Pret A Manager Case Solution
1. Problem Statement
The case has defined about ‘Pret a Manager’ which is famous by the name Pret and runs the fast food chain of bakery items, like: sandwiches. Pret has been a very popular fast food chain because of its marvelous service and fresh sandwiches. The growth of the fast food chain is high, i.e. almost 15% every year, its Board of Directors have decided to open its twin shops atvarious locations.The main idea behind opening the twin shops is that the made sandwiches should be delivered to the shops by the parent company. The decision was made for the opening of the new shops at different places, because Pret is believed to provide the sandwiches just Made in the Kitchen Shops. The main problem is that Pret wants to change its culture and the stereotype practice of making the sandwiches. The sandwiches are made in the kitchen but are labeled as made off sites, which creates the deception in the customer’s mind that they are being cheated.Moreover, the employees are not aware of opening of the new shop and they do not know the main objective behind it. The training and development of the employees is also the main challenge for the company.
2. Situation Analysis
The major success of Pret is because of its brand image and services towards the customer. As the company deals in fresh food, quality service, employee engagement, training and development of the employees; the uniqueness exists because of such factors.
2.1 Macro Analysis
PEST Analysis is the main phenomena to evaluate your business according to the external environment. The external environment is the bottom line of any business, which must be assessed properly. It comprises of Political, Economic, Social and Technological factors.
Political factors for Pret are quite favorable as they are growing their business in London. The political stability of London is positive regarding business. There is a government support for businesses and moderate taxes. London is the largest city where the laws are transparent and effective. The democratic setup is the main factor, which helps the capitalism and aids the people in starting their businesses and having the proper regulations over them. Pret can grow its business and have the positive political factors.
Economically, LONDON is the largest city in the world, which has the stable economy and the per capita income is high there. The GDP is in trillions every year. People are having high standard of living and the inflation rate is moderate there. As the pound prices are high and the city has a good manufacturing and service industry. The economic factor for the Pret is positive as it deals in the food industry and the businesses are becoming well-developed and are expanding because of the economic stability.
Socially, Pret has influencing factors because of the shopping goods. The main focus of the company is diverted on is eatable items. There is a majority of immigrants and cosmopolitan society there. Everyone has a different choice, which leads the firm to have an assessment of the demands of a diverse pool of people. There are some pessimist factors for the Pret which can become hindrance for the growth and expansion. The other issue could generate when the liberal mind-set of people cannot give the hype to the new ventures and they prefer what they are used to.
Innovation and the usage of new technology are the competitive advantages for the London and the rapid growth of businesses is taking place because of such technological factors.
Pret has the lower access to the technology. We can predict the firm is having the support of technological ground in services by the use of technological gadgets which can easily be applied.
The PEST analysis of Pret identifies that the firm can have the positive factors according to its macroeconomic and it can have growth and expansion in the upcoming years.
2.2 Five Forces Model
Risk of Entry by Potential Competitors
The risk of new entrants by potential customers is high because the arrival of entrants can bring higher competition to the market, which increases innovation, new ideas of providing services and the prediction of lower price strategy. The strength of the competitors is high because the industry where Pret deals consists of high market concentration and it will have to bear the high risk in order to maintain its competitive edge in the market. The entrants can bring upward pressure to the industry. Moreover, the industry can be profitable because of the new entrants and high revenue can be generated, asitoperates in the food industry and provides quality services to customers.
Rivalry among Established Companies
There is a high competition in the industry by the rival companies and the force is strong because of innovative ideas by the rivals. Pret deals in the food industry where the strength of the competitors can bring higher profit to the industry. As the company grows, the industry grows. There is an upward pressure to the industry for revenue generation. The competition creates perfection in the services and goods. Every company strives to provide its best services, which can grow the industry and expand its worth.
Bargaining Power of Buyers
As Pret is the fast-food company, which provides food services to its customers. The main buyers of the company are the local people residing in London. There is a high bargaining power force because buyer always demands the best quality in minimum price. This creates decline in the company’s profitability and the industry bears the loss because of less revenue generation. The forces create downward profitability to the industry.
Bargaining Power of Suppliers
Suppliers in the fast-food industry have the higher rate of bargaining, because there is high competition in the market alongside the presence of numerous suppliers. The bargaining chip is mostly because of the diversified arts industry and the tough rivalry causes the bargaining power of the suppliers to be high. This create slow margins in profitability and the industry goes downwards in the revenue generation.
Threat of Substitute Products
There is a high threat of substitutes for Pret because of the various fast-food companies. The service quality of these firms are standard and higher, which creates the threat of substitute. This can bring the profitability upward because every company brings innovation and best quality service, which expands the industry. Moreover, the customer goes towards that company which provides the best taste and an excellent quality service.
2.3 SWOT Analysis
SWOT analysis describes the internal position and the capacity of the company. The company is quite significant in terms of its internal capacity, but there are some negative aspects as well, which are described below:
Quality taste and customer preference, and the company is also having large size of making sandwiches which directly decreases its costs providing it the advantage of economies of scales. Moreover, the current position of the firm is quite profitable and the company has been generating higher revenue from several years.
The weak point of the firm is that it has over dependency only on its top products. However, the other products are given less attention, so its market reputation is affected and the firm is getting negative results because of some external factors.
The new management brings advancements and the new outlooks in the company, which is a great opportunity for the firm to increase and expand its business. The expansion in the fast-food industry is a great opportunity for the Pret to have a broader portfolio.
There is a threat for the industry is the change in the business practices which is quitebeneficial for some companies but also can be problem positional for some companies because ofexternal factors. The new entrants and the existing firms in the industry can have the substitutes in the lower price and can downsize the company’s sales.
2.4 Theories Applied by Pret
Different theories explicit different organizational structures and practices. Here are some theories which a Pret manager fast food possesses;
2.4.1 Learning theory
Learning theory defines the continuous improvement and learning in the organization which is done through employees’ training, improvement in service and quality and also by adopting new ways and expansion in the business. The Pret wants to increase its business by opening the Twins shop which would create the growth in the company and also to provide services in the various areas of London.(Jones, 2013)
2.4.2 Scientific theory
The scientific theory which explicit the practices must be according to the main standard operations and services and also the improvement in quality services. Pret is having the employees’ training and also the customer relationship by its quality service. Furthermore, the rules and regulations are properly applied in the fast-food company where the fresh food is provided to the customers.(Jones, 2013)
2.4.3 Bureaucracy theory
Bureaucracy theory implies the main features in the business like high standard operations, formal structure, hierarchical process and also the main competencies in the business. Pret applies the theory by behaving the competitive advantage in the market and also implementing the standard regulations in the company.(Jones, 2013)……………
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