Bran capital: outback steak house Harvard Case Solution & Analysis

Bran capital: outback steak house Case Study Solution

Introduction

The company Bran Capital acquired a restaurant named Outback Steakhouse in 2007. The restaurant is attractive due to many reasons and Bran Capital purchased the restaurant to earn higher profits.But after acquiring the restaurant soon the economy started deteriorating resulting in decrease in the disposable income of the consumer.The economic downturn also pushed the purchase prices of the raw material higher than they were thought to be due to the economic condition.Furthermore, if the restaurant tried to increase its prices in response then it might lose a lot of valuable customers at the same time when the company needs customers to earn profits.In this time period, it was very difficult to drive down the costs as the costs were mainly due to the inflation the economy experienced. Bran Capital is now finding it hard to devise new strategies so that it could survive best and earn high level of profits.

The Outback company was attractive to Bran Capital due to many reasons which included the expertise of the restaurant chain as the co-founders were experts of the chain restaurants industry. In addition to this, the co-founders had successful business strategies for differentiation which led to the brand loyalty among the consumers and the restaurant earned higher amount of profits. The differentiation strategy made the foods of the restaurant different from its competitors making it more difficult to compete with Outback. The company had strong corporate culture and there were some other qualities which made Bran Capital to purchase the company.

SWOT analysis

Strengths

Brand reputation and marketing

The company Outback Steakhouse has strong brand name in the market which it has established by marketing and has the better use of marketing cost.This has created the differentiation which has helped the restaurant company in generating a high amount of sales leading to more cash inflows for the company and a level of sales which would be greater in terms of the profit if the company has greater cost control and can convert the sales in to profit more efficiently than its competitors.

Innovation of menu

The company has the strength of innovation of menu which will continually upgrade the company in the eyes of its customers as customers would tend to increase due to the innovation in the menu.This would also lead to value addition as those things which are not ordered or ordered least can be removed from the menu of the restaurant and likewise those foods which are mostly ordered by the customers can be made further better by innovation.This will take less time to serve and will add value to the company operations.

Familiarity with local customer’s preferences

The familiarity with the local customer’s preference will help the company in innovation of different recipes and will further lead to the taste of the customers being known by the company more appropriately. The company could further charge premium pricing and the customers will be willing to pay the premium prices for the product as they will be more concerned with what they want and if they find that they getting the value for money in the restaurant then they are more likely to pay the price charged by the company.

Weaknesses:

No international market experience

The restaurant chain did not have any experience of expansion in the international market and this can lead to heavy amounts of expenditure being lost in the expansion.This can further lead to a huge loss for the overall operations as one business unit internationally might have huge losses to make the profit of the whole company to be converted in loss.

Brand awareness

The restaurant chain did not have any brand awareness among the foreign customers and it can suffer as a result of lack of brand awareness. This will make it difficult for the restaurant to compete with other restaurants in the foreign country and might lead to no sales being generated or low level of sales of the company.This will lead to heavy cash amount being lost in the expansion making it unsuccessful for the company.

            Operational inefficiency

The restaurant did not have the operational efficiency as required to compete successfully in the market and hence might find it difficult to survive in the market in the near future. As operational efficiency will drive the cost of production of the restaurant and hence an increase in the profit of the company without an increase in the prices of the restaurant items.

Opportunities:

Backward integration

The restaurant has the opportunity to purchase those who are the suppliers of the restaurant i.e. the restaurant should do backward integration and the restaurant can secure its supplies in this way more easily.

Expansion of menu

The restaurant can further expand the menu being offered to the customers.It can develop dishes or recipes which will help the restaurant earn more profits and have a competitive advantage which can be sustained by research and development..............

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