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Flashfood Shop Self Service Retailing Of Fresh Meals In China Case Solution
The development of the Chinese economy and the rise of per capita income level resulted in a boost in the catering industry. There were three major ways in which the catering industry was divided; online delivery services and self-service machines. While the first two segments of the industry had high operational costs, including delivery and rent costs, the self-service machines addressed both of these drawbacks. In five quarters of its operation, Flashfood was incurring losses. The research question is:
What should the Ji do to maximize profits for Flashfood and increase its profits and minimize its delivery costs to an optimal level?
Following questions are answered in this case study solution
Industry and Research Question
Case Analysis for Flashfood Shop Self Service Retailing Of Fresh Meals In China
2. External Analysis
i. PESTLE Model
The PESTLE model (Appendix A) shows that the industry holds growth opportunities because of the improving economy in China. This model revealed that environmental factors such as harsh conditions could impact the demand for food from vending machines. In this case, online deliveries are feasible. Since the economy has resulted in the middle class having higher purchasing power, higher delivery costs might not be a concern.
ii. Porter’s Framework
Porter’s framework (Appendix B) reveals that the competitive factors in the industry are high. The threat of substitute models is extremely high because of well-established online delivery companies.
iii. Identification of Key Success Factors in the Industry
Through the two models, the key success factors in the industry are convenience and timely delivery. The main drawback of the online delivery model is the high delivery times during peak hours, which included lunchtimes.
iv. Competitor Analysis
The competitor analysis of the two models in the catering industry other than the self-service model (Appendix C) shows that the threat of these competitive models is high. Furthermore, the increasing growth of the catering industry shows that the consumption patterns of the target audience have changed to incorporate takeaway meals in their everyday lives.
3. Internal Analysis
i. Tangible, Intangible, and Human Resources
The tangible resources for Flashfood include the vending machines and the delivery system. The case does not reveal the brand awareness of Falshfood in the five quarters, which would have revealed its intangible resources. The company has different departments for each function, including R&D and operations.
The company’s resources include:
ISM and the ISS (Hardware and software)
Real-time data gathered
Efficient delivery system to provide 24-hour services
Financial support from Fushibingshan vending machine company
These resources make up the company’s competitive advantage and help it to address the gap that delivery companies and convenience stores cannot provide.
The top five capabilities of the company include:
Capability to assess the data and forecast demand to minimize wastage
Capability to improve vending machine services through customer feedback
Ease of placement and low rent
Providing 24-hour services
WeChat App allowing ease to the customer
iv. Value Chain Analysis
The value chain analysis in Appendix D of this report shows that the company’s primary activities are well-developed. However, the support activities, which include technology, should be developed to include a separate application. The focus on marketing activities such as point’s collection through the application can improve the value chain.
v. Strategic Importance vs. Relative Strength
The matrix of strategic importance and relative strength in Appendix F reveals that the only point of weakness is no personnel present on the site.
vi. Financial Analysis
The financial analysis attached in Appendix E reveals that the growth rates of the revenue and the cost of catering increases almost similarly. Since the sales figures have not been revealed, we can analyze based on the growth rates that the cost of catering remains the same. However, the company reduced its marketing and management expenses in three quarters despite an increase in revenue.
4. Alternative Solutions
The research question was addressing the issue of no profitability since five quarters of Flashfood’s operation. The solution for this problem after a thorough analysis using different models and a decision-making matrix is to develop an app that delivers and analyzes real-time data to the management—increasing the human resources to include a data analytics team. This data analysis will help the company to reduce food wastage and reduce delivery costs through forecasted demand. Currently, the software ISS and the R&D team conduct the data analysis. The operations team should be responsible for data analysis so that they can adjust their supply according to the demands.
Furthermore, app development can help in increasing customer loyalty through a points program. Also, the app can help in developing brand awareness. Marketing campaigns can also be effectively run on a separate app.
Another solution is to provide personnel on the site. However, this would be contrasting to the concept of installing an intelligent self-service machine and also increase personnel costs.
In order to improve the profitability of the company, it is important that the company reduce the expenses of wastage. Furthermore, the company’s profits are those from vending machine sales. Including a small team of delivery personnel at the site of each Flashfood vending machine is also a feasible alternative to improve profitability. This means that the customer has the option to get the food through self-service or pay extra to get the food delivered by one of the delivery personnel. This will not only increase the sales for those who cannot get out of the office because of being tied up at work but can also cater to groups of people who would want to eat together but not get out of the building due to less time.
Furthermore, another recommendation is to launch a Flashfood app. This app can include special deals, campaigns, and flash sales. This app will also allow Flashfood to gain customer feedback and improve on the basis of that.
6. Implementation Plan
Investing in an application, initially, will allow the company to gather their clients on the application. The portal will allow the company to gather information on each person’s preferences. Furthermore, subsequently deploying a delivery team and launching the delivery service once the application is set up and gains a significant audience is the next step. This would allow the company to launch a Flashfood delivery service through which the company can earn additional profits.
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