Strategic analysis of Sunset Boulevard

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E-DESIGN

UNIT 2 ASSIGNMENT

Strategic analysis of Sunset Boulevard

Authors:

Zsombor Debreczeni

Kitti Alexandra Fbin

Mrk Bence Juhsz

Irina Salagup

Supervisor:

Marianne Hjaltelin

Date of submission: 08. 11. 2012.

14000 characters


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Table of contents

1. Introduction:................................................................................................................................... 3

2. Problem proposal ...........................................................................................................................3

2.1 What are the influence of trends on the business activity of bakery fast food?................... 3

2.2 Is Sunset Boulevards current strategy suitable for their consumers needs

during that period?................................................................................................................................ 4

3. Delimitation..................................................................................................................................... 4

3.1 In the synopsis the following topics are included:............................................................. 4 3.2 In the synopsis the following topics are not included:...................................................... 4

4. Methodology .................................................................................................................................... 4

5. Analysis section .............................................................................................................................. 5

5.1: Background analysis:.................................................................................................................... 5

5.3 PEST analysis: ..................................................................................................................................7

5.4. Porters five forces: ........................................................................................................................ 9

6. Bibliography...............................................................................................................10
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1.Introduction:

Sunset boulevard is a Danish bakery fast-food chain company and we chose it to

analyse, because it is in a growing phase and there are a lot of opportunities to improve

their future strategy. Due the economic downturn, there was a drawback in that

segment, so new strategies are welcomed to deal with the situation, and gain some

advantages against the competitors. First of all we started with doing researches of

consumer foodservice in Denmark. Our conclusion was that consumers have broader

needs that the company should meet by penetrating into new markets, such as the

food delivery, milk and fruit based drink production.

Our research consisted of SWOT, PEST and analysis by Porters five forces. We also

studied the human, economic and technological resources of the company. By using the

gained knowledge, we focused on creating new strategies for Sunset Boulevard. We

were looking for opportunities for growth, and according to trends, healthy food

consumption and food delivery are the fastest growing segments of consumer

foodservice in Denmark. Traditional fast-food restaurants were suffering from therecession more than the ones which are following the current trends. Sunset Boulevard

from 2009 to 2010 gained 0.6% market share, thanks to the current strategy, but we

have more ambitious plans. We will discuss these topics, and add our own

commentaries.

2. Problem proposal

As we mentioned before, we concentrated on the topic that how the economic

recession affects the market position of a bakery fast food chain like Sunset Boulevard.

2.1 What is the influence of trends on the business activity of bakery fast food?

As we know, during a recession price sensitivity changes, but it is also a fact, that

trends have a big influence on a businesss activity. We will discuss the position

changes due to trends, and set the companys strategy according to the current vogues.

2.2 Is Sunset Boulevards current strategy suitable for their consumers needs

during that period?


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We were examining the last year statistics, and tried to draw a conclusion about

fulfilling the consumers need, is the current strategy fits or not?

Our aim is to find out whether expanding is the correct answer for our question, or is it

something else. We make an attempt to give a proper strategy how to make it happen.

We found that the company should add some new services, like a milk bar inside the

stores and/or food delivery. The reason of setting up these new services is the trend

forecast, which precisely shows the importance of implementing these new directions.

3. Delimitation

In the following report we focused on the trend forecasting, and on expansion plans.

3.1 In the synopsis the following topics are included:o Demography, geography, findings of our research, future plans,

current strategy ,visual identity changes

3.2 In the synopsis the following topics are not included:o Market positioning, precise data about human, economic and

technological resources, organization

4. Methodology

Our work consists of several analysing types, as we were not sure which is the most

suitable for that area, we tried several. First of all we started with the SWOT analysis,

but the result was not sufficient for the following work, so we faced with the PEST

analysis, and later on we examined Porters five forces in this field.

We would prefer to have more data about the internal resources and organization of

Sunset Boulevard, but they did not answer to our request, and it was not possible to

find sufficient information of the situation with the available resources.

5. Analysis section

5.1: Background analysis:


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As we mentioned before, we concentrated on the topic, that how does the economic

recession affect the market position of a bakery fast food chain Sunset Boulevard. Is

Sunset Boulevards current strategy suitable for their consumers needs during that

period? As we know, during a recession price sensitivity changes, but its also a fact,

that trends have a big influence on a businesss activity.

We did not find official information about the following topics, but we contacted with

the company, because they have a store in Kolding. During the reconciliation via e-mail

they informed us about insufficient sources and suggested, to ask for more information

via email. Unfortunately we have not received more answers yet. So we rely on ourown predictions and our basic knowledge to set up an analysis.

Since Sunset Boulevard is basically a restaurant, there are no special technological

requirements they need to operate properly. The usual equipment consists of kitchen

equipment like oven, refrigerator, stove and dishwasher. This equipment is durable and

reliable and does not need to be improved and to be innovated at a high pace. There

are no specific kitchen innovations which could affect the companysactivity positively,

at least not on reasonable price.

About economic resources we need to mention that besides the fact that we had a lack

of information, their market share grown, and they opened some new stores, so we can

assume that they had a positive turnover which they could invest in their expanding

strategy.

What we found about their human resources is that they employ professional chefs. Butfor all the other tasks there is no need for specially trained workforce, so their supply

on this field is quite good.

Their organisation is traditional hierarchical structure which gives the needed

empowerment for all employees, but still remains a quite strong control.


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Domestic player and the leader in bakery fast food Sunset Boulevard continued to

position itself as a healthy fast food alternative, appealing to the growing consumer

demand for healthy foods and drinks. The clear focus on nutritious, low fat and healthy

food is the main motivation for Danish customers to visit the outlets of these chains.

Health and wellness continues to be a dominant theme in the on-going development of

fast food in Denmark. They have a selection of sandwiches, burgers and what belongs

to them. Their foods are fresh and hand-made.

There are a wide range of information about their food on their webpage, including

allergen list and nutritional table. It is also user-friendly and the customers easily find

what they were looking for. In spite of these things, the webpage is only in Danish andif you are a foreigner it is not easy to understand. That would be an opportunity to

make an English version to help the growth of the company.

The restaurants locations are in easily accessible and busyplaces. The interior of the

places attract the people to go there.

One of the biggest weaknesses is the poor advertisement. We have found a TV

commercial of Sunset Boulevard, but almost nothing else. It could be more popular if

Organic food, lot of vegetables (healthier than the competitors), wide product

line, good website, it is bigger than similar companies (organic food

segment), good locations (Billund airport), attractive interior.

s

wName, poor advertisement, organic food retailing, young company, without

experience and brand history.

OEnglish version website, new logo, new slogan, delivery, milk departure (with

ice-cream,salads, etc.)

TBig competitors, new competitors.


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the company would make leaflets, posters to make the company more visible. They

should build their brand, to be identified.

The delivery as growing part would add highest value in consumer foodservice.

Cooperating with Just-Eat network or e-takeaway.dk to manage the process of

ordering.

Another option for growth is to expand the company with a milk departure. The offer

would be dairy products, freshly baked goods, milkshakes and sweets.

Sunset Boulevard has several competitors such as McDonalds or Subways. Thesecompanies are known worldwide and it can be threat to a smaller and younger

restaurant like Sunset Boulevard. A key trend in consumer foodservice in Denmark

during 2010 was the rising consumer demand for healthier products. The advantage of

healthy food would be the real strength against those companies.

5.3 PEST analysis:

The key trend is to offer healthier food to the customers. The governments taxes for

foods, which contain more than 2.3% of fat, encourage the fast food restaurants to

reduce the fat content of their products. It is also the part of European Union to set a

standard for the quality of the food.

There is a new programme in Denmark to fight off the number of the unemployment

people. They could work together with the fast food companies to make them tenders.

The Danish system is backed by a supervisory authority with little power of coercion butplaying an important role in influencing businesses to adopt high consumer protection

standards and in negotiating solutions to problems as they emerge. Economic factors

affect the purchasing power of the customers and the firms cost of capital. The highest

purchasing power is located in the Region Hovedstaden with an index per index per

inhabitant for municipalities more than 128. The inflation rate refers generally to a

growth in prices measured from a standard level of purchasing power. The most known

value of inflation is the CPI which measures consumer prices, and the GDP deflator,

which measures inflation in the whole of the domestic economy.


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Social factors depend on some important circumstances in our life like religion, family,

and education. Also, one of the important social factors is population by age which the

biggest part of it is between 34 and 64 age in Denmark. The second is distribution of

population by region in which they live. It is the same as the highest purchasing power

and more specifically the Region Hovedstaden.

Nowadays technology is driving not only evolution of society but also their businesses.

Considering that 90% of Danes have access to internet and a part of it is due to their

smartphones that can help them to access the advertising websites very easy and order

the delivery of food.

(Anon., dtum nlk.)(Anon., dtum nlk.)(Anon., 2010) (Anon., 2012) (Anon., 2012)

(Storm, 2008) (Anon., 2010) (Anon., 2000) (Anon., dtum nlk.)(Anon., dtum nlk.)(Anon., 2012) (Anon., dtum nlk.)

The biggest part ofpopulation of Denmarkare people between 35and 64 age, 51%

In the East part fDenmark are living morethen 1000 persons perkm2

81,000 of people arevegetarian in Denmark

89% of Danes haveaccess to the internet

1,5 owns smartphone

Internet advertisementsSmartphone applicationCRM for sure

Unemployement: 221400persons, 4% of thepopulation

Oil price:1.706Inflation rate is 2.7The interest ratedecreased from 1.5% inoctober2011 to 0.2 %october 2012

The highest purchasingpower is in the East partof Denmark, more than128 index per inhabitant

Fat-tax: tax for foods,which contain more than2.3 % of fat

Its part of the EUSocial part is the leadingthe country, and they arefighting offunemployment

The Danish systeminfluenced businesses toadopt high consumerprotection standards Political Economic

SocialTechnological


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5.4. Porters five forces:

Threats of substitutes: Price sensitivity is growing, so consumers rather choose eating

at home instead of eating outside. But eating healthy food is a growing trend in

Denmark. The Danish market is small, so it is hard to offer same product line as Sunset

Boulevards, and yet, it is one of the biggest Danish fast food chain line.

Threats of new entry: There are not so big barriers to enter to the consumer food

market, but it depends a lot on the strategy. You can set up a one-employee kiosk

franchise easily, but to enter the chain lined market, you must set up more than fifty

outlets, as the top ten brands on the market have more than that.

Buyers: average loyalty to specific brands, buyers prefer well-known brands, but may

prefer choose by price, or by considering the product line. Also, Sunset Boulevard is a

Danish national brand, which can provoke advantages in a home-market.

Suppliers: The supplier power is not strong because the Sunset Boulevard can easily

find a lot of similar sources. The beverages are supplied locally; the main companies

they are cooperating with are Royal Unibrew (they supply them with Pepsico's soft

drinks-Pepsi, 7-UP, Mirinda) and Carlsberg Denmark. It is unknown if their food and

drink products are purchased from one or more distributors. They produce their product

to their customers and they don't manufacture these for third parties. Possible use of

recyclable paper, implement of new packaging methods, so prices can be lowered.

Rivalry: Top 5 brand shares the 50% of the market in 2010, but rivalry is quite equal,

just in the first place there is McDonalds, with a 22,4% of market share. It is a highlycompetitive industry, with a huge number of new entrants the market. The market is

also very segmented, with kiosks, full service restaurants, fast-food restaurants, bakery

fast food or quick food, there are huge amount of choices. There is also opportunity for

advertising for product differentiation, which can be two-sided.


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Conclusion: As stated in the problem proposal, fast food restaurants are highly affected

by the economic downturn, and the question was, can the trend focusing help on those

companies? Analysing the market, and looking through statistics we reached the

conclusion through the case of Sunset Boulevard, that focusing on a trend can help

solve the situation, especially when the company is only present on a countrys market.

We found as well that the companys current strategy is meets the customers needs

but expanding besides being suitable, it should be supplemented by new elements.

Such as delivery service and milk department.

Bibliography

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Strategic analysis of Sunset Boulevard