Porcini Pronto Harvard Case Solution & Analysis

Sustainable Competitive Advantage:

The term sustainable competitive advantage can be explained as a long-term strategic advantage that cannot be easily copied by the rivals within the industry. In order to make Porcini Pronto sustainable and competitive, the company can execute strategies that add value to the process; which did not get discover and implemented by the competitors yet. Further, for the successful implementation, the company needs to devise strategies that are not only valuable, but are sustainable and rare as well.

Major competitors of the company deny enjoying its recognition for the brand worldwide and have brand recognition of nearly 97%. On the other hand, Porcini is lacking in terms of its brand recognition globally. The company can achieve sustainable competitive advantage by achieving brand recognition as this will be a competitive factor for the company.

Alternatives Evaluation:

As of now, the company has four alternatives available to achieve the future growth in the business. The easiest and prompt alternative would be doing nothing strategy that includes keeps everything running the way it was running in the past. With this alternative, the company has to make no new strategy and make no changes in the system. Another alternative for Porcini Pronto includes franchising the Pronto restaurant. Third alternative will be based on syndication, and the last alternative includes company’s fully owned restaurant.

Syndication:

Available alternatives for the company include syndication that can be defined as a process through which a company can shift full ownership to the franchisee, but having control on the operations of the company by the parent company. By implementing syndication growth strategy, the company will have full access to the business operations and with limited capital outlay; the company will be able to shift property ownership to investors.

In addition to that, it will also help the company to advance its business operations. Nevertheless, the company has to bear several transactional costs related to investment bankers, lawyers, and closing costs. Furthermore, because of the weak brand image, the company will face difficulty in finding good investors.

As per the analysis done in a spreadsheet, calculations have been done to identify the pros and cons of different alternatives. The Net Present Value found from syndication is $20.83 that is higher than the second alternative. On the other hand, the ROI of this option is less than the franchising growth strategy.

Franchising:

Another alternative is based on franchising option that can be defined as business tactic that an organization uses to increase and grow its market share. The franchising businesses are always linked with the parent company and always dependent upon them for each and every action. Franchising will be one of the dominant strategies for the company as it will lead to low construction cost and site acquisition. Franchising a business will require less capital that will be a favorable condition for Porcini Pronto.  It will also help Pronto to reach in different market segments which in turn will increase the brand awareness. On the other hand, the company may face the risk of failure in franchising as maintaining quality of goods and services will be difficult. In addition to this, a new business may affect the Porcini already built reputation.

As per the calculation done in a spreadsheet, the franchising option shows a positive net present value which is a good indicator. Along with positive NPV, return on investment is also positive that indicates franchising to be a viable option for Porcini.

Company Owned:

By implementing the third alternative that is building new restaurant all by its own, Porcini would then be able to get full control on the operations and business of the company. This alternative would help the company to align with the vision and mission of the company. With the help of company owned restaurants, the company would be able to expand at its own pace.

On the other hand, the negative side of the alternative would be the huge transactional cost related with building a new facility on the company’s expense. The company has to invest a lot in order to buy land and building including other facilities on it. Other negative aspects of this alternative would be a direct competition with the giants of fast food and restaurant industry.

From the calculations done in a spreadsheet, one can extract that although the net present value is positive but it is far less than the other two alternatives i.e. syndication and franchising. The same case happened with ROI of the three alternatives as ROI for this alternative would be the lowest..........................................

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