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

Table of contents
1. 2. Introduction: ................................................................................................................................... 3 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. 4. 5. 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 Methodology .................................................................................................................................... 4 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 the recession 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 our own 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 companys activity 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. But for 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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s
w
O
T

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.

Name, poor advertisement, organic food retailing, young company, without experience and brand history.

English version website, new logo, new slogan, delivery, milk departure (with ice-cream,salads, etc.)
Big competitors, new competitors.

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 and if 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 busy places. 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

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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. These companies 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 but playing 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.
Fat-tax: tax for foods, which contain more than 2.3 % of fat Its part of the EU Social part is the leading the country, and they are fighting off unemployment The Danish system influenced businesses to adopt high consumer protection standards Unemployement: 221400 persons, 4% of the population Oil price: 1.706 Inflation rate is 2.7 The interest rate decreased from 1.5% in october2011 to 0.2 % october 2012 The highest purchasing power is in the East part of Denmark, more than 128 index per inhabitant

Political

Economic

89% of Danes have access to the internet 1,5 owns smartphone Internet advertisements Smartphone application CRM for sure

Technological

Social

The biggest part of population of Denmark are people between 35 and 64 age, 51% In the East part f Denmark are living more then 1000 persons per km2 81,000 of people are vegetarian in Denmark

(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.)

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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 highly competitive 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.
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