THE RED DRAGON Unit-10

RESTAURATN GROUP Business Strategy

Khant Zaw Hein

Year 1, Semester 2
Contents
Introduction...........................................................................................................................................2
Objectives..............................................................................................................................................2
Executive summary................................................................................................................................3
LO 1 Understand the process of strategic planning...............................................................................4
Task 1.1 How business missions, visions, objectives, goals and core competencies inform strategic
planning.................................................................................................................................................4
Task 1.2 The factors that have to be considered when formulating strategic plans..............................5
Task 1.3 Effectiveness of techniques used when developing strategic business plans..........................7
LO 2 Be able to formulate a new strategy...........................................................................................11
2.1 The strategic positioning of a given organizational by carrying out organizational audit..............11
2.2 An environmental audit for the Red Dragon Restaurant...............................................................12
2.3 The significance of stakeholder analysis while formulating new strategy.....................................15
2.4 A new strategy for the Red Dragon Restaurant Group..................................................................18
LO 3 Understand approaches to strategy evaluation..........................................................................18
3.1 The appropriateness of alternative strategies relating to market entry, substantive growth,
limited growth or retrenchment for the Red Dragon Restaurant........................................................18
3.2 Justify the selection of a strategy..................................................................................................21
LO 4 Understand how to implement a chosen strategy......................................................................22
4.1 The Roles and Responsibilities of personnel who are charged with strategy implementation for
the Red Dragon Restaurant.................................................................................................................22
4.2 The estimated resources requirements for implementing a new strategy for the Red Dragon
Restaurant Group................................................................................................................................23
4.3 The contribution of SMART targets to the achievement of strategy implementation in the Red
Dragon Restaurant Group....................................................................................................................24
Conclusion...........................................................................................................................................25
References...........................................................................................................................................26

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Introduction
My role is a strategy consultant for the hospitality trade and I have been asked by the board
of directors of the Red Dragon Restaurant Group to advise them business strategies. The
Red Dragon Restaurant Group has experienced about 25 years in the market. The
restaurant offers traditional local cuisine. I'm in charge of giving knowledge and suggestions
in the strategy development of the Red Dragon Restaurant Group.

Objectives
The completion of this assignment aim to get the following objectives-

 To understand the process of strategic planning

 To be able to formulate a new strategy
 To understand approaches to strategy evaluation
 To Understand how to implement a chosen strategy

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Executive summary
In this assignment, the knowledge about the strategy development is expressed widely. The
basic concepts of strategic planning are explained in the first part. Then the techniques that
inform the strategic planning and suggestions for the Red Dragon Restaurant Group are
expressed.

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LO 1 Understand the process of strategic planning

Task 1.1 How business missions, visions, objectives, goals and core
competencies inform strategic planning
The Red Dragon Restaurant Group has to develop a strategy to survive in the competitive
market. So, we must develop a strategic plan that will make the business more successful.
The directors of the Red Dragon Restaurant Group have to know strategic planning process.
Strategic planning is the process of defining a strategy that will give the organization's
expected achievements in the future. A strategic plan is a road map for the organization to
get those achievements. In forming a strategic plan, the basic things we have to consider is
missions, visions, objectives, goals and core competencies of the organizations. Depending
on these things, the strategy for an organization is developed. The directors of the Red
Dragon Restaurant Group need to clearly understand the mission, vision, objective, goal and
core competencies.

Vision: a vision of an organization is the stage that the organization wants to achieve in the
future. Simply, it is an imagined picture of what the organization wants to achieve in the
future. It is a long-term oriented and the time lasts for more than three years. The vision is
the basic of the organization's' all works. It can guide what the organization has to focus in
its processes. Visions are set by top management.

Mission: a mission is what the organization does and how it does in order to achieve its
vision. Although it is a long-term oriented, it can sometimes be shorter than three years. A
clear mission can guide the business decisions of the organization to reach its expected
achievements. Moreover, a clear mission statement can inform the employees precisely
what they are doing. Missions are set by top management.

Goal: goals are the shorter and measurable terms of the organization's vision. Implementing
the short-term goals will lead to the achievement of the vision of the organization as the
goals are based on the mission.

Objectives: objectives are the short-term tasks that the employees perform to achieve the
organization's goals. Objectives are more detailed and they are turning of organization's
mission into measurable shorter terms. Accomplishment of the objectives is meant to be
performing the mission. Consequently, the vision of the organization is achieved.

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Core competencies: core competencies are the main strengths of the organization that
cannot be found in other organizations. These core competencies can give the chance to get
competitive advantages in the market. Core competencies of an organization are usually
difficulty to imitate by others. When a core competency is imitated by other organizations, it
cannot be the core competency no more.

The role of visions, missions, goals, objectives and core competencies are very basic in the
process of strategic planning. In order to develop the effective strategy, the management
team has to consider the visions and missions of the organizations. If a strategic plan is set
apart from its visions and missions, that plan is said to be totally ineffective. The facts that
involved in strategic plan may be far from what the organizations wants to achieve (vision)
and what organization have to do (mission). When missions and visions are neglected, the
potential of completing all goals and objectives is also dismissed. Besides, if the
management does not consider their core competencies in strategic planning, that plan will
never be a good plan. The organizations may not use its strengths effectively. The ability to
compete the rivals in the market will be lower. The directors of Red Dragon Restaurnat
Group must know the importance of visions, missions, goals, objectives, and core
competencies in strategic planning.

Task 1.2 The factors that have to be considered when formulating

strategic plans
After the basic aspects of strategic planning, there are still many factors that have to be
considered in formulation strategic plans. The factors that have to consider in strategic plans
after visions and missions include

 Management and leadership styles

 Organizational structural and culture
 Financial factors
 Environmental changes
 Human resources
 Level of competition

Management and leadership styles

The organization's approach to management can affect the formulation of strategic plans.
The way that the managers set managerial processes and the way they lead the
organizations can affect the strategic plans. The leadership styles that the managers are
using are a considerable factor. The main types of leadership styles that affect strategic

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plans are autocratic and democratic leadership styles. The autocratic leadership style in
which the managers maintain all authorities and make all decisions will not fit a strategy that
designs to let the employees decide freely. That strategy will fit with democratic leadership
style let the employees make the decisions together with the manager. So, management
styles and leadership styles should be considered in strategic plans.

Organizational structure and culture

Organizational structure on which the business is running can affect the formulation of
strategic plans. For example, a tall-structured organization cannot run on a strategic plan
that needs very high flow of information and high connection among each level of
organization. The culture that is forming in the organization can also affect the strategic plan.
For instance, an organization in which the power culture is generating cannot be successful
with a strategic plan that includes the high roles of technicians.

Financial factors

When formulating a strategic plan, we also need to consider our financial positions. We must
know our financial condition will be enough for the strategic plans. If we don't have enough
finance, we can find the ways to get enough finance.

Environmental changes

The changes in environment can affect the strategic planning process. The environment
includes internal and external environments and they both have effects on strategic
planning. Internal changes in the organization such as change in labour turnover can affect
the strategic planning efforts. For example, the main employee or the employee in high
position suddenly leaving the organization can affect the plans. Strategic planning can also
be strongly affected by external changes. For example, changes in political factors such as
government specify new polices influencing on the current industry of the organization will
affect the strategic plans. Moreover, economic changes can also affect the strategic
planning.

Human resources

The role of human resources in strategic planning is crucial. They are the ones who set the
plans and who implements the plans. The directors of the Red Dragon Restaurant Group
must consider their employees' wiliness and abilities to involve in a new strategic plan. The
employees' current skills and abilities should fit with the strategic plans. Otherwise, the
strategic should be flexible to the skills and abilities of employees. The directors of Red

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Dragon Restaurant Group can train their employees or they can set flexible plans. But they
must get the commitment of the employees.

Level of competition

Competitiveness in the market is also a factor which has an impact on strategic planning.
Therefore, high competiveness in the market is a factor that we must consider in strategic
planning. If we fail to design strategic plans that cannot compete competitors, we cannot
lead the market. The directors of the Red Dragon Group must consider the situation of
competitors such as Banana Leaf and Coral Seafood.

Task 1.3 Effectiveness of techniques used when developing strategic

business plans
There are many techniques used in strategic planning. The most useful techniques are BCG
matrix, SPACE and PIMs. These techniques help us know how to develop strategic plans
well. They are the tools for us to reach a high quality strategic plan.

BCG matrix

BCG matrix is a planning technique that shows the strategic position of the organization's
brand portfolio and the potential in the future. It is also known as growth-share matrix as it
classifies the brand portfolio into four types based on the business' market growth and
market share. The market share represents competitive advantage and market growth rate
shows industry attractiveness to invest. The main purpose of this matrix is to determine the
position of business' portfolio in the market and to know we should invest or divest in that
portfolio.

BCG Growth Matrix

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Relative market share:
The increase in
relative market share
results in higher income.
The organization
produces more products
and the profit for that
product portfolio
becomes higher. That is
why relative market share is assumed as cash generator for the organization.

Market growth rate: The increase in higher market growth can also have potential to
generated higher profit. But we need to invest more to get high positions in that growing
market. That is why market growth rate is assumed as cash usage for the organization.

The four categories in the BCG matrix are

Dogs: The businesses that holds low market share and generates in low market growth
industry are in the Dog categories. The product portfolio in this category are not worth
investing as they will generated low profit and the market has low potential to grow. The
strategies for this type of businesses are retrenchment, divestiture and liquidation.

Cash cow: cash cows are the businesses that generate high profit and running in slowly
growing market. They can become stars if they invest in innovation to induce market growth.
But they are the most profitable businesses as the incomes are high and cash usage is low.
So, they only need to maintain their current position. Suitable strategies for cash cows are
product development, diversification, divestiture and retrenchment.

Star: Stars maintain high market share and operate in high growth industries. They are both
high cash generators and cash users. Stars can become cash cows when the products in
that industry reach certain level of innovation. They can also be a dog as they invests a lot of
money to gain market share. The strategies for stars are vertical integration, horizontal
integration, market penetration, market development and product development.

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Question marks: Businesses in Question marks are running in market with rapid growth rate
but possess low market share. So, their cash usage is high and their income is low. They
have potential to get market share and become a star and eventually becomes a cash cow
when the market growth rate becomes slow. Otherwise, they also can be a dog as they are
investing a lot to struggle to get market shares. The strategies for question marks are market
penetration, market development, product development and divestiture.

The Red Dragon Restaurant Group is assumed in the question marks quadrant. The
restaurant is booming but the Red Dragon does not own many shares in the market. The
cash usage in the Red Dragon Restaurant is high. The Red Dragon Restaurant Group
should raise the quality of services to be different from competitors and to be more attractive
to customers. Moreover, the Red Dragon Restaurant Group should enter into new markets
with the combination of existing cuisines and new innovations.

Effectiveness of BCG matrix in strategic planning

The BCG growth matrix is useful for the managers to evaluate the current position and
potential of the company's portfolio. By knowing the current position and potential of the
business, the high level management can choose the strategy that fits with the conditions.
The BCG matrix is effective in a way that it concerns cash flow and investment
characteristics of the company. Depending on the cash flow, the management can make
right decisions in investment. Besides, BCG matrix can let us know the product life cycle
stage of the portfolio of the organization. Then, the manager can set plans that balance the
life cycle stage of the products. For example, the manager can set strategies that promote
brand awareness such as advertising and public relation for the product in introducing stage
of product life cycle. Although BCG growth matrix is useful in strategic planning, it has some
limitations. In this technique, the competitive advantage of the business is decided by only
the market share and industry attractiveness is decided by market growth. Actually, market
share is not all the competitive advantage; there may be other competitive advantages that
competitors can have beyond us. Moreover, there are other things on which industrial
attractiveness depends. Market shares and growth rate are not always the indictors of
profitability for the business such as balance of sales and expenses, cost of staying in the
market, pricing of the product and so on. The directors of the Red Dragon Restaurant Group
must careful in using BCG matrix in strategic planning. They have to adapt with conditions in
reality.

SPACE analysis

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SPACE analysis is an acronym of Strategic Position and Action Evaluation. This analysis
evaluates internal and external environment to develop a suitable strategy. The SPACE
analysis uses four determinants, two internals and two externals to evaluate the strategic
position of business.

The two internal determinants are

Competitive advantage (CA)-it is

generated by market share, product
quality, product life cycle,
customer loyalty.

Financial strength (FS)-it is based on return on investment, liquidity, working capital and
cash flow of the organization.

The two external determinants are

Industry strength (IS) - it is influenced by growth potential, profit potential, financial stability,
resource utilization and ease of entry into market

Environmental stability (ES)- technological changes, inflation, demand variability, price range
of competing products, barriers to entry, competitiveness, risks in the business.

Practice of SPACE analysis

Firstly, each element from four determinants is scored. Then the average scores for each
determinant are calculated. After that, these values are positioned in the matrix. Financial
strength is in the positive value of Y axis and environmental stability is positioned in negative
value of Y axis. Industry attractiveness is positioned in positive value of X axis and
competitive advantage is in the negative value of x axis. Finally, the quadrant that the
business will be in is determined. To do so, x value is obtained by adding two values on X
axis and y value is obtained by adding two values on Y axis. The four quadrants have their
own possible strategic positions.

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Aggressive position-it occurs when two positive values are obtained. The business has an
attractive and relatively stable industry. The business has competitive advantage. There is
possibility of entry of new competitors. Then, the business can get new market share by
focusing on competitive products.

Competitive position-the business that has competitive position has strong industry strength
and low financial strength. Its financial strength is not enough to cover environmental
variability. The business has some competitive advantages. The strategy in this position is to
maintain competitive advantages and to strengthen finance.

Conservation position-the business in this position has a stable financial condition. The
industry is also stable with low growth rate. The business has to maintain its products to be
able to compete in the market. The business also has to penetrate the market with new
products.

Defensive position-the business in this position is not in good condition. The business does
not have enough financial resources. The business does not have any competitive
advantage. The strategy for this position is to reduce costs, reduce investment and leave the
industry.

LO 2 Be able to formulate a new strategy

2.1 The strategic positioning of a given organizational by carrying out

organizational audit
The strategic positioning of businesses can be done by carrying out organizational audit.
There are many techniques in carrying out organizational audit. The main tool that used in
organizational audit is SWOT analysis.

SOWT analysis is a tool for auditing the conditions of the organization. The organization can
get competitive advantages from developing strategies within the four elements of SWOT
analysis. SWOT analysis contains four elements naming strengths, weaknesses,
opportunities and threats.

Strengths: strengths are the organizations' capabilities and unique resources that will lead
the organization to competitive advantage.

Weaknesses: weaknesses are organizations' lack of resources or special capabilities in its

operation. Weaknesses can stop the organization from gaining competitive advantage.

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Opportunities: the chances from the environment that improve the organization's
performance and competitive advantages are called opportunities.

Threats: threats are found in different forms such as individual factors, competitors and
groups. Threats reduce the performance of the organization in some ways.

SWOT analysis of the Red Dragon Restaurant Group

Strengths: The Red Dragon Restaurant Group has market experience of 25 years. The
brand awareness for the restaurant is high. The organization already had good will in the
market. There are skillful chefs in all branches of the organization. The Red Dragon
Restaurant can give real taste of local cuisine compared to other rivals.

Weaknesses: The organization did not have any strategic planning experiences. The way
the organization operates is too formal. The organization does not have any innovation in
menu of the cuisine.

Opportunities: opportunities for the Red Dragon Restaurant are increasing numbers of
tourists, scarcity of traditional cuisine restaurant. The number of tourists visiting Myanmar
becomes larger and the demand for traditional cuisine becomes larger.

Threats: threats for the Red Dragon Restaurant Group contain competitors in the same
industry. Competitors such as Banana Leaf and Coral seafood are growing rapidly. Another
threat is lifestyle of today families. They consume more foreign foods than traditional food.

2.2 An environmental audit for the Red Dragon Restaurant

An environmental audit is carried out to know the changes in the contexts around the
environment. The environmental audit is different from organizational audit that it analyses
the external environmental factors that cannot be controlled by businesses. Then the
organization can find a suitable strategic plan to respond the environment. The popular tools
used in environmental audit include PESTLE analysis and Porter's five forces analysis.

PESTLE analysis

PESTLE analysis is used to evaluate the changes in external macro environment. The
elements of PESTLE analysis are political, economic, social, technology, legal and natural
environment. These six factors influence the operation of the organization.

Political factors

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In political factors, the role of government is vital. Most of the political factors that affect
businesses organizations are concerned with the government. The policies specified by the
government mostly affect the business. The Red Dragon Restaurant Group can be affect by
the policies set by the government such as tax policy, monetary policy, policies on healthy
and clean foods. The Red Dragon Restaurant Group must adapt the government policies.
They have to pay taxes regularly and systematically. The food they provide must be clean
and free of chemicals as the government set strict consumer protection law.

Economic factors

Economic factors include a lot of factors that happens in national and global economies.
These factors influence on all business in the market in all industries. Only the amount of
impact is different. The factors that have to consider in economic environment includes
interest rates, economic growth, recession, inflation rate, exchange rate, minimum wage,
wage rates, unemployment, cost of living, working hours, credit availability, financing
availability, etc. The Red Dragon Restaurant Group has to face with high inflation rate. But
Myanmar Government is changing and the economy is growing faster. The economic factors
can be opportunities for the Red Dragon Restaurant Group.

Social factors

Social factors include the attitudes, beliefs and the culture of people. People's attitudes,
beliefs and culture in which they live influence their behaviors including their life styles and
choices of food. The social factor that the Red Dragon Restaurant faces is lower local
demand of traditional foods. They have to make innovations to attract customers.

Technology factors

Technology factors include the advancement of new technologies and machines. The
technology environment is the most dynamic environment. The businesses have to adapt
the changing technologies to be more efficient in operation. The Red Dragon Restaurant
Group has to use trending technologies such as internet. They can do online advertising to
get brand awareness at low cost. And also the use of new machines in the restaurants can
reduce the number of employees and cut costs.

Legal factors

Legal factors involve laws and legislations that limit the operation of the business. The Red
Dragon Restaurant Group must be aware of all legislations and follow them precisely. The

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products or foods sold in the restaurant must be legally allowed by the health ministry
department.

Environmental factors

Environmental factors here mean the impacts of natural environment to the business.
Environmental factors include temperature, monsoons, natural calamities, access by rail, air,
and road, ground conditions, ground contamination, nearby water sources, and so on. The
Red Dragon Restaurant Group is affected by temperature. Depending on the temperature,
the demand for cold and warm foods can be varied. And also they must care about enough
water resources to use in their restaurants.

Porter's five forces analysis

Porter's five forces analysis is a useful tool to analyze the attractiveness of a business
industry. These five forces will determine the competitive intensity of industry. The overall
profitability within the market industry is shown through these five forces. These Porter's five
forces affecting the Red Dragon Restaurant Group are shown as below.

Threat of new entrants

The businesses in the industry are affected by the new businesses that enter the market.
High threat of new entrants can be found when barrier to entry is small. The capital need to
enter the market is small. The businesses can be affected by high threats of new entrants
when the government set policies to encourage the development of the industry. Nowadays,
the Myanmar government is trying to develop the economy by encouraging various industrial
sectors. The food industry is also booming with higher demand of various foods. The Red
Dragon Restaurant Group must try to be different from other restaurant not to lose the profit.
New entrants have potential to reduce our profit. So, the strategy that will get customer
delight should be used in the Red Dragon Restaurant Group.

Threat of substitutes

The businesses are affected by substitute products or services. The substitute products are
developed when the capital need for them is not too much. The threat of substitute products
can be seen when the industry is booming with high demand of similar products or services.
The Red Dragon Restaurant Group is strongly affected by high threat of substitutes. The
people are demanding various tastes of foods. The restaurants that provide foreign foods
such as sushi, fried chicken, and hot pot restaurants get most of shares in food industry. The
Red Dragon Restaurant Group must adapt the taste that the customers will like. The new
menus that will attract customers should be provided.

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Bargaining power of suppliers

Bargaining power of suppliers is a big force that can affect the operation of the business.
The high bargaining power of suppliers can be seen when the suppliers have many
customers. There are only a few suppliers in the market. When the suppliers' products have
superior quality, the businesses are affected by bargaining power of suppliers. The Red
Dragon Restaurant Group has strong supplier relationship with suppliers as they work
together for 25 years. But in recent years the suppliers have many customers. The prices for
resources are likely to be raised. The Red Dragon Restaurant has two options. The first is to
negotiate with suppliers and next option is to make resources themselves.

Bargaining power of customers

Customers are one of the most powerful forces that affect the businesses. High bargaining
power of customers is seen when there are only a few customers or many other suppliers in
the market. The Red Dragon Restaurant Group can reduce the bargaining power of
customers by providing high quality services. The customers will not hesitate to pay for
quality services that satisfy their needs and wants.

Intensity of Rivalry

The major factor that affects the profitability of businesses is the intensity of competition in
the market. High intensity of competition is found when the industry is growing rapidly and
there is only small barrier to entry. As the Myanmar restaurant industry is booming, the Red
Dragon Restaurant Group will face many direct (new entrants) and indirect competitors
(substitutes).

2.3 The significance of stakeholder analysis while formulating new

strategy
Stakeholder analysis is a technique used to identify the stakeholders, the key people who
have interest in the organization. Stakeholder analysis let us know the voices of stakeholder
to be considered in strategy formulation.

Importance of stakeholder analysis

Stakeholder analysis let us know more detail about the actual stakeholders of the business.
We also can know the power, influence and interest of different stakeholders through
stakeholder analysis. By knowing the power, influence and interest of stakeholders, we can
identify potential impact of these stakeholders on the business. Then, the organization can
adapt its actions with the interest of stakeholder. Stakeholder analysis can point out the

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ways for the organization to get better stakeholder relationships. Good stakeholder
relationship is very important for the smooth flow of job processes in the organization.
Moreover, the stakeholder analysis let us identify the potential risks that can disrupt the work
processes related to stakeholders. The acceptance of organization's plans and actions will
be higher. The expectations of all stakeholders cannot be met at the same time. Stakeholder
analysis can show ways to manage the expectations of stakeholders. Good management of
stakeholder expectations can ensure that active involvement of stakeholders in the work
processes. Finally, stakeholder analysis can help us to make better decisions and strategies.

Stakeholder analysis for the Red Dragon Restaurant Group

There are three stages in stakeholder analysis-

1) Stakeholder mapping
2) Stakeholder power/interest analysis
3) Strategic positioning

Stakeholder mapping

In this stage, the business identifies who are key stakeholders. The key stakeholders of the
Red Dragon Restaurant Group are employees, customers, suppliers, government,
communities and shareholders.

Employees: anyone who works for the Red Dragon Restaurant Group is the stakeholder.
The employees are internal stakeholders that as they exist inside the organization.
Employees range from low skilled workers to high level management staffs.

Customers: every customer who consumes the services of the Red Dragon Restaurant
Group is stakeholder. They are different from employees that they are outside the
organization. The occasion of consumption is neglected here.

Suppliers: suppliers are also considered as stakeholders of the Red Dragon Restaurant
Group as they have interests in the operation of the business. The sales of suppliers can be
affected by the sales of the Red Dragon Restaurant Group.

Government

Government is also an external stakeholder of the Red Dragon Restaurant Group. The
government has interest in the operation of the Red Dragon Restaurant because the
restaurant can give jobs to people and reduce unemployment.

Communities

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Communities are external stakeholders of the Red Dragon Restaurant Group as they are
interested in the location of the restaurant near to them and the jobs the restaurant can offer.

Shareholders

Shareholders are the internal stakeholders of the Red Dragon Restaurant Group as they
invest their money in the restaurants and they are owners of the restaurants. The profitability
of the restaurant directly affects their dividends.

Stakeholder power/interest matrix

Stakeholder power and interest analysis is done through stakeholder power/interest

matrix.The stakeholders' are cassified into four categoriese depending on theirower and
interest level.

Key players-key players have high interest and high power or inflence on the organizaiton.
The key players of the Red Dragon Restaurnt Group are sharholders and major customers.
The strategies of the Red Dragon Restaurant Group must be acceptable to the key players
and highly satisfy their needs.

Keep satisfied-the stakholders in this section should be treaeted carefully and satisfied. They
have potential to become key players. The stakeholder in Keep satisfied section of the Red
Dragon Restaurant Group is the government.

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Keep infomed-the stakholders in keep informed cannot influence the strategy. The keep
informed stakeholders of the Red Dragon Restaurant Group are communities and suppliers.
The Red Dragon Restaurant Group only needs to inform them about the strategy.

Mininal effort-stakholders who has low interest and low power are in the categort minimal
effort. The employees of the Red Dragon Restaurant Group are in this category.

Strategic positioning

This stage is choosing the sutiable strategy from options to satisfy the need of the
stakeholders. The various needs that the Red Dragon Restaurant Group sholuld satisfy its
various stakeholders are as follows.

Employees-the Red Dragon Restaurant Group should provide the employees job security. It
has to arrange pay and conditions well. The work arrangement that can give employees' job
satifaction should be provided.

Customers-the Red Dragon Restaurant Group shoul provide reasonable goods and services
of reasonable quality. The price of the services should be reasonable.

Suppliers-the Red Dragon Restaurant Group pay promptly for goods the suppliers deliver.

Government-the Red Dragon Restaurant Group must meet legal requirements.

Communities-the Red Dragon Restaurant Group's operation should not harm the
surrounding environment.

Sharholders-dividends should be regularly paid. The growth in capital is expected by

shareholders.

The strategy choice of the Red Dragon Restaurant should meet the needs of the
stakeholders. The focus should be in the most influencing stakeholders' satisfaction. The
strateg should emphasize to meet the expectations of powerful stakeholders.

2.4 A new strategy for the Red Dragon Restaurant Group

According to organization audtit of the Red Dragon Restaurant Group, the SWOT analysis of
Red Dragon expresses that the business is going to face with strong walls of threats and
weaknesses. To come up this situraiton, mini-mini strategy ( defensive strategy) is used . A
defensive strategy is taken up in the least advantageous situation. The organization
operates in an unfavorable environment, and additionally the internal threats are

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strengthened by internal weaknesses of the company. Red Dragon needs to try to minimize
weaknesses and threats. It is very difficult because a company does not have any strong
sides or opportunities, which could be used here. The main threat of Red Dragon is that the
competitors are using modern strategic tools to generate more growth. The main weakness
of Red Dragon is that the business does not have any experience with modern strategic
tools. So, the Red Dragon must minimize its weakness by using the strategic tools in
practice. Consequently, the level of threats will be lower.

LO 3 Understand approaches to strategy evaluation

3.1 The appropriateness of alternative strategies relating to market

entry, substantive growth, limited growth or retrenchment for the
Red Dragon Restaurant
The Red Dragon Restaurant Group can choose the suitable strategies from the following
alternatives.

 Market entry
 Substantive growth
 Limited growth
 Retrenchment

Market entry

Market entry is a strategy to distribute goods and services to new markets. Simply, market
entry is entering into new markets. New market can be domestic or international. The
purpose of market entry strategy is to get more shares in the industry and greater brand
awareness. However, entering into new market faces with many challenges including
localized knowledge, price localization, culture and lifestyles and competition. The strategies
under market entry are as follows.

Licensing: There are licensor and licensee in a business brand and trade mark licensing. A
licensor is the party who grants permission to a licensee to provide products and services
under its trademark. The licensee is the party that uses the trademark of licensor for a pay
agreement. There are different types of agreements under the licensing. The first one is a
regular fee regardless of sales and profits. The second type is fee calculated on the sales
and productivity of licensee.

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Franchising: Franchising is the practice using a firm's successful business model and brand
for a prescribed period of time under agreed payment. The franchisor allows the franchisee
to use its business model, trademark and brand. The difference between licensing and
franchising is franchising allows to use the whole business model and franchisor is also
responsible for training franchisee to be able to operate well. The image of franchisor is
developed by the success of franchisees. The payment is like licensing. The famous
franchise business is McDonald.

Strategic alliance: Strategic alliance is an agreement between businesses to work in a

project to reduce cost and raise quality of service for the customer. They share both the risks
and opportunities. The project team is usually run by integrated project team. Thefields that
the business alliances commonly used are sales, geographic-specific and investment.

Joint venture: Joint venture is a business agreement between two parties to develop a third
independently managed company. Both parties are equally invested in the project in terms of
money, time, technique and effort. Two businesses work together in a particular market and
industry. The also share risks and opportunities equally.

Outsourcing: Outsourcing is transferring some processes of the business operations to other

companies. When the business faces with a lot of work loads, it contracts some other
companies to work some of their processes. For instance, Apple transfers the process of
assembling to China companies.

Organic growth: Organic growth is a growth strategy in which the business grows from its
inner. It is sometimes known as inner growth strategy. In this strategy, the business is
strengthened by using its own energy and resources. This strategy usually takes more time
than other market entry strategy. But it costs less than other strategies.

Substantive growth

Vertical integration: Vertical integration is expanding business into areas that are at different
points on the same production path. There are three types of vertical integration. Backward
integration is trying to own the manufacturer or assemble of resources. Forward integration is
an effort to control the distribution channels. Finally, balanced integration is balanced effort
to control on both suplier and input product company and distribution channels.

Horizontal integration: Horizontal integration is a strategy to increase the market share by

taking over a similar company at the same production. The purpose of horizontal integration
is to expand the market, to reduce competition and to raise the quality of products or
services.

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Diversification: Diversification is a strategy that enters new market or new industry with the
development of new products or services. The purpose of diversification is to expand the
market with new products or stages of production beyond current level.

Limited growth strategies

Market penetration: Market penetration is a strategy that tries to increase market share of
the existing product or services in the same market that has already been offered. This is an
effort to raise the sales without any changes in products or services.

Market development: Market development is a strategy that sells a current product and
services to the potential new market. New users can be found in new geographic segments,
new demographic segments, new institutional segments or new psychographic segments.

Product development: Product development is a strategy that introduces improved existing

products or new products into a market. The main purpose of product development is to
attract customers and to satisfy ever changing customers' needs.

Retrenchment

Retrenchment strategies are pursued by companies with a weak competitive position in

some or all of its product lines resulting into poor performance. The following strategies are
examples of retrenchment strategies.

Turnaround Strategy: Turnaround strategy emphasizes the improvement of operational

efficiency. There are two steps of turnaround strategy such as contraction and consolidation.
Contraction is used to control the situation; it is the initial effort to keep the company under
control with a general, across the board cut back in size and costs. The second phase which
is consolidation, implements a program to stabilize the now leaner corporation.

Sellout or divestment: the unsuccessful part of the company is sold out in this strategy.

3.2 Justify the selection of a strategy

The Red Dragon Restaurant Group must be wise in choosing strategies that are suitable for
the organization. The suitable strategy that the Red Dragon Restaurant should use is
organic growth strategy. It is one of the market entry strategies. The organic growth strategy
proposes the inner growth of the Red Dragon Restaurant Group. The main idea here is to
expand the business by improving existing resources and operation of the business. The
directors of the Red Dragon Restaurant Group should focus on the skills and abilities of
employees and quality of services in the restaurants. The chefs in the restaurants of the Red

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Dragon should be trained more to maintain the taste of the cuisine and to produce better
taste for customers.

After the improvement in the kitchen made, other employees such as waiters/waitresses,
securities, receptionists who are in charge of the customer services should be trained in
advance to maintain and improve the quality of services. When all the training programs are
all planned and used in practice well, the Red Dragon Restaurant Group have improved its
one resource. After that, another inner improvement in management should be made. The
leadership and management system should be more flexible with employees. The
management practices that are used in the Red Dragon should be modernized. The
participative management style that let employees involved in the decision making should be
used. The higher management who set the strategies and chefs together create better tastes
of the cuisines. Moreover, the management should motivate its employees not to be afraid of
change and to learn new skills. These improvements in inner side of the Red Dragon will
make the business grows by its sales and profit. By using organic growth strategy, the Red
Dragon Restaurant Group will be a stronger competitor in the market. The Red Dragon
Restaurant Group can attract new customers while maintaining the relationship with existing
customers by growing company's strengths. Indeed, organic growth strategy is a suitable
strategy for the Red Dragon Restaurant Group.

LO 4 Understand how to implement a chosen strategy

4.1 The Roles and Responsibilities of personnel who are charged with
strategy implementation for the Red Dragon Restaurant

In implementing a strategy, the different parts of the organizations have to involve. Although,
the different levels in the organizations have different responsibilities, the complement of all
these responsibilities is important no matter small or large the responsibilities are. In order to
implement a strategy, all levels of the organization have to complete their tasks and actively
involve in their roles.

Personnel Role and Responsibilities

BOD They are the ones who set the strategies. Although they are not about to
implement the strategies, they need to inform their employees clearly how
the strategies will go. A clear and exact understanding of strategies is

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 need for precise strategy implementation.
Management Higher managers in the restaurants must motivate lower employee to
involve in strategy implementation. Moreover, they have to carefully
monitor the performance of the employees and control them not to be far
from the strategy.
Chefs They are the main controller of the tastes of cuisines in the restaurants.
Their performance directly affects sales of the restaurants. They are the
key employees that will implements the strategies that are product
oriented.
Other employees Other employees such as cleaners and waiters are also important in
strategic implementation. Their services can also assume as the product
that the restaurant is providing. They should be flexible about changes in
their daily works during implementing the strategy.
Suppliers Though the suppliers are not parts of the Red Dragon Restaurant, they
are also part of strategy implementers. Providing high quality delivery of
resources in time to the restaurants gives great support in strategy
implementation.

4.2 The estimated resources requirements for implementing a new

strategy for the Red Dragon Restaurant Group
When a strategy is set, the implementation of that strategy needs a variety of resources. The
resources that will actually useful and that can give core competencies to the businesses
should be allocated well. The resources that are required in the strategy implementation of
the Red Dragon Restaurant Group are human resources, financial resources and physical
resources,

Human resources

Human resources are the most important of all resources. The abilities, skills and
competencies of employees are the most important factors that determine the performance
of the restaurants. Their commitment and involvement in the strategy is crucial. They must

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accept the changes of work arrangements. They must learn new skills and involve in training
programs if required.

Financial resources

The Red Dragon Restaurant Group must know how much it costs for other resources in
implementing strategy. Financial resources will support the other resources such as wages
for human resources and expenses for physical resources. The Red Dragon Restaurant
Group must check that there is enough cash for strategy implementation. If the finance
resources are not enough, the sources of finance such as selling shares, bank loans and
overdraft should be wisely used.

Physical resources

Physical resources are the materials that are necessary in the operation of the Red Dragon
Restaurant. The advanced cooking machines that will give higher efficiency should be used
in the restaurants of the Red Dragon. Modern machines will reduce time consumption and
result in better efficient services. The decent furniture that will attract the customers should
be used. The decoration and the physical layout of the restaurant should be done well. Nice
decoration and physical will attract the customers.

4.3 The contribution of SMART targets to the achievement of strategy

implementation in the Red Dragon Restaurant Group
When a strategy is formulated, many small objectives that will fulfill the complete strategy
are also set by the management. Consequently, the small activities that will lead to particular
objectives are also planned in advance. The key to the success of strategy depends on its
objectives or targets that are SMART. The objectives of the Red Dragon Restaurant must be
SMART. SMART is short form of specific, measurable, achievable, relevant and time-bound.
Firstly, the objectives of the Red Dragon Restaurant Group must be specific so that the
detailed plan for the objectives can be prepared. Secondly, the objectives need to be
measurable. The targets should be measurable in terms of success or profit or sales. The
objectives also need to be achievable. The objectives that we specified should be realistic
and achievable by efforts. Next, the objectives must be relevant to the overall strategy.
Finally, the objectives or targets should be bound by time. The time to complete particular
objectives should be limited by enough time so that the delay of strategy implementation can
be reduced. With SMART objectives and targets, the strategy of the Red Dragon Restaurant
Group can be implemented successfully.

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SMART targets are important for the implementation of the strategies. The Red Dragon
Restaurant has aimed to improve the sales to double every six month in a year. The new
cuisines that will give new tastes to customers will be introduced every quarter of a year. The
performance appraisal will be practiced in the company and the scores in the appraisal form
of the employees must rise every month. By completing these SMART targets the Red
Dragon Restaurant will get the achievement in the implementation of its strategy. In order to
raises the sales to double money improvement in the quality of services and abilities of
employees have to be made. When all these improvement are made and the sales are
raised, the percent of strategy implemented for the organic growth strategy of the Red
Dragon will be raised continuously. The innovation in cuisines and launches of new cuisines
will attract the customers and the potential for the more sales is raised. By getting the
SMART target that the performances of the employees have to rise every month, the
strengths of the company that related with employees can raised. This can be assumed as
one of the achievement to the organic growth strategy of the Red Dragon Restaurant Group.
Actually, each SMART target has small percent of strategy implementation. In order to
implement the strategy, the Red Dragon Restaurant Group has to complete its SMART
targets successfully.

Conclusion
The Red Dragon Restaurant will be able to develop suitable strategy for them. The
suggestions that are given in the assignments will let the directors make decisions about the
strategic plans well. The new strategy developed will support the development of the Red
Dragon Restaurant Group in the market. The directors of the Red Dragon Restaurant Group
will understand how the alternative strategies are suitable for which situation. The
implementation of strategy in the Red Dragon Restaurant Group will be systematic.

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References
Websites

www.investopedia.com

www.chron.com

www.ask.com

www.boundless.com

www.pepperdine.com

www.scribd.com

www.100ventures.com

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