bread talk

7/15/2019 Bread Talk

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Contents Page

Page

Executive Summary

1. Introduction

1.1 Company Overview

1.2 Recent Developments1.3 Industry Overview

2. External Environment Analysis – PEST

2.1 Political

2.2 Economical

2.3 Socio-cultural

2.4 Technological

2.5 Implication of PEST

3. Internal Analysis

3.1 Financial Analysis

3.2 Success Factors of Breadtalk Group

3.3 Value Chain

3.4 Competitors’ Analysis

3.5 Strategic Group Analysis

3.6 Porter’s Five Forces

3.7 Boston Consulting Group Matrix

3.8 TOWS Matrix

4. Problem Definition & Objective

4.1 Problem Definition

4.1.1 Current Challenges

4.1.2 Future Challenges

4.2 Short Term Objectives

4.3 Long Term Objectives

5. Recommended Strategies

5.1 Business Level Strategy

5.1.1 Porter’s Generic Strategies

5.2 Corporate Level Strategy

5.2.1 Related Diversification

5.3 International Strategy

5.3.1 Franchising

5.3.2 Joint Ventures

6. Implementation

7. Evaluation and Control

References

Appendix

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Executive Summary

BreadTalk Group Limited is a lifestyle F&B group who started with the Bakery

business in year 2000, and steadily developed into an enterprise consisting of 3 major

business segments in Bakery, Restaurant, and Food Atrium.

This report includes a detailed analysis conducted on BreadTalk Group Limited, and

the proposed strategies that will give BreadTalk a better direction into its future with

the idea of sustainability.

The report consists of a brief overview of the company and the industrial outlook. It

will be followed by an extensive external and internal environmental analysis

conducted and its implications. Key success factors will be identified and matched toBreadTalk’s core competencies, and various Strategic Management models and tools

will be use to aid analysis.

Lastly, challenges faced and both short and long-term objectives will be discussed,

and proposed strategies and implementation measures will be put forward. The

proposed strategies will be discussed using Porter’s Generic Strategies and The

Balanced Scorecard is used for Implementation, Evaluation and Control.

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

strength, and become an even bigger and sustainable business.



1. Introduction

1.1 Company Overview

BreadTalk Group Limited was founded in year 2000 by current Managing Director, Mr

George Quek and his wife, Executive Director, Mrs Katherine Lee. The first retail outlet

opened at Parco Bugis Junction in July 2000 selling freshly baked breads and buns that are

visually creative and attractive. Within 5 months, the second outlet at Novena Square

followed and they also ventured into the HDB heartlands (BreadTalk Group Limited, 2012).

By year 2003, BreadTalk was listed on the SGX.

A central kitchen and corporate headquarters was built at KA FoodLink, Kampong Ampat in

September 2001 to centralise food preparation process and in preparation of franchising plans.

Over the past 11 years, BreadTalk has expanded and become a distinctive F&B brand with

bakery, restaurant and food atrium businesses. Their proprietary brands are BreadTalk, Toast

Box, Food Republic, RamenPlay and The Icing Room. They also manage franchises in Din

Tai Fung and Carl’s Jr.

1.2 Recent Developments

10-storey International Headquarters (IHQ) due to complete in year 2013, costingapproximately S$64.1 million.

The IHQ will house the Grou p‘s main office, retail, Research & Development,

training, logistics and central kitchen facilities (BreadTalk Group Limited, 2012).

As of 2011, BreadTalk manages 81 bakery outlets, 7 food atriums and 17 restaurants

in Singapore.

Presence in 16 countries, including Singapore, Mainland China, Hong Kong and

Indonesia, supported by 6000 global staffs, managing over 500 F&B outlets.

1.3 Industry Overview

Looking at the Food & Beverage (F&B) industry in Singapore, it is a highly competitive but

promising industry with steady growth rate and expanding market value. The rise in growing

middle income groups, increase in visitors and the surge in disposable income are the main

driving forces for the growth. The industry is predicted to grow even further where food retail

currently represents 40% of the total retail spending in Singapore (Singstat, 2012). Singapore

is also one of the top three eating capitals in Asia-Pacific (SPRING Singapore, 2012).

1



As a company with huge success, BreadTalk needs to continue to monitor the general and

industrial environment as well as making sound strategic moves to improve their market

position, gain competitive advantages and ensures a sustainable growth.

2. External Environment Analysis – PESTPEST analysis look into the political, economic, social-cultural and technological aspect of

the environment that the industry is affected. It is a powerful tool to improve businesses

through effective & practical scanning of the environment and making prediction and

preemptive strategies to gain competitive advantages (Carruthers, 2009). A PEST analysis

would be done for Breadtalk Group.

2.1 Political

Singapore government encourages local companies to venture overseas. A “double

tax deductions” scheme is introduced to allow companies to have deduction on tax

income mainly for overseas business or investment (International Enterprise

Singapore, 2010).

The Agri-Food & Veterinary (AVA) is the national authority entrusted to ensure a

resilient supply of safe food. Under Food Regulations and the Sale of Food Act, all

processed food must comply with prevailing requirement including labelling

requirements.

2.2 Economical

Companies struggled economically, particularly during the recent global financial

crisis. BreadTalk has its stock prices drop significantly to S$0.25 in June 2008, down

from S$0.6 per share towards the end of the year 2007.

On the positive side, by the end of 2008, BreadTalk had set up over six thousand

successful food and beverage establishments in Singapore alone, and its profits are

quite steady (OCBC Investment Research, 2010).

Rising costs in raw materials throughout the world and also rising fuel prices has a

direct impact on the supply chain of Breadtalk

2.3 Socio-cultural

Consumers are getting more health conscious and affluent, and inflation has an impact

on consumer buying power.

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BreadTalk came out with a wider variety of products that includes a healthier choice

range, and kept prices low to attract more consumers.

Investment in R&D to create more creative products to meet consumer demands.

2.4 Technological Advance Technology had greatly reduced the cost of labour and increase in

productivity.

Enterprise Resource Planning (ERP) was implemented to improve effective

monitoring of inventory purchases and consumption.

The retail outlets are also installed with point-of-sale systems. This mean that the

daily sales figures and itemised sales volumes can process at the end of day for each

outlet so that management can evaluate the popularity of each item and understand

trends better.

2.5 Implications of PEST

With expansions and acquisitions, BreadTalk’s revenue increased by 27.4% in 2011,

owning 448 food atriums and restaurants supported by global staff strength of 6000

employees.

BreadTalk distinguishes itself from traditional bakeries with its unique and innovative

concept — focusing on hygiene, quality and brand image. It was the first in Singapore

to adopt an open kitchen concept for bakeries, installing transparent glass panels to

allow customers’ viewing of the whole bread-making process.

Sophisticated bread-making equipments are installed in each outlet, with bakers

wearing standardized uniforms and outlet cleanliness is maintained at all times. This

concept is proven to be popular, especially in China where food safety is a key

concern among consumers.

Strategic locations - Outlets can be found in accessible locations with high pedestrian

traffic flow. Outlets are located near public transport system and also popular

departmental stores or supermarkets.

Creativity is the key selling point of BreadTalk. It has a dedicated R&D team devoted

in developing new bread designs and flavours to meet the ever-changing consumer

tastes and preferences

The BreadTalk brand has evolved to become one of the most recognisable local

brands in Singapore. In 2002, the group won the “Singapore Promising Brand Award

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2002” awarded by ASME and SPH and was also voted Singapore’s Most Popular

Brand in a joint poll by the ASME and SPH.

F&B industry has been hit by the inflation of rental expense and utility charges, which

hurts profitability. F&B industry in Singapore is highly competitive and fragmented

with low barriers to entry.

4



3. Internal Environment Analysis

3.1 Financial Analysis

Ratios ImplicationCalculation

2009 2010 2011

Current Ratio Ability to pay current liabilitiesfrom current assets

0.97 0.90 0.98

Quick Ratio Ability to pay current liabilities

from the most liquid assets0.68 0.91 0.93

Debtor

Collection

Period

The period of time taken to

collect payment from debtors 0.2mths 1.0mths 1.5mths

Creditor

Payment Period

The period of time taken to pay

creditors on credit purchases1.5mths 0.9mths 0.8mths

Stock Turnover Indicates sale ability of

inventory23.2 22.5 22.4

Gearing Ratio The mix between owner’s funds

and borrowing (determines if

company has borrowed too

much to finance the business)

0.62 0.63 0.67

Returns on

Equity (ROE)

The amount of net income

returned as a percentage of

shareholders equity.(profit a

company generates with the

money shareholders have

invested)

18.2% 16.4% 14.9%

Return on Sales Measures the percentage of

profits to sales 6.33% 5.51% 4.68%

Gross Profit to

Sales

Measures the percentage of

gross profits to sales54.4% 54.5% 54.7%

Revenue

Growth

Percentage of growth in

revenue16.1% 22.9% 20.8%

Net Earnings

Growth

Percentage of growth in net

earnings42.8% 1.6% 2.9%

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Based on the liquidity ratios, it reflects that BreadTalk might not have enough cash or liquid

assets to pay its current liability as their net working capital is negative. In the supplier point

of view, higher liquidity ratios will be preferred as it will lower their overall risk. However,

due to their reputation and size of company, BreadTalk’s buyer power will not be greatly

affected. In the investor point of view, it will not be of a great concern as investors will be

more concerned about growing the business using assets of the company.

The debtor collection period increased from 0.2 months in 2009 to 1.5 months in 2011. This

might tie down their liquid assets hence affecting their quick ratio and ability to use the

money for other investment or expenses.

There is a decrease in the percentage of net income returned as per shareholders’ equity. This

reflects on the profitability of the company as also shown in the decreased in return on sales.

The high administrative expenses incurred over the years might have contributed this.

2008 2009 2010 2011

Administrative

Expenses

($’000)

32 061 34 198 41 872 45 038

Bakery remains the main source of revenue for BreadTalk with about half of the income

coming from the bakery segment. However, it is observed that the restaurant segment is

catching up on their revenue with increasing shares of income every year.

It was also in the profit earned by restaurant sales with an increase of 35% from 2010 to 2011

and an overall increase of 25% in profit over the past 4 years.

Singapore remains the main source of revenue for BreadTalk with China as the next major

revenue contributor, followed by Hong Kong. However, there is a decrease in revenue earned

by the two major revenue contributors in year 2011.

+ 6.7% + 22.4% + 7.6%

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3.2 Success Factors of Breadtalk Group

Success

FactorsDescription

Skills and

Capabilities

Joint venture with Japanese company opening a Frozen Dough

Factory sharing expertise and industry know-how

Range of

Quality

Products

60-80 items offered in stores daily

Central kitchens that ensures quality and improves consistency of

products

Artisan bread concept using premium ingredients (eg. Bread

Society)

Strategic

Locations

Targeting locations with high traffic flow Good mixture of locations in central areas and the heartlands

Strategically placing businesses next to one another (eg. Opening

ToastBox next to BreadTalk and Icing Room)

Venturing into lucrative markets such as China

Diversification

Branching into related and complementary businesses (F&B

industry)

Going regional and international

Branding

First mover advantage in creating creative breads with innovative

flavours and a trendsetter

A strong Singapore brand name created

Brand accolades from Singapore and international platforms

Innovation

Known for the open kitchen concept, and creative breads with

innovative flavours

Creating a lifestyle

Emphasis on R&D and creativity with an International Head

Quarters building due to complete in 2013

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3.3 Value Chain

Value Chain

Activities

Description Evaluation

Firm

Infrastructure

Adheres to strict Agri-Food & Veterinary

(AVA) and Food Regulation requirements in

Singapore. Invests in R&D, innovation and

training.

Strategy is effective and BreadTalk has won

numerous brand accolades and gain brand

recognition.

Human

Resource

Management

By 2013, will bring together all the diverse

departments under one roof at their IHQ

facility, which will accelerate their ability to

innovate and produce.

Recognised for providing consistent and quality

training, with in-house R&D and central kitchen

facilities adds value to the company.

Technology

Development

Sophisticated bread-making equipment in

every outlet and will own an in-house R&D

facility by year 2013.

Positioned itself as a vibrant and innovative

company with huge investment in improving

business efficacy and product innovation and

creativity.

Procurement Investment in IHQ and costs involved in

streamlining businesses lead to increase in

operating and administrative costs.

Strategy is to keep company ahead of its

competitors and investment will bring about better

returns and add value to company’s sustainability.

Products &

Services

Rejuvenated the sunset industry of Bakery

with its award winning Boutique Bakery in

year 2000 (SPRING Singapore, 2012) and is

constantly afloat in developing new and

creative products.

Creates value as BreadTalk is not only innovative

but adapts well to international markets by

identifying local palates.

Sales &

Marketing

Opening outlets in high traffic areas and

reaching into heartlands. Strategically placing

related businesses next to one another (eg.

Ding Tai Fung next to BreadTalk and

ToastBox)

Successfully created a lifestyle F&B brand with a

strong image that can be easily differentiated.

Concern is in sustainability as its strategies can be

easily imitated.

Operations Central kitchen and training facilities that will

improve and enhance current operations. A

new management structure with division heads

under one CEO.

Reassessment of company standing and revising

standard operating procedures, keeping true to the

company’s vision of an innovative and

trendsetting lifestyle company.

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3.4 Portfolio Analysis

Implications for BCG Matrix:

Breadtalk Group’s major business segment in Bakery is a Cash Cow that is

contributing to 53.2% of its total revenue

Need to maintain competitive position in this lucrative market and understand that

competition is only going to get steeper

Relatively low barriers to entry, low switching costs and products are difficult to

differentiate but easy to imitate

Customers are price sensitive and value product innovation

Restaurants is a Question Mark that contributes to 21% of total revenue and cannot be

easily eliminated

Faces stiff competition as restaurants has the highest number of direct competitors

The existence of under-performing restaurants is affecting the overall group

performance

There is extensive room for growth as Singapore is one of the top three eating capitals

in Asia-Pacific (SPRING Singapore, 2012) and Breadtalk has a good brand name and

has won numerous awards in the industry (Breadtalk Group Limited, 2012)

The Food Atrium business is a Star and needs to be cultivated into a Cash Cow

The industry has the least number of direct competitors and hence there is more

intense competition

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*Refer to Appendix 1 for market data



BreadTalk needs to continue focus and invest in its food atrium business in order to

reap more benefits

3.5 Competitors ‘Analysis

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

essential for companies to analyze and perceive cognitive relations with rival partners. This

process eventually aids in integrating a suitable strategy (Meng & Layton, 2011) in order to

identify opportunities or threats within the industry to remain competitive, create greater

innovation and competitive advantage (Pellissier, 2011).

BreadTalk Group faces two type of competitor, direct and indirect competitor.

Form of

competitionBrands Justification

Brand

competition –

Product Range

and Selling

Method

BreadTalk Group has overcome thisweakness by creating new innovations andengaging in strong differentiation strategyand marketing activities.

BreadTalk Group distinguishes itself fromtraditional bakeries with its unique andinnovative concept

Food Republic invites and enticescustomers using unique thematic dinner

concepts

Brand

competition –

Brand Equity

Despite losing out the first mover advantage in the Bakery industry, Breadtalks possess strong brand equity.

Most outlets can be found in accessiblelocation with high pedestrian traffic flowto pull in customers as they walk.

Outlets located new public transportssystem and also near some of the popular departmental store or supermarkets.

Food Republic mantra is to bring the bestof local hawker and street food under oneroof.



Form of

competitionBrands Justification

Industry

competition

BreadTalk has created a unique selling preposition in order to prevent competitorsfrom any direct attacking strategy.

Focusing on hygiene, quality and brand

image. Adopted an open kitchen conceptfor bakeries, installing transparent glass

panels to allow customers viewing of thewhole bread-making process.

Recreation of bygone eras or the charmingretrospective styles of 60s ad 70s or an oldChinese village.

Form

competition

(substitutes)

Cakes

Coffee shop/Food court

BreadTalk Group not only focuses on the

Bread but also providing cakes.BreadktTalk Group has been aware of thecompeting to satisfy the need.

BreadTalk Group may need to look on both attack and defense strategy to makeeffective solutions to counter various typeoff threat imposed by the substitutes tosustain in the industry.

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Players in the

IndustryStrength Weakness

•Over 30 Years of experience incakes and pastries

•Offering traditional and"innovative-traditional" premium

quality kueh, cakes, cookies andvarious seasonal products for allfestivities

•Lack of strategic andaccessible locations toattract potential customers

•Not constantly introducing

new products to cater tocustomers' changing tastes

•First movers advantage thatopen the ‘La Mian Xiao LongBao” restaurant

•Lack of new products tocater to customers'changing tastes

• Among the first in Singapore tooperate and manage food courtswith a themed concept and serve amix of local fare and internationalcuisine to give customers greater variety

•Food Junction Privilege CardMember to enjoy discount andpromotion at their premises

•Did not bring in the best of local hawker and street foodunder one roof

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3.6 Strategic Group Analysis

A strategic group is a cluster of firm which has similar strategies and rivalry would tend to be

greater within such firms (Dess, Lumpkin & Eisner, 2010). A strategic group analysis was

conducted for Breadtalk Group against its competitors, based on the perceived price/ quality

and geographical coverage.

Implications:

Bengawan Solo, Four Leaves and Prima Deli are emerging threats that can challenge

BreadTalk in the Regional market in the near future

Delifrance and Crystal Jade are strong competitors in the Regional market that

possess capabilities of going global

Product and brand differentiation to attract a younger and more affluent crowd and

distinguish itself from its competitors

Recommendations:

BreadTalk to identify their target group and continue to build on the brand image for

the specific target group

To expand and reach into the global market in terms of joint venture or franchise

Needs to stay as a leader in innovation and creativity

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3.7 Porter’s Five Forces

Porter’s Five Forces is a useful tool which focuses on the forces which shapes the industry

structure which drives competition and profitability (Porter, 2008). The five forces which

impact the industry are threat of new entrants; bargaining power of buyer; bargaining power

of supplier; threat of substitution and rivalry among competitors.

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Threat of New Entrants

Threat of new entrants

is high

Low barrier to entry

Capital requirement is

relatively low

Weak product

differentiation, easily

imitated

New entrants can

climb the experience

curve quickly

Customer incur low

switching cost

Low government policy

on setting up of F&Bstore in Singapore

Breadtalk enjoy

economies of scale

Bargaining Power of Buyer

High bargaining power

Low switching cost

Many substitute and similar product in the

market

Buyer are price sensitive

Bargaining Power of Supplier

Low bargaining power

Breadtalk has the ability to integrate

backward

Supplier’s product are common and

largely available

Numerous suppliers providing similar

products

Breadtalk is considered a large

customer of the supplier, however

there are also many other buyer inthe market

Threat of Substitution

High threat of

substitution

Low switching cost

Numerous substitute

available

Cheaper alternative

option available

Lower cost and

better product

available in the

market (hawker

center)

Intensity of Rivalry

High rivalry, intense competition

Numerous competitor in the market

Certain competitor in the market are

of similar size and capacity

High industry growth

Low level of differentiation and

switching cost

Exit barriers are low



Implication

Based on the Porter’s Five Forces analysis, the F&B industry in Singapore is highly

competitive with many competitors offering similar products at a competitive price.

Competitors are able to imitate the winning strategy of their competitors easily and hence

BreadTalk will have pressure to compete on low cost but high quality products. This is

especially so when the consumers are highly price sensitive. BreadTalk will have to work on

the R&D to ensure that their products are innovative, premium, and yet value for money.

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3.8 TOWS Matrix

(O) External Opportunities

Overseas Ventures and

Expansions Target premium F&B market

Increase in Tourist dollars

Merger or Acquisition of

other food businesses

(T) External Threats

Feedback on Publicity may

cause bad image for the brand

Intense Competition in

F&B industry

Over-saturation in

Singapore market

(S) Internal Strength

Well-known Brand inF&B industry

Strong brand Equity

Innovative Products

Strategic Retail

Locations

Wide Products offering

SO – Aggressive Strategy

Well-known branding creategood opportunities for

diversification into other

F&B business

Expansion by integration of

Cafés with bakery business

ST – Diversification Strategy

Create Differentiation withdistinctive competencies

Strengthen and differentiate

the existing product core

competencies

(W)Internal Weaknesses

Low Barriers to entry for

F&B industry

Cost increasing on Raw

materials

Easy imitation of

products

WO – Turnaround Strategy

Promote awareness of new

and innovative products

Training and Development

for employees

WT – Defensive Strategy

Maintain current position

and streamline all

businesses

Develop intangible and

reputable core

competencies

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4. Problem Definition & Objective

4.1 Problem Definition

4.1.1 Current Challenges

Making sound decisions in expanding its business by acquiring new

restaurants, expanding its food atrium business, and venturing into moreregional markets

The increase in costs in streamlining and coordination of its businesses

4.1.2 Future Challenges

To ensure sustainable growth

Having the capacity to venture into the global market

Keeping up with the ever-changing consumer tastes

4.2 Short Term Objectives

Strengthen market position by enhancing existing products within the next 5 years

To increase profit margin by 50% within 5 years

To streamline the value chain, reducing the cost of administration

To increase food atrium sales by 50% by 2017

4.3 Long Term Objectives

Expansion into new markets (e.g. delivery service/catering/training hub)

Research & Development in new and improved technology, reducing the cost of

production

5. Recommended Strategies

5.1 Business Level Strategy5.1.1. Porter’s Generic Strategies

Using the Porter’s Generic strategies, it is recommended that BreadTalk

Group adopt an overall cost leadership strategy & differentiation strategy.

Suggested low cost strategies include the following:

Effective training programs to improve productivity

Use of automated technology to reduce labor cost and wastage

Good working relationship with suppliers to ensure low-cost in rawmaterials

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Shared purchasing operation within the business units to increase

bargaining power and lower cost

BreadTalk Group can also go into differentiation strategy by focusing on

producing high quality products, which are value for money. This can be done

so by investing in R&D to improve on the quality of end products. Through

experiences gained, they will be able to move down the experience curve and

hence lowering the cost of production. With its low pricing and wide selection

of high quality products, power of buyer will be reduced, as there are few

competitors who can offer the same quality at a comparable price.

5.2 Corporate Level Strategy

5.2.1 Related Diversification

Diversification enables an organization to expand their operations by

venturing into new businesses. In order to increase their revenue and profit,

BreadTalk Group can go into a related diversification where they can benefit

from economies of scope, leveraging on their core competencies and sharing

their value chain activities (Dess, Lumpkin & Eisner, 2010), hence improving

their market position in the F&B industry.

As the restaurant segment has a growing potential, BreadTalk Group candiversify into other cuisines such as Japanese or Korean, and have restaurants

that has such strong market demand and appeal to the younger generation.

5.3 International Strategy

5.3.1 Franchising

Franchising is an agreement between both parties where the parent company

receives royalty or an amount of fee in exchange for the rights to use their intellectual property (Dess, Lumpkin & Eisner, 2010).

BreadTalk Group can continue to issue franchise rights for business operations

in the foreign market. This will increase their brand awareness and expand

their revenue base across other regions while limiting the risk exposure.

They will need to continue selecting their franchisee carefully by setting high

criteria and control measures to ensure consistency and quality of their

products. However, receiving only a portion of the revenue in the form of

franchise fee will be one of the set-back of franchising.

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5.3.2. Joint Ventures

BreadTalk Group can consider working closely with other firms in the foreign

market through joint ventures to increase revenue. A joint venture is an

association of two or more companies engaged in a solitary business enterprise

for profit without the need of actual partnership or incorporation.

It reduces costs and enhances learning of the organisation through knowledge

sharing. Innovation is one of the key success factors and BreadTalk Group can

collaborate with other related companies to improve on their current research

and development team. Through the collaboration with other companies,

BreadTalk Group will be able to leverage and develop on the core competencies

and technology of their partners to gain competitive advantage and strengthen

their market position. By working with the foreign companies, BreadTalk will

also be able to gain information on the local market preferences, competitive

conditions and other relevant information.

Before entering into a joint venture, BreadTalk Group will have to determine

their main purpose and goals to ensure that their partner companies are capable

of assisting them in achieving the goals and objectives.

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6. Implementation

Below highlights the proposed activities for the different strategies and their estimated cost of

implementation. Activities will be implemented over the next 10 years to spread out the cost

to prevent a sudden surge in expenses due to the changes and to allow monitoring of the new

changes to ensure its sustainability.

Proposed Activities 2012 2014 2016 2018 2020 2022

Proposed Budget

(S$ million)

Business Level Strategy – Cost Leadership & Differentiation

Regular Market research and

survey

1

Develop and update training

schedule for all employee

1

Develop / source for new

technology to improve

productivity

3

Streamline Breadtalk Group

value chain activities

1

Corporate Level Strategy - Diversification

Develop diversification plan

into other cuisine in the

restaurant segment

1

Setting up of restaurant outlet

in Singapore

3

Setting up of restaurant outlet

overseas

4

International Strategy – Franchising & Joint Venture

Market and company research 0.5

Development of joint venture

plan, objective and goal

0.5

R&D of new technologies and

work process improvement

5

Total 20

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7. Evaluations and Control

The balance scorecard will be used to assist Breadtalk Group to identify the strategic

objectives and control from the financial, customer, internal and learning & growth

perspective. This will help to achieve sustainability of the business and gain competitive

advantage over their competitors through well managed and integrated planning and

control (Dess, Lumpkin & Eisner, 2010).

Strategic Objectives Strategic Control

Financial F1: To increase profit rate by 50% and improve

market position by 2017

F2: To lower operational expenses by 2017

Return on Capital Employed (ROCE)

Gross profit to sales

Net margin

Cash flow

Volume growth rate vs F&B Industry

Customer C1: To continually delight the customers with

new innovative product which are value for

money

C2: To improve Customer

Relationship Management and

obtaining feedbacks for

continuous improvement

Mystery shopper rating

Customer survey to understand the

demand of the market

Loyalty program

Internal I1: To be the market leader in the F&B industry

by 2022

I2: To market their products through social media

and other various means to reach out to target

consumers

I3: To lower production cost and operational cost

I4: To improve health, safety and environmental

performance

I5: To ensure high quality product delivered to

consumer at all time

To monitor competitors and adjust

business level strategies to gain

competitive advantage

Sales revenue

Profitability index

Staff turnover rate and incident report

Staff sick leave rate

Quality control and random sampletest

Learning

& Growth

L1: Continuous training and upgrading courses

for staff to improve on skills and service standard

L2: Create a innovative and positive working

environment

Employee’s performance appraisal

Training records

Employee survey

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Appendix 1: Selected SBU Market Data

Notes: Figures asterisked represent Breadtalk’s sales within sector

2011 Sales

($m)

Number of

direct

competitors

Sales of the

3 largest

firms in thesector ($m)

Forecast

Annual

GrowthRate (%)

Relative

Market

Share(RMS)

Bakery 101.8 110 101.8*,

92.8, 89.2

5.4 1.10

Restaurant 40.2 850 40.2*, 39.7,

27.8

10.2 0.96

Food Atrium 49.4 37 52.3, 49.4*,

22.9

11 1.01



References

Breadtalk Group Limited. (2012). Breadtalk Group Limited Annual Report. Retrived from:

http://breadtalk.listedcompany.com/ar.html on 13 June 2012.

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