Secret Recipe Cakes and Café: A Case Study
Table of Contents
Task 1
1 Introduction
1.1 Company Background
1.2 Problematic Business Systems
1.3 Aim and Scope
1.4 Method of Enquiry
Task 2
2 External Environment
2.1 Political
2.2 Economic
2.3 Social
2.4 Technological
Task 3
3 Consequence Analysis
3.1 Applying Technology to Support Customer Relationship (IBM)
3.2 Launching Online Order Transaction
3.3 Maintenance and Update of Current System
3.4 Installation of Wi-Fi
3.5 Focusing on Human Resource
3.6 Training for Staffs
Task 4
4 Soft System Methodology
4.1 The Problem Situation Unstructured
4.2 The Problema Situation Expressed
4.3 Root Definitions of Relevant Systems
References
Appendices
Appendix A The Relationship between Key Driving Forces
Table of Figures
Figure 1 Rich Picture
Table of Tables
Table 1 CATWOE Analysis
Task 1
1 Introduction 1.1 Company BackgroundSecret Recipe is a lifestyle café was founded in 1997 by. It started a small family business, but in just short period of time, it had become leader in the market with profit soars up to 300% in 2002, alone. Aside from that, it a lifestyle café that has become household name that have successfully established its brand name in Malaysia, Singapore, Indonesia, Thailand, China and Philippines by offering line of products such as fine quality cakes, fusion food, with the help of good quality of services ( 2006; 2003).
The said café chain is considered as the largest and leading player in the Malaysian industry, and it can be seen on the different awards and recognition that it had received during its years of service. Secret Recipe was also awarded by Islam Malaysia or JAKIM with Halal certification, which signifies its high quality (Secret Recipe 2006).
The principle of Secret Recipe is to give the best satisfaction to its valued customers, and it can be seen on the effort of company to offer more than 20 types of fusion food, and 40 cake creations and pastries ( 2006).
1.2 Problematic Business Systems
Like other players in the food-service industry, Secret recipe is facing problems that are related to human errors as well as inconsistency in order that has great influence on customers’ satisfaction. The employees of the café chain are using pen and paper in order to take orders, take the orders to he kitchen staff and ring up sales transactions by using, using the traditional or old fashioned cash registers. The said process cause two problems, first it can cause errors in orders that will be delivered to customer that will cause time, and above all, it will cause unnecessary effort or burden for the staffs, making the time that they spend to cater to their customer longer
Due to the said events in the stores of Secret Recipe, the management later on realizes that the traditional methods hinder the inventory control, reporting as well as sales analysis, at the same time, preventing the company to deliver world class customer services towards their market
1.3 Aim and Scope
The aim of this paper is to focus on how the competitive environment as well as internal capabilities of Secret Recipe have combined in order to influence its IS strategies and development. It will gather information about the company by using quality sources of references, and connect it with the different theories and knowledge that are related to IT. The following issues will be tackled in this paper:
· the external factors in the food-service industry in Malaysia that affects the operation of Secret Recipe;
· the internal factors that can affect the decision-making process and performance of Secret Recipe;
· the impact of IT/IS to the operation, performance and competitive advantage of Secret Recipe; and
· the concerns that are connected to the systems development of Secret recipe based on the relationship of its external and internal environment.
1.4 Method of Enquiry
It is important to consider that a system is a set of elements that are connected or interrelated with each other (2005, ). Thus, in analyzing the different elements of a system, including IT, there are different modes of enquiry that must be used. Enquiry is the act of asking or a request for information . For the process of participatory assessment it involves a process of listening, information gathering as well as interactive analysis . Essentially, the modes of enquiry are divided into three important categories: the simple (inductive-consensual and analytic deductive), complex (dialectic and multiple realities), and innovative (unbounded systems thinking). The said modes can help to break the system into smaller sub-system in order to focus in details that can help to achieve the goal of a system (2003).
This paper will use the unbounded systems thinking. This is because it will enable the decision-maker to be more involved in all of the disciplines as well as context in order to come up with the most suitable actions, solutions or conclusions. In unbounded systems thinking, the complex problem solving requires the application of as many discipline professions and branches of knowledge as possible, with each one utilizing different paradigms of thoughts. In addition, there are three important perspectives that identified: technical perspective; organizational or societal perspective; and personal or individual perspective ( 1993, 2002,) . As a result, it can give an in-dept analysis of the different perspective or reactions of the different entities which are involved in the entire system. This is because each perspective gives information that cannot be obtained from others and that is the organizational and personal perspective are vital to bridge the gap between the analysis and action. Consequently, organizational and personal perspective is used in order to complement the technical perspective, not replace it. Furthermore, using the organizational and personal perspective can help to bring in the human and social factors that stuffed in complex problems, hence focusing on the human beings both as an individual and groups, as well as the ethical analysis (1996 cited in 2002, ).
As a result, the said mode of enquiry will help the management of the decision-maker in Secret to choose what he or she thinks would be suitable for the company and information or data will not be limited to a certain idea but he or she can offer infinite factors and idea regarding the case of applying IT or IS in their different processes. Aside from that, with the application of the Internet, the said enquiry mode will be useful, since the Internet itself gives challenges that must be given sufficient consideration in order to have a successful result.
Task 2
2 External EnvironmentThe external environment of Secret Recipe or the current conditions of the food-service retail industry in Malaysia. Due to the fact that the performance is the primary objective of the company, and application of IT is the primary strategy, it is commonly accepted that the structure and the process of the decision-making is affected by different environmental complexities and volatilities (2000).Thus , the alignment of the different strategies of organizations with the requirements of their given environment helps to do better than those organizations that fail to get the said alignment ( 2000). This is because of the fact that environmental scanning helps an organization to discover more regarding the different opportunities for taking competitive advantage as well as threats to its overall survival ( 1997).
The process of environmental scanning focuses on the thorough and comprehensive study of the international, macro as well as market environment, but focuses more on the relationship between the structural and dynamic characteristics of each of the environmental factors (1995).
In order to analyze the macro-environment aspects of factors that are considered as uncontrollable and inevitable for Secret Recipe, including political changes, demographics, economic status as well as social and technological changes that has an impact to the plan of the company to apply new technology, PEST analysis is used. PEST stands for Political, Economic, Social and Technological (See Appendix B).
The consumer food service industry in Malaysia is considered as one of the most successful industries, the following are the different factors that had affected the entire performance of the industry:
2.1 PoliticalPolitical factors can have a direct or indirect effect on the way certain operates. This is because of the fact that the decisions that are being made by the government affect the operations of units of the company First is the action or policy of the government towards investing in the country, primarily by foreign Multinational companies. In 2003, 100% of the foreign equity holding is allowed for all investments in new projects and investments regarding the process of expansion or diversification of project by the existing company ( 2009). The said supportive effort of action of the government enables many players in the food-service industry to develop and grow.
In addition, the government also assertively launches its Visit Malaysia Year 2007 campaign in order to improve its tourism industry ( 2008). The said action was important because of the fact that food service is dependent in tourism, because tourism will help to increase the number of people in the country, thus increasing the target market for Secret Recipe.
2.2 EconomicAll businesses, regardless of which industry they belong, are affected by different changes and trends in the national and international economy. The improving economy of Malaysia offers opportunity for all of the businesses in the country; this is because it can affect the entire buying behavior of the citizens. Malaysia is considered as one of the most affluent nations in Asia, it had reported a GDP per-capita of about US$6,807 in 2007. As a result, the country is already considered as an upper middle income country, and ranked by the World Bank as the 8th wealthiest nation in the East Asia. In 2007, the economy of the country grew by 6.3%, 5% in 2008, and expected to rise to 3.4% to 4% this 2009 (US Government, 2009).
Due to the said economic growth, together with the effort of the government to open its policy for foreign investors, expansion of different shopping malls and supermarkets or hypermarkets in the country is observable ( 2008). In addition, major retail outlets have seen a tremendous growth since 1980s, and there are about 400 such outlets in the country which include big players such as Dairy Farm Giant Retail, Jaya Jusco, Makro, Parkson, Carrefour and Tesco. Aside from that, after their debut in the 1990s, foreign-owned hypermarkets are gaining its popularity in Malaysia which attracts customers. As a result, in 2003 alone, there were 32 foreign-owned hypermarket outlets in the country (2005). Thus, it creates an intensive competition.
The employment rate has a great impact on the buying behavior of the consumer. In the country, in 2003, the total unemployment rate was just 3.5%, or showing an almost full employment. The said event was due to improve labor market conditions (2005). It also resulted to stronger purchasing power of the customer as well as higher standard of living, that’s why eating away from home is considered as part of life of Malaysian, which contributed to the greater competitive edge for the consumer foodservice market ( 2008).
2.3 SocialSocial factor plays a very important factor in the decision of the consumers regarding what, where and when to buy something. Due to the improvement of the economy of Malaysia, the standard of living also heightened. This had affected the eating habit of the citizens. Eating is considered as an obsession for many Malaysians regardless of their races. It can be observe that eating out with family or friends are done much more regular by Malaysian tan the Western countries ( 2007).
Aside from that, due to the continuing expansion of shopping malls and supermarkets or hypermarkets in the country, consumers are spending more time in different retail outlets; thus, create opportunities for the food-service retail industry (2008).
In terms of demographic, it is important to consider that Malaysia has a multi-racial population; most of them are multi-lingual that speaks two languages fluently, primarily English that is widely used in the business field (2009). This is important because it can affect the decision of the company in hiring its employee that will serve the customers. Furthermore, it must also consider on the different products that they are offering.
As of now, more and more women are entering the global labor force, this has an impact to the food-service industry. In Malaysia, since 1995, the employment rate for women is 80.06% ( 203).
In Malaysia, 60% of the entire population is Muslim, that’s why the demand for halal foods by Malaysian consumers is high. The Malaysian halal standards are recognized as stricter than those of other Islamic countries (2009).
Another important aspect that is affecting different businesses in the food-service industry is the growing demand of the people for Wi-Fi. This is because of the changing lifestyles of the people, primarily those people who are busy in their work, and who wish to work, even while they are eating or in break.
2.4 TechnologicalFood-service industry is not only about the menu or the taste of the products or services, but it is also belong to the business groups that are in great need of fast, efficient and good quality service. Based on the different factors that have mentioned in the first part of the paper, it can be observed that the main challenges for the Secret Recipe focuses on maintaining the interests and loyalty of their customers despite of the massive number of competitors in the market. Thus, it also focus on maintaining competitive advantage which focuses on how the company will handle time pressure and will prevent any errors in the transactions that will drive the customers away.
Currently, we are now living in the world where in information is already considered as an important resource for a company or organization. Thus, integration of the different systems inside the organization is a vital aspect ( 1995). Application of properly planned, implemented and maintained IT and IS in the entire process of any business, can help managers in the process of decision making. This is because the data that were gathered from the different transactions or in-flow or out-flow of data can be used in order to analyse the current performance of the company, and from that use it as a tool to decide regarding different matters or issues such as the products to be offered, the market that must be targeted. In general, it has a great influence in the process of developing the entire strategy of the company. Another important aspect is that IT or IS can help to improve the customer relationship, because it will help to improve the customer satisfaction. Customer satisfaction depends greatly on the accuracy and comprehensiveness of given or detailed information which concerns on their demand, preferences and tastes (2003,).
Another important aspect to consider is the growing popularity of the different wireless connections such as Wi-Fi and mobile Internet. This can help the company in the process of connecting to their consumers. First is that it will be important to offer their customers, primarily business customers an access to a free Wi-Fi connection that will serve as an additional attraction or marketing. Above all, due to the growing popularity of mobile Internet, it is a must for the company to establish a website that is compatible in the said technology.
Task 3
3 Consequence AnalysisThe main purpose of the consequence analysis is to estimate the consequences values for each event for a given facility, and used to estimate the relatively security risk ( 2007,). Thus, the consequence analysis tool enables to show the different issues or actions with connection to the impact of IT or IS in the entire operation of Secret Recipe, together with the effects and the probability of a given event. The following are the internal resource, competencies as well as capabilities of the company that might affect the use of IT.
3.1 Applying Technology to Support Customer Relationship (IBM)One of the important competencies of Secret Recipe is to focus on the demand, preferences and satisfaction of their customers. It can be seen in their mission statement, and that is to give the best satisfaction to its valued customers.
However, there are different hindrances that can affect directly, the effort of the company to serve their customers at their bests. The restaurant is facing the same problem of the rest of players in the food-service industry which is the human error and inconsistencies in the process of ordering
Due to the said event, and the realization of the company that information is considered as an important resource for their competitive advantage, as well as the growing number of customers and growing number of stores, and their need to decrease the serving time at the same time increasing the efficiency and staff interaction with the client, the company decided to become open with the application of IT or IS in their system
The said action was considered as the answer or solution of the company in the challenge of improving the customer service at the process of point of sale of POS up to the efficiencies and process of improvements in order to maintain its current position in the market. The company avails of IBM service, which focuses on the wireless POS which connects wait and kitchen staff to the streamline of serving process in the entire café chain. The said technology enables the staff or order taker to use PDA in order to input the order of the customers, and then it will be automatically generated in the kitchen, at the same time, with the payment counter in immediate manner, by this means it can reduce paperwork . Furthermore, it helped the café chain to integrate the entire café operations in order to ensure that orders are taken correctly and quickly, efficiently passed on the staffs in the kitchen; and correctly processed at the register
The result of the said effort or initiative enables the staff to have more time to spend in communicating with the customers. Thus, enable the café chain to offer more personalized and better service to the customers. Above all, it can help the managers in the process of decision-making due to the fact that the detailed information can be retrieved or accessed in immediate manner. It will enable the manager to analyze different trends that can help to improve or develop the entire operation as needed
3.2 Launching Online Order TransactionThe Internet has a great impact on the business world; this is because it created a bandwagon that is full of opportunities, particularly greater target market and no time limit. In Malaysia, due to the improving or growing economy, Internet is considered as common needs.” The Internet economy in Malaysia continues its rise from the ashes, with strong spending growth in the ecommerce market. This growth is driven largely by the B2B ecommerce industry, which contributed 78.4% of total ecommerce spending in 2004," says by Lee, senior analyst of IP Communication in Malaysia ( 2005). This shows that e-business is considered as one of the most effective way of communicating with customers in Malaysia.
With the said action, it enables the café chain to be connected with their customers 24/7, and everyday. This offers an advantage to the marketing strategy of the company.
3.3 Maintenance and Update of Current SystemIt is important to consider that maintenance and update of the system after its launching or implementation is a very crucial and vital task for any business. This is because of the fact that the world of business is currently changing, and it is very important to ensure that the current system is still applicable or appropriate to the current situation of the internal and external environment of the company. Therefore, it is vital for Secret Recipe to maintain their connection to their partners regarding their system.
This can be seen on the effort of the company to improve their current system, and totally reconstruct it in order to meet the increasing demand of employees, customers and other important stakeholders in the future. The company plans to incorporate the POS system with the application from Stockpro that will help to reduce the paperwork more, at the same time improve the accurateness of the different data of the company that are related to the waste management and inventory shortages. Together with its partner IBM, they are working to incorporate the front-end POS system with the back-end enterprise resource planning application from the Exact Software. This will work by the help of IBM SurePOS 500 system that will apply File Transfer Protocol or FTP in order to communication with the multivendor back-end systems at the main office of the company. By applying the said technology, all of the data regarding sales will be automatically transfer to the back-office business intelligence of inventory management systems of Secret Recipe. Above all, the IBM SurePOS systems will send the data via a Streamyx broadband connection
3.4 Installation of Wi-FiCurrently there is an ongoing craze in Wi-Fi technology, and it can be located in most of food-service stores in the world. This is an answer to the growing challenge of the changing preferences of people towards communication as well as the growing inclination of people for different hand-held device such as PDAs and laptop. Aside from that it is also a marketing strategy of many businesses in order to get the attention and cater to the needs of their business customers, primarily those foreigners who came for business travels.
Aside from that, it can also catch the attention of other generation, together with the students who can stay inside a food-service store, while studying or chatting with their friends. That is the reason why, Secret Recipe decided to launch or install Wi-Fi hot spots in its stores in Malaysia. The said factor gives additional credit for the image of the café chain as modern and updated.
3.5 Focusing on Human ResourceThe process of selection and hiring has a great impact over the implementation of any system of project. This is because they are the one that will handle the system in the future. Secret Recipe is considered as one of the top café chains in Malaysia, not only in terms of sales or customer performance, but also on its relationship with the employees.
As a result, the company is offering different benefits and other financial aspects that will motivate the interested individuals to enter the team of Secret Recipe. Furthermore, with connection to the movement or action of the café chain in applying IT or IS in their entire processes, the company focuses on applicants who posses some backgrounds in computers or IT. The said effort enables the company to save time, money and effort.
3.6 Training for Staffs
Training is a very important aspect in terms of overall management. This is because of the fact that the knowledge, skills and ability of the staffs reflect the organizational image of an organization. Because of the fact that Secret Recipe is considered as one of those premium products in Malaysia and other parts of the globe, the company is establishing a high set of standards regarding the physical aspects and behavior of its employee.
Furthermore, this is important because of the fact that the company has already started to focus on application of IT or IS in order to improve their entire process or performance. Thus, it will be important for the end users of the systems, particularly the waiters or order takers to become completely familiar with the application, therefore giving them confidence to face the customers. This is important because no matter how good a system is, if the end users are not that capable of knowledgeable in using it, it will not work well, by wasting time in figuring things or process or even keying the wrong code or data.
Task 4
4 Soft System MethodologySoft Systems Methodology or SSM is essential about the process of creating multiple systemic perspectives of a given situation ( 2005,). It is an approach of inquiry into problem situations that is perceived to exist in the real world ( 1990 cited in ). SSM is consists of 7 stages, where in the first two stages take place in the real world based on the experience and knowledge of the participants, and how things are to them. Stage 1 focuses on the process of exploring the problem situation, and later on the process of gathering information about it by process of observation Stage 2 is expressed by rich picture that represent the problem situation that was found out in stage 1and 2. Stage 3 and 4 are considered as abstract processes designed that explore how things could or should be, as oppose to how they are perceived by the actors. Stage 5 and 6 focuses on comparing the model drawn from the real world and the proposed model (2002, ).
4.1 The Problem Situation UnstructuredIn this stage, Secret Recipe focuses on connecting the current status and trends of the food-service retail industry with the internal capabilities and competencies of the café chain. Using the analogy from the current trends and development in the social aspects of Malaysian, which has a great impact on their decision of buying products and availing service, the café chain found out that people are becoming more and more dependent in eating outside due to conflict in schedule and high standard of living. The said aspect gives a great opportunity for the café chain but also provide different threats, in terms of their performance. Secret Recipe came to realize that their current system is not applicable to the current business environment, because first it causes errors in order and billing process, at the same time it takes time for the staffs to serve the customers, which is very important because most of their customers are busy or into business sectors.
4.2 The Problema Situation ExpressedDuring this stage, all of the important information regarding the different political, economic, social and technological factors was analyze together with the strengths and weaknesses of the café chain in order to show the problematic situation by means of rich picture.
The main purpose of a rich picture is to help the analyst in order to gain an appreciation regarding the problematic situation. Furthermore, it is also used as a mean of representing the situation of the different concern entities, together with the different factors that influence the problems that cannot be picked up by using the formal methods ( 1994).
Figure 1 shows the rich picture of problematic situation of Secret Recipe. The green shaded area is the real world or real situation of the café chain, and the concept of IT or IS was already there, yet it was not yet realized by the Secret Recipe. There are 4 entities that are directly connected in the entire system, the waiter or odertaker, the kitchen staff, the customer and the management. The waiter takes the order by means of pen and paper, therefore the question regarding the consistency shall be aroused. The said aspect can be observed in other relationship such as the waiter and the kitchen staff and the cash register. Therefore, the entire responsibility and the accuracy of the data and information to be entered in the company are in the hand of the waiter. Due to the different process, time is a crucial matter. It will be the basis for the satisfaction of the customers. On the other hand, the upper management or the decision-makers cannot retrieve enough and helpful information from the cash register in order to analyze the supplies, accounting as well as sales report, therefore, it can create additional works and additional costs.
Outside the said direct relationship, it is also important to consider the upcoming threats and problems that will be caused by the growing number of customers and franchises. If the said process and systems continues, it can cause major problems or dilemma for the café chain because it will primarily affect their relationship with the customers, therefore will affect their company image, competitive advantage and position in the market.
Figure 1 Rich Picture
The root definitions affirm the heart or core of the functions of some particular action structure. In order to focus on the root definition, it will be important to use Checkland’s mnemonic CATWOE in order to describe the human activity and situation. The said analysis is consists of aspects such as: clients, actors, transformations, weltanschauung or world-view, owners and environment
Table 1 shows the CATWOE analysis of Secret Recipe, it can be seen that the different entities and processes were based on the internal and external analysis of the café chain.
Table 1 CATWOE Analysis
Clients – entities who will be benefited or suffer from the change.
-
Customer – receive fast service, accurate and consistent orders and bills;
-
Waiter/Order taker – less work load and less errors;
-
Kitchen Staff – less errors;
-
Upper Management – retrieve and access information and data for decision-making in fast and easy manner;
-
Franchise – manage the business with ease and with connection to the mother branches.
Actors
-
Upper Management – pay the implementation and maintenance;
-
IBM – develop and implement the system.
Transformation
-
Create the logical design of the system based on the current business rule of the café chain;
-
Apply wireless POS systems and integrate the said system in the entire operations.
Weltanschauung/World View
-
Many business in the industry are starting to apply IT or IS in their transactions;
-
The increasing influence of and need for information in the decision-making process.
Owners
-
-
Stockholders;
-
Franchisees.
Environment
-
Changing demands and lifestyle of the customers;
-
Intensifying competitions from domestic and foreign players in the industry;
-
Growing number of possible customers;
Appendices
Appendix A The Relationship between Key Driving Forces
Source: (1995,)
Appendix B: Secret Recipe: PEST Analysis
Appendix C: Effect/Probability/Action Grid
Effect
Probability
Action
1. Up to 20% faster delivery food delivery
High
Implement Training and Coaching
2.Increased sales by 10%
Moderate
Focus on marketing strategies
3.5% improvement in staff efficiency
High
Focus on Motivation and Learning process
4.Reduce paperwork
High
Maintain and update the system
5.Minimize human interaction and billing errors
High
Implement Training and Coaching
6.Minimize the workload of staffs
Moderate
Implement Training and Coaching
7. Create good working environment
Moderate
Focus on Motivation and Learning process
8. Improve relationship with customers
High
Focus on marketing strategies
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