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2. Industry overview & Analysis

2.1 PORTERS 5 FORCES

2.1.1 RISKOFENTRYOFPOTENTIALCOMPETITORS

As stated before there is only one competitor in the region, which is North South

Photocopier. But, rather than thinking about the existing competitor we have to concentrate

more on the competitors who are about to enter in the industry. These competitors can take

away some of our potential market share. To minimize the risk we have to develop our core

competencies.

Being the low cost manufacturer will help us to be the cost leader in the industry. The

resources are readily available in the market. The bulk purchase will reduce the purchase cost

as a result the manufacturing cost will go down. With this we can provide the customer their

needed materials in a lower price.

Another is to develop is our capabilities. With the latest technology it is easy for us to

provide the promised quality study materials in a lower price.

Other things we have to take into account are the strategic advantages like, superior

efficiency, superior quality, innovation and customer responsiveness. Superior efficiency can

be achieved through employee training and motivation. Superior quality has to be achieved

through the best use of the resources. New and new innovation in the way to providing service

and the way of production can help us to gain advantage and the most valuable asset of the

business is the customers responsiveness. This will help us to lower the cost and gain

competitive advantage.

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2.1.2 Existing competitors & Rivalry

To have a clear view of the industry it is necessary to judge the rivalry among the

competitors inside the industry. Whether

To judge the condition of an industry it is necessary to judge if the rivalry among firms is

currently. Whether it is polite or stable? Rivalry refers to the competitive struggle between

companies in an industry to gain market share from each other using price, service, and

advertising expenses. This rivalry increases when many firms of relatively equal size compete

in the industry. In the catering industry this rivalry can be assessed by:

INDUSTRYCOMPETITIVESTRUCTURE

In catering service business there is a large number of small or medium sized competitors, none

of which is in position to determine industry price. The pricing is not set and no new owner can

charge higher price until it is justified strongly through high product differentiation. In that case

superior quality will be the main armor for competing against the competitors. The risk and

uncertainty involved is thereby significant to some extent.

DEMANDINTHEINDUSTRY

The demand pattern of the industry also plays quite a significant role as a determinant of the

intensity of rivalry among established companies. If there is a growing demand from customers

or additional purchases by existing customers tend to moderate competition by providing

greater scope for companies to compete for customers. Since in Bangladesh nowadays people

want new things and brand intensive, they are always lookout on the unique services. Hence

industry demand is very high. Quality and uniqueness will help gain the upper hand in such a

situation.

EXIT BARRIERARENOTHIGH

Barrier may come from factors like economic, strategic, and emotional issues that prevent

companies from leaving the industry. In case of catering business this type of barrier is

moderate. We can assess the state of exit barrier based on the factors like investments in assets,

fixed costs, emotional attachment to the industry and economic dependence on a single

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industry. Due to the low investment in those factors the exist barrier is not that immense in a

catering business .

2.1.3 THREATOF SUBSTITUTESIn a catering business there are usually several competitors. The products category is also very

similar. The scope of differentiation is thereby quite insignificant. Threat of substitute for this

industry is also very high Substitute product limits the profit potential of an industry because

they limit the prices firms in an industry can change. Almost everything has a substitute but it

is necessary to determine how close the substitute is in price and function to the product of the

industry in concern. The catering business does suffer from the threat of substitutes to large

extents. In terms of satisfying customer needs, there are many catering service offering quality

food to customer.

2.1.4. BARGAINING POWEROFTHE CUSTOMERS

The customers have a key that to a large extent determines the success of any business. Porters

5 Force Model has another factor, which is the bargaining power of buyers. An industrys

buyers are individual customers who consume products and services like any other end users.

Buyers can affect the profitability of an industry because they can bid down prices of demands

higher quality or more services by bargaining among competitors. If the supply is large;

usually it creates the opportunity for buyers to pick up the product of their choice from a wide

range of varieties. So, it enriches the bargaining power of the buyers. The buyers have access to

large variety of outputs, and also the switching cost is pretty low. Hence the bargaining power

of the customers is high, which ultimately pushes us on the back gear.

2.1.5. BARGAINING POWEROF SUPPLIERS

Another porters five forces comprise the Bargaining power of suppliers. This refers to the

ability of suppliers to raise input prices, threat to stop selling products & delay in delivering

products. Suppliers can influence the future industry returns if they increase prices or reduce

the quality of the product or the service they provide. The suppliers are more powerful if they

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are few and if they are more concentrated that the industry to which they sell and if they supply

critical inputs to several for which few, if any, substitute exists. Hence, the suppliers are free to

change prices and services they supply to the firms in an industry. In the catering business the

bargaining power of the suppliers are moderate since there are large suppliers and the switching

cost for the companies are quite significantly low.

2.2 Core Competency

The core competence is the firms strength that allows companies to differentiate products

and/or achieve substantially low cost and at the same time offer a better and superior quality

than our rivals. There are various sources of core competences. These are discussed below:

HUMAN RESOURCES

Employees will be one of the biggest costs to incur while running the catering business,

because we will need other administrative and support staff to run the day-to-day operation

catering business. If we hire specialized employees who were already trained and know how to

attract customer through cooperation and interaction, then they will definitely charge higher

fees. Moreover, Employing specialized employees who will decide for us the superiority of the

products and product longevity, then he/she is also likely to charge a lot of money.

INNOVATION/CREATIVITY:

Ifwe can be innovative then we can use our creativity and innovation as our core competence.

If we can gain brand loyalty through offering distinctive food item and service then we can

become competent in terms of our service. Moreover, doing so we will also focus on providing

the best possible quality product.

2.3 Industry SWOT

The following SWOT analysis captures key strengths and weaknesses within the company and

describes the threats facing seventh heaven.

Strengths:

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Starting up a catering business does not require investing huge sums of money. It is

very easy to open a catering business. There is minimal government interference or

regulations regarding pricing and other factors.

Excellent staff who are highly trained and very customer attentive.

Superior service offerings.

World class chefs who have been trained and worked in different chain restaurants in

home and abroad.

Despite having tremendous amount of competitors, we even large and yet increasing

amount of customers who want some different product. Hence demand for such items isimmense in the market.

One can also achieve economies of scale and there produce more in order to reduce per

unit cost of production. This will enable the companies to rise their pricing.

Weaknesses:

A limited marketing budget to develop brand awareness. Our investment is not that

much high and very small amount of budget allocate for marketing.

Lack of experience in the catering market as we are new in the scenario. We do not

have enough experience about this business.

An upcoming business in any industry and can be considered profitable business and

hence more competitors in the market. The existence of more entrants into the business

and thereby enhancing the competitors is likely.