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Contents Page

Page

Executive Summary

1. Introduction 1
1.1 Company Overview 1
1.2 Recent Developments 1
1.3 Industry Overview 1
2. External Environment Analysis – PEST 2
2.1 Political 2
2.2 Economical 2
2.3 Socio-cultural 2
2.4 Technological 3
2.5 Implication of PEST 3
3. Internal Analysis 5
3.1 Financial Analysis 5
3.2 Success Factors of Breadtalk Group 7
3.3 Value Chain 8
3.4 Competitors’ Analysis 9
3.5 Strategic Group Analysis 12
3.6 Porter’s Five Forces 13
3.7 Boston Consulting Group Matrix 15
3.8 TOWS Matrix 16
4. Problem Definition & Objective 17
4.1 Problem Definition 17
4.1.1 Current Challenges 17
4.1.2 Future Challenges 17
4.2 Short Term Objectives 17
4.3 Long Term Objectives 17
5. Recommended Strategies 17
5.1 Business Level Strategy 17
5.1.1 Porter’s Generic Strategies 17
5.2 Corporate Level Strategy 18
5.2.1 Related Diversification 18
5.3 International Strategy 18
5.3.1 Franchising 18
5.3.2 Joint Ventures 19
6. Implementation 20
7. Evaluation and Control 21

References

Appendix
Executive Summary

BreadTalk Group Limited is a lifestyle F&B group who started with the Bakery
business in year 2000, and steadily developed into an enterprise consisting of 3 major
business segments in Bakery, Restaurant, and Food Atrium.

This report includes a detailed analysis conducted on BreadTalk Group Limited, and
the proposed strategies that will give BreadTalk a better direction into its future with
the idea of sustainability.

The report consists of a brief overview of the company and the industrial outlook. It
will be followed by an extensive external and internal environmental analysis
conducted and its implications. Key success factors will be identified and matched to
BreadTalk’s core competencies, and various Strategic Management models and tools
will be use to aid analysis.

Lastly, challenges faced and both short and long-term objectives will be discussed,
and proposed strategies and implementation measures will be put forward. The
proposed strategies will be discussed using Porter’s Generic Strategies and The
Balanced Scorecard is used for Implementation, Evaluation and Control.

BreadTalk is anticipated to continue to thrive in the industry and go from strength to


strength, and become an even bigger and sustainable business.
1. Introduction

1.1 Company Overview

BreadTalk Group Limited was founded in year 2000 by current Managing Director, Mr
George Quek and his wife, Executive Director, Mrs Katherine Lee. The first retail outlet
opened at Parco Bugis Junction in July 2000 selling freshly baked breads and buns that are
visually creative and attractive. Within 5 months, the second outlet at Novena Square
followed and they also ventured into the HDB heartlands (BreadTalk Group Limited, 2012).
By year 2003, BreadTalk was listed on the SGX.

A central kitchen and corporate headquarters was built at KA FoodLink, Kampong Ampat in
September 2001 to centralise food preparation process and in preparation of franchising plans.

Over the past 11 years, BreadTalk has expanded and become a distinctive F&B brand with
bakery, restaurant and food atrium businesses. Their proprietary brands are BreadTalk, Toast
Box, Food Republic, RamenPlay and The Icing Room. They also manage franchises in Din
Tai Fung and Carl’s Jr.

1.2 Recent Developments


 10-storey International Headquarters (IHQ) due to complete in year 2013, costing
approximately S$64.1 million.
 The IHQ will house the Group‘s main office, retail, Research & Development,
training, logistics and central kitchen facilities (BreadTalk Group Limited, 2012).
 As of 2011, BreadTalk manages 81 bakery outlets, 7 food atriums and 17 restaurants
in Singapore.
 Presence in 16 countries, including Singapore, Mainland China, Hong Kong and
Indonesia, supported by 6000 global staffs, managing over 500 F&B outlets.

1.3 Industry Overview


Looking at the Food & Beverage (F&B) industry in Singapore, it is a highly competitive but
promising industry with steady growth rate and expanding market value. The rise in growing
middle income groups, increase in visitors and the surge in disposable income are the main
driving forces for the growth. The industry is predicted to grow even further where food retail
currently represents 40% of the total retail spending in Singapore (Singstat, 2012). Singapore
is also one of the top three eating capitals in Asia-Pacific (SPRING Singapore, 2012).

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As a company with huge success, BreadTalk needs to continue to monitor the general and
industrial environment as well as making sound strategic moves to improve their market
position, gain competitive advantages and ensures a sustainable growth.

2. External Environment Analysis – PEST


PEST analysis look into the political, economic, social-cultural and technological aspect of
the environment that the industry is affected. It is a powerful tool to improve businesses
through effective & practical scanning of the environment and making prediction and
preemptive strategies to gain competitive advantages (Carruthers, 2009). A PEST analysis
would be done for Breadtalk Group.

2.1 Political
 Singapore government encourages local companies to venture overseas. A “double
tax deductions” scheme is introduced to allow companies to have deduction on tax
income mainly for overseas business or investment (International Enterprise
Singapore, 2010).
 The Agri-Food & Veterinary (AVA) is the national authority entrusted to ensure a
resilient supply of safe food. Under Food Regulations and the Sale of Food Act, all
processed food must comply with prevailing requirement including labelling
requirements.

2.2 Economical

 Companies struggled economically, particularly during the recent global financial


crisis. BreadTalk has its stock prices drop significantly to S$0.25 in June 2008, down
from S$0.6 per share towards the end of the year 2007.
 On the positive side, by the end of 2008, BreadTalk had set up over six thousand
successful food and beverage establishments in Singapore alone, and its profits are
quite steady (OCBC Investment Research, 2010).
 Rising costs in raw materials throughout the world and also rising fuel prices has a
direct impact on the supply chain of Breadtalk

2.3 Socio-cultural

 Consumers are getting more health conscious and affluent, and inflation has an impact
on consumer buying power.

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 BreadTalk came out with a wider variety of products that includes a healthier choice
range, and kept prices low to attract more consumers.
 Investment in R&D to create more creative products to meet consumer demands.

2.4 Technological
 Advance Technology had greatly reduced the cost of labour and increase in
productivity.
 Enterprise Resource Planning (ERP) was implemented to improve effective
monitoring of inventory purchases and consumption.
 The retail outlets are also installed with point-of-sale systems. This mean that the
daily sales figures and itemised sales volumes can process at the end of day for each
outlet so that management can evaluate the popularity of each item and understand
trends better.

2.5 Implications of PEST


 With expansions and acquisitions, BreadTalk’s revenue increased by 27.4% in 2011,
owning 448 food atriums and restaurants supported by global staff strength of 6000
employees.
 BreadTalk distinguishes itself from traditional bakeries with its unique and innovative
concept—focusing on hygiene, quality and brand image. It was the first in Singapore
to adopt an open kitchen concept for bakeries, installing transparent glass panels to
allow customers’ viewing of the whole bread-making process.
 Sophisticated bread-making equipments are installed in each outlet, with bakers
wearing standardized uniforms and outlet cleanliness is maintained at all times. This
concept is proven to be popular, especially in China where food safety is a key
concern among consumers.
 Strategic locations - Outlets can be found in accessible locations with high pedestrian
traffic flow. Outlets are located near public transport system and also popular
departmental stores or supermarkets.
 Creativity is the key selling point of BreadTalk. It has a dedicated R&D team devoted
in developing new bread designs and flavours to meet the ever-changing consumer
tastes and preferences
 The BreadTalk brand has evolved to become one of the most recognisable local
brands in Singapore. In 2002, the group won the “Singapore Promising Brand Award

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2002” awarded by ASME and SPH and was also voted Singapore’s Most Popular
Brand in a joint poll by the ASME and SPH.
 F&B industry has been hit by the inflation of rental expense and utility charges, which
hurts profitability. F&B industry in Singapore is highly competitive and fragmented
with low barriers to entry.

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3. Internal Environment Analysis
3.1 Financial Analysis

Calculation
Ratios Implication
2009 2010 2011
Current Ratio Ability to pay current liabilities
0.97 0.90 0.98
from current assets
Quick Ratio Ability to pay current liabilities
0.68 0.91 0.93
from the most liquid assets
Debtor The period of time taken to
Collection collect payment from debtors 0.2mths 1.0mths 1.5mths
Period
Creditor The period of time taken to pay
1.5mths 0.9mths 0.8mths
Payment Period creditors on credit purchases
Stock Turnover Indicates sale ability of
23.2 22.5 22.4
inventory
Gearing Ratio The mix between owner’s funds
and borrowing (determines if
0.62 0.63 0.67
company has borrowed too
much to finance the business)
Returns on The amount of net income
Equity (ROE) returned as a percentage of
shareholders equity.(profit a
18.2% 16.4% 14.9%
company generates with the
money shareholders have
invested)
Return on Sales Measures the percentage of
6.33% 5.51% 4.68%
profits to sales
Gross Profit to Measures the percentage of
54.4% 54.5% 54.7%
Sales gross profits to sales
Revenue Percentage of growth in
16.1% 22.9% 20.8%
Growth revenue
Net Earnings Percentage of growth in net
42.8% 1.6% 2.9%
Growth earnings

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Based on the liquidity ratios, it reflects that BreadTalk might not have enough cash or liquid
assets to pay its current liability as their net working capital is negative. In the supplier point
of view, higher liquidity ratios will be preferred as it will lower their overall risk. However,
due to their reputation and size of company, BreadTalk’s buyer power will not be greatly
affected. In the investor point of view, it will not be of a great concern as investors will be
more concerned about growing the business using assets of the company.
The debtor collection period increased from 0.2 months in 2009 to 1.5 months in 2011. This
might tie down their liquid assets hence affecting their quick ratio and ability to use the
money for other investment or expenses.
There is a decrease in the percentage of net income returned as per shareholders’ equity. This
reflects on the profitability of the company as also shown in the decreased in return on sales.
The high administrative expenses incurred over the years might have contributed this.

2008 2009 2010 2011


Administrative
Expenses 32 061 34 198 41 872 45 038
($’000)

+ 6.7% + 22.4% + 7.6%

Bakery remains the main source of revenue for BreadTalk with about half of the income
coming from the bakery segment. However, it is observed that the restaurant segment is
catching up on their revenue with increasing shares of income every year.

It was also in the profit earned by restaurant sales with an increase of 35% from 2010 to 2011
and an overall increase of 25% in profit over the past 4 years.

Singapore remains the main source of revenue for BreadTalk with China as the next major
revenue contributor, followed by Hong Kong. However, there is a decrease in revenue earned
by the two major revenue contributors in year 2011.

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3.2 Success Factors of Breadtalk Group

Success
Description
Factors

Skills and  Joint venture with Japanese company opening a Frozen Dough
Capabilities Factory sharing expertise and industry know-how

 60-80 items offered in stores daily


Range of  Central kitchens that ensures quality and improves consistency of
Quality products
Products
 Artisan bread concept using premium ingredients (eg. Bread
Society)
 Targeting locations with high traffic flow

Strategic  Good mixture of locations in central areas and the heartlands

Locations  Strategically placing businesses next to one another (eg. Opening


ToastBox next to BreadTalk and Icing Room)
 Venturing into lucrative markets such as China
 Branching into related and complementary businesses (F&B
Diversification industry)
 Going regional and international
 First mover advantage in creating creative breads with innovative

Branding flavours and a trendsetter


 A strong Singapore brand name created
 Brand accolades from Singapore and international platforms
 Known for the open kitchen concept, and creative breads with
innovative flavours
Innovation  Creating a lifestyle
 Emphasis on R&D and creativity with an International Head
Quarters building due to complete in 2013

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3.3 Value Chain
Value Chain Description Evaluation
Activities

Firm Adheres to strict Agri-Food & Veterinary Strategy is effective and BreadTalk has won
Infrastructure (AVA) and Food Regulation requirements in numerous brand accolades and gain brand
Singapore. Invests in R&D, innovation and recognition.
training.

Human By 2013, will bring together all the diverse Recognised for providing consistent and quality
Resource departments under one roof at their IHQ training, with in-house R&D and central kitchen
Management facility, which will accelerate their ability to facilities adds value to the company.
innovate and produce.

Technology Sophisticated bread-making equipment in Positioned itself as a vibrant and innovative


Development every outlet and will own an in-house R&D company with huge investment in improving
facility by year 2013. business efficacy and product innovation and
creativity.

Procurement Investment in IHQ and costs involved in Strategy is to keep company ahead of its
streamlining businesses lead to increase in competitors and investment will bring about better
operating and administrative costs. returns and add value to company’s sustainability.

Products & Rejuvenated the sunset industry of Bakery Creates value as BreadTalk is not only innovative
Services with its award winning Boutique Bakery in but adapts well to international markets by
year 2000 (SPRING Singapore, 2012) and is identifying local palates.
constantly afloat in developing new and
creative products.

Sales & Opening outlets in high traffic areas and Successfully created a lifestyle F&B brand with a
Marketing reaching into heartlands. Strategically placing strong image that can be easily differentiated.
related businesses next to one another (eg. Concern is in sustainability as its strategies can be
Ding Tai Fung next to BreadTalk and easily imitated.
ToastBox)

Operations Central kitchen and training facilities that will Reassessment of company standing and revising
improve and enhance current operations. A standard operating procedures, keeping true to the
new management structure with division heads company’s vision of an innovative and
under one CEO. trendsetting lifestyle company.

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3.4 Portfolio Analysis

*Refer to Appendix 1 for market data

Implications for BCG Matrix:


 Breadtalk Group’s major business segment in Bakery is a Cash Cow that is
contributing to 53.2% of its total revenue
 Need to maintain competitive position in this lucrative market and understand that
competition is only going to get steeper
 Relatively low barriers to entry, low switching costs and products are difficult to
differentiate but easy to imitate
 Customers are price sensitive and value product innovation
 Restaurants is a Question Mark that contributes to 21% of total revenue and cannot be
easily eliminated
 Faces stiff competition as restaurants has the highest number of direct competitors
 The existence of under-performing restaurants is affecting the overall group
performance
 There is extensive room for growth as Singapore is one of the top three eating capitals
in Asia-Pacific (SPRING Singapore, 2012) and Breadtalk has a good brand name and
has won numerous awards in the industry (Breadtalk Group Limited, 2012)
 The Food Atrium business is a Star and needs to be cultivated into a Cash Cow
 The industry has the least number of direct competitors and hence there is more
intense competition

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 BreadTalk needs to continue focus and invest in its food atrium business in order to
reap more benefits

3.5 Competitors ‘Analysis

Competition and cooperation co-exist in various sub-fields of organizational strategies. It is


essential for companies to analyze and perceive cognitive relations with rival partners. This
process eventually aids in integrating a suitable strategy (Meng & Layton, 2011) in order to
identify opportunities or threats within the industry to remain competitive, create greater
innovation and competitive advantage (Pellissier, 2011).
BreadTalk Group faces two type of competitor, direct and indirect competitor.
Form of
Brands Justification
competition
Brand  BreadTalk Group has overcome this
weakness by creating new innovations and
competition –
engaging in strong differentiation strategy
Product Range and marketing activities.
and Selling  BreadTalk Group distinguishes itself from
traditional bakeries with its unique and
Method innovative concept
 Food Republic invites and entices
customers using unique thematic dinner
concepts

Brand  Despite losing out the first mover


advantage in the Bakery industry, Bread
competition –
talks possess strong brand equity.
Brand Equity  Most outlets can be found in accessible
location with high pedestrian traffic flow
to pull in customers as they walk.
 Outlets located new public transports
system and also near some of the popular
departmental store or supermarkets.
 Food Republic mantra is to bring the best
of local hawker and street food under one
roof.
Form of
Brands Justification
competition
Industry  BreadTalk has created a unique selling
preposition in order to prevent competitors
competition
from any direct attacking strategy.
 Focusing on hygiene, quality and brand
image. Adopted an open kitchen concept
for bakeries, installing transparent glass
panels to allow customers viewing of the
whole bread-making process.
 Recreation of bygone eras or the charming
retrospective styles of 60s ad 70s or an old
Chinese village.

Form Cakes  BreadTalk Group not only focuses on the


Bread but also providing cakes.
competition
BreadktTalk Group has been aware of the
(substitutes) competing to satisfy the need.
 BreadTalk Group may need to look on
both attack and defense strategy to make
Coffee shop/Food court effective solutions to counter various type
off threat imposed by the substitutes to
sustain in the industry.

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Players in the
Strength Weakness
Industry
•Over 30 Years of experience in •Lack of strategic and
cakes and pastries accessible locations to
•Offering traditional and attract potential customers
"innovative-traditional" premium •Not constantly introducing
quality kueh, cakes, cookies and new products to cater to
various seasonal products for all customers' changing tastes
festivities

•First movers advantage that •Lack of new products to


open the ‘La Mian Xiao Long cater to customers'
Bao” restaurant changing tastes

•Among the first in Singapore to


operate and manage food courts •Did not bring in the best of
with a themed concept and serve a local hawker and street food
mix of local fare and international under one roof
cuisine to give customers greater
variety
•Food Junction Privilege Card
Member to enjoy discount and
promotion at their premises

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3.6 Strategic Group Analysis

A strategic group is a cluster of firm which has similar strategies and rivalry would tend to be
greater within such firms (Dess, Lumpkin & Eisner, 2010). A strategic group analysis was
conducted for Breadtalk Group against its competitors, based on the perceived price/ quality
and geographical coverage.

Implications:

 Bengawan Solo, Four Leaves and Prima Deli are emerging threats that can challenge
BreadTalk in the Regional market in the near future
 Delifrance and Crystal Jade are strong competitors in the Regional market that
possess capabilities of going global
 Product and brand differentiation to attract a younger and more affluent crowd and
distinguish itself from its competitors
Recommendations:

 BreadTalk to identify their target group and continue to build on the brand image for
the specific target group
 To expand and reach into the global market in terms of joint venture or franchise
 Needs to stay as a leader in innovation and creativity

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3.7 Porter’s Five Forces
Porter’s Five Forces is a useful tool which focuses on the forces which shapes the industry
structure which drives competition and profitability (Porter, 2008). The five forces which
impact the industry are threat of new entrants; bargaining power of buyer; bargaining power
of supplier; threat of substitution and rivalry among competitors.

Bargaining Power of Buyer

 High bargaining power


 Low switching cost
 Many substitute and similar product in the
market
 Buyer are price sensitive

Threat of New Entrants Intensity of Rivalry Threat of Substitution

 Threat of new entrants  High rivalry, intense competition  High threat of


is high  Numerous competitor in the market substitution
 Low barrier to entry  Certain competitor in the market are  Low switching cost
 Capital requirement is of similar size and capacity  Numerous substitute
relatively low  High industry growth available
 Weak product  Low level of differentiation and  Cheaper alternative
differentiation, easily switching cost option available
imitated  Exit barriers are low  Lower cost and
 New entrants can better product
climb the experience available in the
curve quickly market (hawker
 Customer incur low center)
switching cost
Bargaining Power of Supplier
 Low government policy
on setting up of F&B  Low bargaining power
store in Singapore  Breadtalk has the ability to integrate
 Breadtalk enjoy backward
economies of scale  Supplier’s product are common and
largely available
 Numerous suppliers providing similar
products
 Breadtalk is considered a large
customer of the supplier, however
there are also many other buyer in
the market

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Implication

Based on the Porter’s Five Forces analysis, the F&B industry in Singapore is highly
competitive with many competitors offering similar products at a competitive price.
Competitors are able to imitate the winning strategy of their competitors easily and hence
BreadTalk will have pressure to compete on low cost but high quality products. This is
especially so when the consumers are highly price sensitive. BreadTalk will have to work on
the R&D to ensure that their products are innovative, premium, and yet value for money.

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3.8 TOWS Matrix

(O) External Opportunities (T) External Threats

 Overseas Ventures and  Feedback on Publicity may


Expansions cause bad image for the
 Target premium F&B market brand
 Increase in Tourist dollars  Intense Competition in
 Merger or Acquisition of F&B industry
other food businesses  Over-saturation in
Singapore market

(S) Internal Strength SO – Aggressive Strategy ST – Diversification Strategy

 Well-known Brand in  Well-known branding create  Create Differentiation with


F&B industry good opportunities for distinctive competencies
 Strong brand Equity diversification into other
 Innovative Products F&B business  Strengthen and differentiate
 Strategic Retail the existing product core
Locations  Expansion by integration of competencies
 Wide Products offering Cafés with bakery business

(W)Internal Weaknesses WO – Turnaround Strategy WT – Defensive Strategy

 Low Barriers to entry for  Promote awareness of new  Maintain current position
F&B industry and innovative products and streamline all
 Cost increasing on Raw businesses
materials  Training and Development
 Easy imitation of for employees  Develop intangible and
products reputable core
competencies

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4. Problem Definition & Objective
4.1 Problem Definition

4.1.1 Current Challenges

 Making sound decisions in expanding its business by acquiring new


restaurants, expanding its food atrium business, and venturing into more
regional markets
 The increase in costs in streamlining and coordination of its businesses

4.1.2 Future Challenges


 To ensure sustainable growth
 Having the capacity to venture into the global market
 Keeping up with the ever-changing consumer tastes

4.2 Short Term Objectives


 Strengthen market position by enhancing existing products within the next 5 years
 To increase profit margin by 50% within 5 years
 To streamline the value chain, reducing the cost of administration
 To increase food atrium sales by 50% by 2017

4.3 Long Term Objectives


 Expansion into new markets (e.g. delivery service/catering/training hub)
 Research & Development in new and improved technology, reducing the cost of
production

5. Recommended Strategies
5.1 Business Level Strategy
5.1.1. Porter’s Generic Strategies
Using the Porter’s Generic strategies, it is recommended that BreadTalk
Group adopt an overall cost leadership strategy & differentiation strategy.
Suggested low cost strategies include the following:
 Effective training programs to improve productivity
 Use of automated technology to reduce labor cost and wastage
 Good working relationship with suppliers to ensure low-cost in raw
materials

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 Shared purchasing operation within the business units to increase
bargaining power and lower cost

BreadTalk Group can also go into differentiation strategy by focusing on


producing high quality products, which are value for money. This can be done
so by investing in R&D to improve on the quality of end products. Through
experiences gained, they will be able to move down the experience curve and
hence lowering the cost of production. With its low pricing and wide selection
of high quality products, power of buyer will be reduced, as there are few
competitors who can offer the same quality at a comparable price.

5.2 Corporate Level Strategy


5.2.1 Related Diversification
Diversification enables an organization to expand their operations by
venturing into new businesses. In order to increase their revenue and profit,
BreadTalk Group can go into a related diversification where they can benefit
from economies of scope, leveraging on their core competencies and sharing
their value chain activities (Dess, Lumpkin & Eisner, 2010), hence improving
their market position in the F&B industry.
As the restaurant segment has a growing potential, BreadTalk Group can
diversify into other cuisines such as Japanese or Korean, and have restaurants
that has such strong market demand and appeal to the younger generation.

5.3 International Strategy


5.3.1 Franchising
Franchising is an agreement between both parties where the parent company
receives royalty or an amount of fee in exchange for the rights to use their
intellectual property (Dess, Lumpkin & Eisner, 2010).
BreadTalk Group can continue to issue franchise rights for business operations
in the foreign market. This will increase their brand awareness and expand
their revenue base across other regions while limiting the risk exposure.
They will need to continue selecting their franchisee carefully by setting high
criteria and control measures to ensure consistency and quality of their
products. However, receiving only a portion of the revenue in the form of
franchise fee will be one of the set-back of franchising.

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5.3.2. Joint Ventures

BreadTalk Group can consider working closely with other firms in the foreign
market through joint ventures to increase revenue. A joint venture is an
association of two or more companies engaged in a solitary business enterprise
for profit without the need of actual partnership or incorporation.

It reduces costs and enhances learning of the organisation through knowledge


sharing. Innovation is one of the key success factors and BreadTalk Group can
collaborate with other related companies to improve on their current research
and development team. Through the collaboration with other companies,
BreadTalk Group will be able to leverage and develop on the core competencies
and technology of their partners to gain competitive advantage and strengthen
their market position. By working with the foreign companies, BreadTalk will
also be able to gain information on the local market preferences, competitive
conditions and other relevant information.

Before entering into a joint venture, BreadTalk Group will have to determine
their main purpose and goals to ensure that their partner companies are capable
of assisting them in achieving the goals and objectives.

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6. Implementation
Below highlights the proposed activities for the different strategies and their estimated cost of
implementation. Activities will be implemented over the next 10 years to spread out the cost
to prevent a sudden surge in expenses due to the changes and to allow monitoring of the new
changes to ensure its sustainability.
Proposed Budget
Proposed Activities 2012 2014 2016 2018 2020 2022 (S$ million)

Business Level Strategy – Cost Leadership & Differentiation

Regular Market research and 1


survey
Develop and update training 1
schedule for all employee
Develop / source for new
technology to improve 3

productivity
Streamline Breadtalk Group 1
value chain activities
Corporate Level Strategy - Diversification

Develop diversification plan


into other cuisine in the 1

restaurant segment
Setting up of restaurant outlet 3
in Singapore
Setting up of restaurant outlet 4
overseas
International Strategy – Franchising & Joint Venture

Market and company research 0.5

Development of joint venture 0.5


plan, objective and goal
R&D of new technologies and 5
work process improvement
Total 20

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7. Evaluations and Control
The balance scorecard will be used to assist Breadtalk Group to identify the strategic
objectives and control from the financial, customer, internal and learning & growth
perspective. This will help to achieve sustainability of the business and gain competitive
advantage over their competitors through well managed and integrated planning and
control (Dess, Lumpkin & Eisner, 2010).

Strategic Objectives Strategic Control


Financial F1: To increase profit rate by 50% and improve  Return on Capital Employed (ROCE)
market position by 2017  Gross profit to sales
F2: To lower operational expenses by 2017  Net margin
 Cash flow
 Volume growth rate vs F&B Industry
Customer C1: To continually delight the customers with  Mystery shopper rating
new innovative product which are value for  Customer survey to understand the
money demand of the market
C2: To improve Customer  Loyalty program
Relationship Management and
obtaining feedbacks for
continuous improvement
Internal I1: To be the market leader in the F&B industry  To monitor competitors and adjust
by 2022 business level strategies to gain
I2: To market their products through social media competitive advantage
and other various means to reach out to target  Sales revenue
consumers  Profitability index
I3: To lower production cost and operational cost  Staff turnover rate and incident report
I4: To improve health, safety and environmental  Staff sick leave rate
performance  Quality control and random sample
I5: To ensure high quality product delivered to test
consumer at all time

Learning L1: Continuous training and upgrading courses  Employee’s performance appraisal
& Growth for staff to improve on skills and service standard  Training records
L2: Create a innovative and positive working  Employee survey
environment

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Appendix 1: Selected SBU Market Data

2011 Sales Number of Sales of the Forecast Relative


($m) direct 3 largest Annual Market
competitors firms in the Growth Share
sector ($m) Rate (%) (RMS)

Bakery 101.8 110 101.8*, 5.4 1.10


92.8, 89.2

Restaurant 40.2 850 40.2*, 39.7, 10.2 0.96


27.8

Food Atrium 49.4 37 52.3, 49.4*, 11 1.01


22.9

Notes: Figures asterisked represent Breadtalk’s sales within sector


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