Question

As a business investment, you are planning to open several donut shops throughout the city of Riyadh, with potential futu.re expansion plans in other city areas in Saudi Arabia including Jeddah, Dammam, Khobar and Al Hofuf. Your initial plan will offer a wide variety of donuts and assorted beverages (coffee, tea, juices, etc.) Currently, the only competitors you will face in the above mentioned locations are two global organizations, with no local competitors in the market for those locations. Realizing that the current customer market may well support a local business that can successfully compete in those targeted cities, you begin to build a business plan. The first step in the business strategy plan is to conduct an analysis using the principles of Porters Five Forces Model, while applying each component to determine the strategic impact of each element:

1. Rivalry among direct competitors (existing donut shops, define and discuss)
2. Risk of market entry of new competitors (new donut shops attempting to enter your market)
3. Risk of market entry of substitute products (different products, similar functionality)
4. Bargaining power of suppliers (who you will buy your raw materials from)
5. Bargaining power of buyers (your customers who you will target to buy your product)

Questions:

Discuss and summarize a plan to address the following concerns:

1. Consider each of these principles as they relate to your proposed business. Who are your direct competitors and how can you compete against them? (use Porter’s Grand Competitive model to define your strategy)
2. What are the chances of other donut shops entering your market over the next year? Two years? Five years? How can you minimize the threat?
3. What risks exist of someone entering your market with a substitute product? What substitute products could be offered that would compete with your product? What strategy can you use to minimize the threat?
4. How can you maintain leverage over both your suppliers? How can you maintain your customer base?

   Instruction:

   Break into teams and develop a strategy to address these issues. Be prepared to discuss your solutions and strategy.

   Some of the areas you may want to explore in your discussion are cost leadership, differentiation of product, focus market, diversification of product, product quality, demographics of your target customers, etc.

Answer 1

1.a).Donut

A doughnut or donut (the latter spelling often seen in American English) is a type of fried dough confection or dessert food. The doughnut is popular in many countries and is prepared in various forms as a sweet snack that can be homemade or purchased in bakeries, supermarkets, food stalls, and franchised specialty vendors.

Doughnuts are usually deep fried from a flour dough, and typically either ring-shaped or a number of shapes without a hole, and often filled, but can also be ball-shaped ("doughnut holes"). Other types of batters can also be used, and various toppings and flavorings are used for different types, such as sugar, chocolate, or maple glazing. Doughnuts may also include water, leavening, eggs, milk, sugar, oil, shortening, and natural or artificial flavors

b). the substitute product in Gulf Countries are chicken items as well as roasted bakery products, which people are normally consume more day to day.

c). Raw materials can be purchased from different countries near by Saudi Arabia as well as local people. normally companies are importing raw material from diffrent countries such as India,China,Indonesia,Pakistan etc...

d). The customers in which company targeting to the youth as well as elder people. so that company would get more market share.

2.There are many scope for entering into Gulf countries,because the consumption rate of local people is very high in that region. other important thing is that people from all around the world coming to gulf contries for business and tourism purpose, so that opening sound shop will give more return.

next year will be very tough to maanage business, because ongoing pandemic diseases and financial loss will adversly effect the global business as well as in that region.

after one year, Gulf countries will come back to their full potential because there is a large scope for business in hospitality and restuarent. the major reason will be FIFA wolrd cup going to conduct in quatar in 2022. So we can hope a good business opportunity there.

3. The major risk in Gulf countries will be cultural and religious practices. if any company going to open inthis region should understand the culture prior to open. Second important risk business going to face is that government rules and regulation for stanrting business. this always changing and gulf countries oil crisis may also effect your businesss.

similarly, there are many opportunities to start business in Saudi arabia and other related countries. which include the FIFA world cup 2022, and also the government changing policies into liberal, so that tourism wil boost in upcoming years.

Cost Leadership

Strategy used by businesses to create a low cost of operation within their niche. The use of this strategy is primarily to gain an advantage over competitors by reducing operation costs below that of others in the same industry.

Product differentiation

Product differentiation refers to the strategy used by businesses to highlight the unique features and benefits of its product or service to separate it from competitors. The marketing team communicates these unique qualities through their campaigns and promotions. And the sales team can use them to demonstrate the product's competitive advantage.

Product diversification

Product diversification is the practice of expanding the original market for a product. This strategy is used to increase the sales associated with an existing product line, which is especially useful for a business that has been experiencing stagnant or declining sales.

Product Quality

Quality is the performance of the product as per the commitment made by the producer to the consumer. Such commitment may be explicit or implicit i.e. in terms of written contract or in terms to the QUALITY MANAGEMENT expectation of the average consumer of the product. The performance of the product is concerned with the ultimate function and service which the product must provide to the final; consumer.

A product is known as a quality product only when it satisfies various criteria for its functioning for the consumer. In addition to the physical criteria, there is also a service and time factor to quality. The same quality of physical performance should be available over a reasonable length of time. Hence time is also unnecessary aspect of quality.

target consumer

The term target customer is defined as the specific group of consumers who are the focus of a company's advertisements. This focus is communicated through media and the use of television, movies, audio, and print capabilities. The target consumer is similar to target market; however, the notable difference is the target consumer is a specific group within the target market.

Core Specifics of Target Consumers

Much like target markets, target consumers have a large impact on a company's marketing and advertising plans. When companies design campaigns with messages to be conveyed in advertisements, they compose them specifically around the target consumer attributes. It is important to understand your target consumer, and the following criteria can act as a guide:

• Your product or service has the ability to be preferred by the customer
• Your product or service contains an attribute they desire
• The target consumer has buying power and can provide you with sales and profits
• The target consumer has an unmet desire that your product or service can fulfill