Introduction of
Company
Al-Nakheel restaurant, one of the leading restaurant chains is
operating in the town and has strong customer base that dine in their
restaurant for the last five years. Restaurant is famous for its delicious food
items , therefore, people from far and near come there for lunch and
dinner; the business is growing and earning good profits.
New Product line
proposal
Mr. Ahmad, the marketing manager of the Al- Nakheel restaurant, has
researched that their business should extend its products to fruit juices as
well. He is in favor of getting more business opportunity with already managed
strong customer base into new product line. Mr. Ahmad has shown projections and
research analysis supporting his proposal in form of profits being doubled,
client base is increased, competitors are well coped and business
is sustainable.
It is important to mention here that next to Al- Nakheel restaurant,
there is already a juice parlor existing for the last one year and it also has
good business. This juice parlor has taken up a partial market of Al-Nakheel in
form of tea/ coffee and soft drink users preferring juice parlor to sit in. Al;Nakheel
management take this parlor as their competitors with increasing threat in
future. Therefore, the new product line is supposed a potential strategic
decision for the future.
Is it the right decision to enter into new product line or focus on existing
food chain only?
Current Situation
Following are the some key advantages for this restaurant business:
1. Prime location of the town.
2. Reputed for tasty foods.
3. Good space for customers to dine-in.
4. Healthy take-away business as well.
5. More than 5 years in market for the same business.
6. Growing customer base and profitability.
Along with all these plus points Al-Nakheel restaurant enjoys, it
has also some challenges to meet associated with this business, such as
1. Growing customer base, growing demands for the same quality
standards
2. Limited resources.
a. Space
b. Staff
c. Production/ kitchen premises
3. New entrants
4. Competitors
5. Consistent performance
So these are the some common factors which are associated with the
Al-Nakheel restaurant. Their strategic team consists of Chief Executive
Officer, Director Operations and Marketing Manager of Restaurant, who have
already considered these factors for their business and look for some new
proposals for the sustainability of the business and also to keep increasing
the profits.
Proposal Analysis
Referring to the Marketing Manager’s suggestion to add a new
product line of juices into their business is a bit challenging and thoughtful.
CEO and directors are considerably impressed by the suggestion from the
Marketing Manager, due to certain factors such as
1. Coping with the competition from the juice parlor
2. Retaining the clients
3. Increased profitability
4. Broader scope and research data shown by the marketing manager for
extension of the juice parlor
5. Strengthening the existing business
However along with all these positive factors highlighted in the
proposal by Mr. Ahmad, the marketing manager, there are some questions that
also pop-up in the minds of the strategic team
1. Is expansion necessary?
2. Is it helpful to cope with the competition and helpful to increase the sales?
3. Will the resources be managed adequately? The existing
business is already suffering from growing pressure of resources as discussed
above including staff, space and materials supply.
Management is interested to get into a new product line to get many
advantages as elaborated by the proposal report; the company has the intention to
invest more and more money into this new product line but their main concern is
over the following point:
·
Will the new product
line be launched with in current premises? Or is a nearby new place to be
arranged for the juice product line?
Because they are already suffering from the limited land space to
accommodate increasing customer base, at the same time they cannot compromise
to switch whole operations to entirely new place for more land space, which
will affect their customer base severely.The Director of Operations has added in this
proposal that they should add more staff and supplier relations to be improved
and existing premises should be utilized at maximum potential. As Director
Operations, he sees no future growth for a separate juice parlor in a nearby location,
as he thinks it will increase the investment and initial cost but returns may
not be as expected in the proposal. But, it is also questionable if the
addition of new workforce and better supplier relations will help to meet the
growing customer base.
Conclusion
Al-Nakheel restaurant should first consider their business objectives
from the current company; if they want to grow vertically for their existing
setup then it is a good idea to add a new product line into their business. At
the same time, the constraints in the way to add a new product line are also
complicating the situation for them. The management should look for adjacent
places to be acquired for the extension of room space and also space for a juice
product line. It is evident that new product line is a good proposal for the
sustainable business strategy of Al-Nakheel restaurant. But shifting to the new
place, or adding a new product line to an entirely separate new area will hardly be
considered by the existing customers to be attracted to the new place. Customers
are more inclined to use the original place of Al-Nakheel restaurant; they
will respond positively within same location or close to it but not to a new
place.
Therefore, management should proceed with following steps
-
Arrange more space
adjacent to their current location
-
Increase the
workforce and improve their efficiency levels
-
Introduce the new
product line at the same one stop, i-e Al-Nakheel restaurant,
-
Improve the ambience
and space management to accommodate more customers at a time.
-
Improve the take
away process, that will reduce the pressure on space management considerably
If these steps are taken successfully, then Al-Nakheel can be
confident to achieve its future goals from the given proposal of adding the new
product line; otherwise launching a proposal to an entirely new location will not
help achieve the Al-Nakheel restaurant’s over all objectives.
A new branch or chain is an entirely different concept than addition of
a new product line in the existing business; it will take some more time for the
company to build its brand image for adding new branches and chains for growth in a wider spectrum.
Refrences
http://www.mindtools.com/pages/article/newTMC_05.htm
http://www.extension.iastate.edu/agdm/wholefarm/pdf/c5-52.pdf
http://writing.colostate.edu/guides/guide.cfm?guideid=60
http://www.wikihow.com/Do-a-Case-Study
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