TUTORIAL 6 (Topic 4 & 5)

CASES

Case 5.1
Panera Bread: Occupying a Favorable Position in a Highly Competitive Industry

DISCUSSION QUESTIONS

1. How has Panera Bread established a unique position in the restaurant industry?

Answer: Panera Bread has established a unique position in the restaurant industry.
As explained in the case, the fast-casual position that Panera has established
allows it to capture the advantages of both fast food and casual dining. It is clear
that Paneras unique position has contributed to its success. It provides Panera a
distinct point of differentiation between itself and many of its competitors, and
allows the company to sell a fairly large volume of high-margin food products.
Most students will say that Panera Bread will reach its goal of becoming a leading
national brand in the restaurant industry.

2. What barriers to entry has Panera Bread created for potential competitors? How
significant are these barriers?

Answer: Panera has created barriers to entry in the following areas:

Economies of scale. Panera Bread has 1,770 restaurants, which allows it

to negotiate discounts when buying food and nonfood products for its
restaurants.
Product differentiation. Panera Bread has a strong brand with food and
bakery products people like.
Capital requirements. Panera Bread restaurants are not large but are stylish
and are often located in premier locations, suggesting that considerable
capital would have to be accumulated to build even a handful of
competing restaurants.
Cost advantages independent of size. Panera Bread may have purchased
some of the real estate it owns when real estate prices were lower and
built some of the buildings that its restaurants are housed in when
construction costs were lower.

3. What are Panera Breads primary sources of competitive advantage?

Answer: Paneras primary sources of competitive advantage are: (1) its position
in the restaurant industry, (2) its brand strength, (3) the atmosphere of its
restaurants, and (4) the distinctive nature of its bakery products. Most students
will argue that these sources of competitive advantage are sustainable.

4. What are the ways that Panera Bread can conduct ethical and proper forms of
competitive analysis to learn about potential competitors entering the fast-casual
industry?

Answer: Panera can utilize all of the techniques listed in Table 5.4, including:
 Attend conferences and trade shows.
Purchase its competitors products (and eating at their restaurants).
Study competitors Web sites and social media pages.
Set up Google e-mail alerts (to track news about itself and its
competitors).
Read industry-related books, magazines, Web sites, and blogs.
Talk to customers about what motivated them to dine at Panera Bread
opposed to a one of Paneras competitors.

5-1 What is a business plan? What are the advantages of preparing a business plan for
a new venture? Explain

Answer: A business plan is a written narrative, typically 25 to 35 pages long, that

describes what a new business plans to accomplish and how it plans to
accomplish it.

5-2. What are the advantages of preparing a business plan for a new venture?

Answer: For most new ventures, the business plan is a dual-purpose document
used both inside and outside the firm. Inside the firm, the plan helps the company
develop a road map to follow in executing its strategies and plans. Outside the
firm, it introduces potential investors and other stakeholders with the business
opportunity the firm is pursuing and how it plans to pursue it.

6. What are the differences between a summary business plan, a full business plan,
and an operational business plan?

Answer: A summary business plan is 10 to 15 pages and works best for

companies that are very early in their development and are not prepared to write a
full plan. A full business plan is typically 25 to 35 pages long, and it works best
for new ventures that are at the point where they need funding or financing, and
serves as a blueprint for a companys operations. An operational business plan
is 40 to 100 pages long, and is meant primarily for an internal audience. It works
best as a tool for creating a blueprint for a new ventures operations and providing
guidance to operational managers.

7. Why is the Management Team and Company Structure section of a business

plan often touted as one of the most important sections of the plan?

Answer: Because investors and others place a high value on the composition of a
new ventures management team (in terms of experience, educational
background, past accomplishments, etc.) and often look at other sections of the
plan only if the Management Team and Company Structure section is sufficiently
convincing.