Research Korner: Cafe de Coral Competitive Advantage

MANAGEMENT OF CHANGE: THE CAFÉ DE CORAL EXPERIENCE Table of Contents   I.      Introduction.. 3 II.     Background of the Company.. 4 III.        Diagnosis.. 5 A.    External Change Drivers. 6 1.     Political Factors. 6 2.     Economic Factors. 6 3.     Socio-Cultural Factors. 7 4.     Technological Factors. 7 B.    Internal Change Drivers. 8 Figure 1. Ansoff’s product/market Matrix. 8 1.     Market Penetration. 9 2.     Market Development 9 3.     Product Development 9 4.     Diversification. 10 C.    Current State. 10 1.     Strategy. 10 2.     Structure. 11 3.     Systems. 11 4.     Shared Values. 12 5.     Skills. 12 6.     Style. 12 7.     Staff 13 D.    Source of Resistance. 13 1.     Endings. 14 2.     Neutral Zone. 14 3.     New Beginnings. 14 E.    Leadership in the Company. 14 IV.       Prognosis.. 15 A.    Status Quo Scenario.. 15 B.    Change Scenario.. 15 V.    Conclusion.. 16 VI.       References.. 16   I.      Introduction The realm of the fast food industry, the current trends brought about by western monoliths like McDonalds has been the prevailing formula. Specifically, serving dishes that are easy to prepare and serve such as sandwiches, deep fried foodstuff and other pasta-based products are those that fit the requisites needed in the formulaic process employed in such types of industries. However, one must also highlight that the advantage of these types of companies are not limited to their products and the dishes that they serve. These are only a fraction of what make them leaders of the industry. To be precise, it is this efficiency and quality that places these western companies in the top of their game. This primarily establishes the fact why their respective operations and processes are considered as the prevailing models in the fast food industry.    This problem brings forth a limited number of food genres that would fit the classification as a fast food company. In Hong Kong, a local company, Café de Coral, attempted to dispel the myth that such dishes that offer oriental cuisines will not complement the processes inherent in the fast food industry. This study will be taking a closer look in the existing conditions that Café de Coral is experiencing in their daily operations. The said name is under a corporation controlling various types of stores in the food industry. For the purposes of this paper, the focus of the study will be the Café de Coral based in Hong Kong. The arguments and observations held in this paper shall be reinforced by existing literature on organisational development and change management.    II.    Background of the Company Café de Coral is said to be the largest group of Chinese restaurants in Asia and the rest of the world. The company is listed under the Café de Coral Group in the Hong Kong Stock Exchange. The said company covers fast food, institutional catering, specialty restaurants, food manufacturing, and distribution among others. For the purposes of this study, the focus of the discussions will be the fast food operations of the company. The first store of the company commenced in 1968 on Causeway Bay. After several decades, the company controls over a hundred and twenty restaurants which serves drones of satisfied customers in a daily basis. Based on the company’s website, the current battle cry of the organisation is “A hundred points of excellence.” This is driven by the desire to provide imminent customer satisfaction by constant improvement in the quality of their products, the service that they provide, and the ambience in their restaurants. In doing so, the company makes their customers realise that the value of their money is given importance in the stores managed by the company.   The company has risen in the ranks of the food industry in Hong Kong because of the top products and services that they offer. In the area of products, the company flaunts of their signature products that are made with premium ingredients and prepared with the strictest quality control. The area of services is also one of the major factors why Café de Coral is at the top of its competition. With the motto mentioned above, continuous staff improvement through training is given the top priority of the company. It focuses on both individual and team skills of the company.   III.   Diagnosis In an article of Wong (2006), he coined the term “fast-foodization” as the process imposed by McDonalds in the modern food business. He also pointed out the phenomenon wherein exotic cuisines have become one of the major competitors of these big fast food companies in the West. Japanese, Indian, and Chinese restaurants which serve their respective local dishes directly take on the likes of Burger King and other major companies in the western world. This makes perfect sense as these exotic restaurants offer an alternative to the ubiquitous burger and fries offered by these established organisations in the fast-food industry. In order to establish the change needed in any company, an analysis of both the internal and external environment is required. In doing so, the specific areas on which companies like Café the Coral could pinpoint the specific parts of the operations that require improvements or reductions that will trigger change in the organisation. The following parts shall do exactly that, analyse both internal and external environments of Café de Coral to establish how it could initiate improvements in their operations. In doing the said discussions, the use of analytical tools such as the PEST Analysis, Growth stages, 7s framework, the company’s cultural web, transition curve, and the leadership theories and models implemented in the company. The findings in these discussions shall be the basis of the succeeding parts of the paper wherein two scenarios will be depicted.      A.   External Change Drivers To establish the existing conditions surrounding the external environment, the PEST Analysis will be employed. In doing the change drivers of the external environment shall be directly observed. 1.    Political Factors The government of the administrative region adheres to the encouragement of trade and business in Hong Kong. (Speath, 2004) This is shown in the liberties that it provides companies like Café de Coral and its foreign counterparts. Specifically, this is proven by the fact that the first McDonald’s in the region was established several decades earlier. (Watson 1997, 78) However, the business-friendly nature of the laws in Hong Kong does not make it weak. Companies have to similarly comply with the standards provided for by the laws of the land.     2.    Economic Factors Hong Kong is one of the imminent tourist destinations in Asia. People flock the administrative region wither for business, pleasure, or both. Studies have pointed out that travellers from the mainland have increased exponentially in the past couple of years. (Kam-Yee and Kim-Ming, 2006, 217) This means that aside from the tourists and locals of Hong Kong, companies like Café de Coral have to cater to a much larger crowd as massive numbers of mainlanders have added to the overall market of the Hong Kong food industry. 3.    Socio-Cultural Factors In the study of Chan et al, (1999, 12) they described the consumers in Hong Kong with low uncertainty avoidance. This basically means that the buyers’ decision in Hong Kong is primarily based on impulse. Buyers tend to do away with the possibility of planning to buy a particular product or brand before they actually make the purchase. This spells great for companies like Café de Coral since they already have a strong brand name and recall on the consumers. This makes them already a part of the short list of choices of the consumers when it comes to fast food cuisines. Moreover, it has also been noted that the consumers in Hong Kong possess long term orientation. (Chan et al, 1999, 12) This basically establishes the fact that Hong Kong consumers tend to be loyal to a particular brand or company once they have already tried it and are satisfied with the products or services. This reinforces the observation that companies like Café de Coral has strategically placed themselves in the core list of companies which the Hong Kong consumer will constantly visit. 4.    Technological Factors Companies involved in the food service industry have to contend with a complex system of inventory as they deal with stocks that are perishable and ultimately fragile. Fortunately, Hong Kong is one of the hubs of IT in the whole of Asia. (Koo, Lee, Ngan 2003) Most of its workforce is able to easily apply these processes in their operations. (Lee, Leung, Lim, Sia 2004) Infusion of inventory and logistics is highly workable for companies operating in this environment.      B.   Internal Change Drivers Though the standing of Cafe de Coral in Hong Kong appears stable, it is merely the tip of the iceberg. At some point, one must realise that there are several organisations that operate in the same industry that will readily take away the existing market share of the company. Thus, it is important to make sure that the company is aware of its strengths as to whether it would find a fit with the rest of the external environment. The drive towards market ascendancy of Cafe de Coral shall be presented with the help of Ansoff’s product/market matrix. In this manner, the company establishes the areas which could be considered as internal change drivers. (Adamson 2005, 358) The areas on which the company should consider is summarised in Figure 1 below.   Figure 1. Ansoff’s product/market Matrix     1.    Market Penetration The concept of market penetration basically establishes the possibilities on which an organisation could grow with the use of its existing market and products. (Stopper 2004, 21) In the case of Cafe de Coral, its market in Hong Kong shall continue to be stable provided that it holds true on its resolve of improving its signature products, ensure that premium ingredients are used, and the strictest quality control should be observed. 2.    Market Development As pointed out in the earlier part of this paper, Hong Kong is the centre of commerce in Asia. It has low uncertainty avoidance and long term orientation. This intimates that companies like Cafe de Coral should anticipate impulse spending and a more profound sense of brand loyalty. Hence, it is advisable for Cafe de Coral to find ways to seek new markets as they progress as a company to maximise this opportunity. 3.    Product Development With the area of product development, it appears that the company is lagging behind as they tend to display a single set of signature products. However, they maintained in their website that they never stop looking for ways to improve their products and services to ensure customer satisfaction. (Stopper 2004, 21) This shows promise on the part of the company as a prospective insight on the market appears to insinuate positive results. 4.    Diversification On the whole, the corporation on which Café de Coral is under have taken steps to come up with restaurants and other stores that will cater to those aside from the fast-food model in the food industry. There are several brand names controlled by the Café de Coral Corporation that focuses on catering and food production among others. This shows that the diversifications held be the company are still interconnected with every elements in the food industry. C.   Current State Another element that could determine the areas on which change could be induced is the current state of the company. In this paper, McKinsey’s 7s Framework shall present the distinct nuances of Café de Coral. This tool shall establish the possible implications of changes within the organisation. Hence, it will show the best way to tackle a particular strategy proposed to the company. The discussions in this part of the paper shall base its arguments on the website of Café de Coral. 1.    Strategy The company seeks to acquire “A hundred points of excellence.” In order to do this, the company has implemented a customer-centric approach in their operations. Customer satisfaction is held highly by the company. This is ensured by staff training at regular intervals which seeks to improve the individual and team skills of the organisation. However, it is observable that the company have not indicated a stable and veritable feedback system that would house the demands and criticisms of the customers. In doing so, the company may have difficulty in dealing with the demands of the customers as they are not actually aware of these specific elements.   2.    Structure Café de Coral is divided into independent operations of each store. Each store is considered as a team that has to maximise their profits and generate revenue for the corporation. It is responsible for its operational costs, hence, required to find ways to limit their expenses and find ways to attract clients to their respective stores. The store manager is the one that overseas the operations with the help of their staff which includes the administrative sector and those that deal with food preparation and customer assistance (waiters and servers). This thus manifest the decentralised nature of the decision making process in the organisation. Moreover, the organisational structure in every store is apparently flat hence giving the assumption that the communication lines are rather open between management and the other employees. 3.    Systems The company’s primary activities are basically composed of the acquisition of the raw materials that they would use as ingredients for their dishes. Normally these items of inventory are acquired from the main supplier of the corporation. Subsequent activities are manifested in serving and interaction with the customers. Moreover, the maintenance of the equipments used in the operations is also added into these set of activities.       4.    Shared Values The core value of the company, as intimated in the earlier parts of this paper, is the maintenance of a strong customer relationship management within the organisation. The customer is held highly and thus the operations revolve around what these individuals demand from Café de Coral. 5.    Skills The company basically requires both technical and soft skills. This means that each and every unit of the organisation has to take on skills like accounting and use of store equipment such as telephone and computers. In the area of soft skills, given that the main concern of the company is the consumers, involves elements like leadership, initiative, and communication skills. Looking at the reports provided by the organisation, there appears to be minimal gap in the overall workforce of the company. This is because they conduct regular trainings to keep their personnel sharp and deeply acquainted with the shared values within the organisation. 6.    Style The leadership style in every store varies from manager to manager. However, since there is a flat structure in every store, the leadership and management style tend to be highly participative. On the whole, the stores have a healthy competition with each other. Though they do not contend as to the actual market share, these teams contend to gain some “bragging rights” with the other members of the Café de Coral group. 7.    Staff The number staffs of every store of Café de Coral depend on the demands of the consumers and the required business activity in each store. On the whole, the training provided by the company shall place the required skills of new employees and ensure that the seasoned ones are kept informed of the knowledge required in their respective functions. D.   Source of Resistance To determine the sources of resistance in Café de Coral, the transition curve will be employed. The said model is summarised in the figure below. Figure 2. The Transition Curve 1.    Endings This phase of the transition curve, resistance is anticipated from the employees. This is especially true with regards to the seasoned personnel who are used to the traditionally applied processes. In the case of Café de Coral, it is anticipated that if ever there is some anxiety or denial of the change proposal, it would be rather minimal. 2.    Neutral Zone In this zone, the level of uncertainty is high among the personnel. This is especially true to those who hold positions that are contractual. More specifically, they will be in constant fear whether their contracts would be renewed or not. The managers of the respective stores would have to bear this responsibility to mitigate the implications of this state. The management has to keep control over the situation. 3.    New Beginnings In this state, the change is anticipated and accepted by the personnel. In the case of Café de Coral, the personnel may have realised the positive implications of the proposed change by the management. In this part, the proposed change is openly implemented as a part of the normal operations of the organisation. E.   Leadership in the Company As stated in the earlier parts of this paper, the leadership styles and management styles complement the flat organisational framework of the organisation. Basically, participative leadership is seen exercised in the operations of the respective stores. In this regard, the employees are empowered and the managers keep the human resource under his control.   IV.  Prognosis The following discussions will pinpoint the changes required of the operations of Café de Coral. To clearly establish the implications of these changes, two scenarios will me meted out in the process. Based on the discussions above, the company requires synchronisation in the operations of its numerous stores. However, as their independence has contributed much of their success, the management is in a dilemma what to do. Basically, the answer would be to install additional IT technologies that would put correspondence between the different stores and the respective suppliers in real time communication. A.   Status Quo Scenario In this scenario, nothing will change. The operations will be the same however the existence of a gap in between transactions could lead to delay that will essentially establish significant losses for the company.   B.   Change Scenario The implementation and installation of added IT technologies will provide the company added flexibility and opportunity to adjust their operations to actually minimise the losses of the company in instances where any unforeseen events come up. The apparent issue is the added costs in training the appropriate unit of each and every store in the use of the hardware and software applicable in the process. However, as pointed out in the earlier parts, the common Hong Kong worker is adept with the basics of information technology. Hence, this added instruction will not lead to any more wasted resources and time. V.   Conclusion The discussions above have intimated that the proper fit between the internal and external environments is essential to the achievement of the major goals of the organisation. Be it financially or not, it is left on the shoulders of the company to find a way to balance out the situations wherein they are able to remain flexible and keep things under their control.   VI.  References   Adamson, J. (2005) "Using Marketing Visuals for Product Talk in Business English Classes." Business Communication Quarterly. 68(3), 358 Chan, A., Chow, W., Fosh, P., Snape, E., Westwood, R. (1999) Hong Kong Management and Labour: Change and Continuity. Routledge. London. Kam-Yee, L., and Kim-Ming, L. (2006) "Citizenship, Economy and Social Exclusion of Mainland Chinese Immigrants in Hong Kong." Journal of Contemporary Asia. 36(2), 217. Koo, R., Lee, C., Ngan, M. (2003) “Voices and Implementation of Information Technology in an Elementary School Classroom : A Hong Kong Case Study.” Childhood Education. 79(5) 268 Lee, M., Leung, K., Lim, K., Sia, C. (2004) "Is eCommerce Boundary-Less? Effects of Individualism-Collectivism and Uncertainty Avoidance on Internet Shopping." Journal of International Business Studies. 35(6) 545 Speath, A (2004), “Hong Kong's defiance: China warns the city to forget democracy and get back to business. But many Hong Kongers aren't listening.” Time, Available at: http://www.time.com/time/asia/2004/hk_politics/story.html [Accessed 31 July, 2008] Stopper, W. (2004) "Establishing and Maintaining the Trust of Your Employees." Human Resource Planning. 27(2), 21. Watson, J. (1997) Golden Arches East: McDonald's in East Asia. Stanford California: Stanford University.

MANAGEMENT OF CHANGE: THE CAFÉ DE CORAL EXPERIENCE

MANAGEMENT OF CHANGE: THE CAFÉ DE CORAL EXPERIENCE Table of Contents I. Introduction .. 3 II. Background of...