Independent Business Project Work Placement
Tutor: Roel Brinkman
Content TOC o “1-3” h z
Introduction PAGEREF _Toc523498013 h 31. Analysis of César Ritz Colleges PAGEREF _Toc523498014 h 41.1 Property Analysis PAGEREF _Toc523498015 h 41.2 Competitive Analysis PAGEREF _Toc523498016 h 51.2.1 Rivalry among existing firms PAGEREF _Toc523498017 h 51.2.2 Bargaining power of buyers PAGEREF _Toc523498018 h 51.2.3 Bargaining power of suppliers PAGEREF _Toc523498019 h 51.2.4 Threat of new entrants PAGEREF _Toc523498020 h 61.2.5 Threat of substitute products or services PAGEREF _Toc523498021 h 61.3 PESTEL Analysis PAGEREF _Toc523498022 h 61.3.1 Political Factor PAGEREF _Toc523498023 h 61.3.2 Economic Factor PAGEREF _Toc523498024 h 71.3.3 Social Factor PAGEREF _Toc523498025 h 71.3.4 Technological Factor PAGEREF _Toc523498026 h 81.3.5 Environmental Factor PAGEREF _Toc523498027 h 81.3.6 Legal Factor PAGEREF _Toc523498028 h 91.4 SWOT Analysis PAGEREF _Toc523498029 h 91.4.1 Strengths PAGEREF _Toc523498030 h 91.4.2 Weaknesses PAGEREF _Toc523498031 h 91.4.3 Opportunities PAGEREF _Toc523498032 h 101.4.4 Threats PAGEREF _Toc523498033 h 102. The Guest Experience PAGEREF _Toc523498034 h 102.1 The Way to Enhance the Guest Experience PAGEREF _Toc523498035 h 102.2 Features and Benefits PAGEREF _Toc523498036 h 112.2.1 The Value of Features and Benefits PAGEREF _Toc523498037 h 112.2.2 The Marketing of Features and Benefits PAGEREF _Toc523498038 h 123. Balanced Scorecard PAGEREF _Toc523498039 h 123.1 Customer Perspective PAGEREF _Toc523498040 h 123.2 Financial Perspective PAGEREF _Toc523498041 h 133.3 Learning and Growth Perspective PAGEREF _Toc523498042 h 133.4 Internal Business Perspective PAGEREF _Toc523498043 h 134. Improvement PAGEREF _Toc523498044 h 144.1 Recommendations to the Ritz Lounge PAGEREF _Toc523498045 h 144.2 The Way to Increase the Revenue PAGEREF _Toc523498046 h 144.3 The Way to Decrease the Cost PAGEREF _Toc523498047 h 145. Innovation PAGEREF _Toc523498048 h 156. Conclusion PAGEREF _Toc523498049 h 16Reference PAGEREF _Toc523498050 h 17IntroductionAim
After studying Master of International Business in Hotel, Resort and Food & Beverage Management, I have an internship as F&B trainee supervisor in Cesar Ritz Colleges. The report aims to analyze the basic information of Ritz Lounge and its products and service, purpose the solutions of innovation.
To explain the information of César Ritz Colleges
Analyze the competitive by Porter’s Five Forces
SWOT analysis and PESTEL analysis
Analyze the Features and Benefits to explain how add value to the customer experience
By Balanced Scorecard to analyze strategic management method of Lounge
Purpose the improvement and make predictions for the future
1. Analysis of César Ritz Colleges1.1 Property AnalysisCesar Ritz Colleges located in Le Bouveret, a charismatic French-speaking town nestled on the shores of Lake Geneva, it is a popular summer resort and famous as beautiful beach and many outdoor attractions. The vision is “Where Hospitality Meets Business.” And the mission is “At Cesar Ritz Colleges, we provide our students with a truly Swiss journey through hospitality education. Our programs give students the best of both worlds: a ‘Ritzy’ Swiss hospitality education in campuses drenched in history and tradition combined with an American/British approach to business management and entrepreneurship.” Dating back to early 1900s, the former of college is a magnificent hotel. The new campus was built in 2002, providing four kinds of accommodation for students now, Double Standard Room, Double Deluxe Room, Single Deluxe Room and Single Superior Deluxe Room. There are many recreational facilities for students to relax, including a fitness room, table tennis, table football and a home cinema with up to date video gaming equipment, the students also can enjoy themselves by water skiing, sailing and motor boating during the summer months. The college offer two restaurants, Fine Dining and Lakeview Restaurant, and Ritz Lounge for students to buy coffee, snacks or warm dishes from morning to the late in the evening, also the underground that open on Friday, a students’ bar and night club. In addition, the college is equipped with laundry and luggage room.
1196340136842500To ensure the students have a safe study and living environment, the collages only open for the teachers, students, staff and a small number of visitors, so the customers of Lounge are unchanged. According to the pie chart, students occupy the largest proportion of customers segments (55%), teachers and staff account for 25% and 15% respectively.
In general, the college with fascinating view and fully facilities offer a tranquil and secure study environment for bachelor students. Students have the choice of eating in any of the food outlets on campus. However, the college lack more potential customers because Ritz Lounge only serve students and teachers.
1.2 Competitive AnalysisAccording to the Porter’s Five Forces, there are five separate forces that shape the overall extent of competition in the industry, these are “Rivalry among existing firms”, “Bargaining power of buyers”, “Bargaining power of suppliers”, “Threat of new entrants” and “Threat of substitute products or services”.
1.2.1 Rivalry among existing firmsPorter (1980) reiterated that intensity of rivalry is dependent on number and size of direct competitors as numerous and equally balanced competitors may lead to intense competition. Ritz Lounge competes with café, Kebab, and supermarket where they have same pastries and snacks, so there is not a fierce competition. It is distance of 800 meters from school to these competitors. Comparing with current competitors, the Lounge has an obvious competitive advantage. The Lounge offers various coffees, beer, pastries, pizza, chips and open from 07:30 to 23:00 expect Saturday. Students can buy what they want at any time, it is convenient especially during the break time and the price of product is cheaper than the others. Moreover, the Lounge is part of school and the fixed cost is low, and the school do not have to pay advertisement fee or attract the customers by price-cutting.
1.2.2 Bargaining power of buyersPorter (1980) mentioned that the buyers of goods and services from an industry may be powerful if they are more concentrated than the players in the industry and are able to force down prices as well as reduce the industry’s margin. The students are not price-sensitive, they prefer to buy what they really love and do not concentrate on the price. Unlike the other store, every single product of Lounge has a fixed price, there is no discount no matter how many products the customers buy. So the cost of switching suppliers to the customer is low.
1.2.3 Bargaining power of suppliersPorter (1980) emphasized that suppliers to an industry may be powerful if they are more concentrated than their customers and their customers do not command a significant share of their business because their customers do not represent a potential long-term or major relationship. The main ingredients used in Lounge is coffee bean, beverages, pastries, snacks, chocolate, orange, sugar, coffee cup, napkin, etc. The lounge has stable suppliers and there is no differentiation of products to make sure it is a low switching cost.
1.2.4 Threat of new entrantsAccording to Michael Porter (1980), threat of new entrants is determined by barriers to entry which include several elements. For opening a small business in Switzerland, the owner need to complete the insurance of damages water and fire and the concept of HACCP, apply for the permit application, inform about the national collective agreement, register the VAT and AHV, etc. Switzerland’s economy constitutes a highly developed service sector, led by financial services, it has more advantages to do business in Switzerland because its economic and political stability, transparent legal system, vibrant infrastructure, efficient capital markets, and low corporate tax rates. But there are still challenges for small companies in the field of innovation and a huge challenge is ‘financing’.
1.2.5 Threat of substitute products or servicesMichael Porter (1980) pointed out that alternative products can be existing or potential products and services that perform the same functions. For Ritz Lounge, the main substitute products and services are the small restaurant and vending machine. The students will have lots of diet options in small restaurant, they can pick up an order to bring back to school or enjoy their meal there with a picturesque view. There are two vending machines that sell soft drinking, chocolate, candy, cup noodles in the school, it provides comport and put students at ease because the students can buy what they want at any time, especially during the closing time of Lounge.
1.3 PESTEL Analysis1.3.1 Political FactorSwitzerland is a federal republic with a directorial system under a direct democracy. Certain powers lie with the 26 cantons; others are reserved to the federal government. The Swiss political system is characterized by a high degree of decentralization and is delegated to 26 states or states. This loose federal structure reflects the evolution of the Swiss state since the Middle Ages, in part because of the high degree of linguistic division in Switzerland. Frequent referendums on major or controversial political issues are key elements of Switzerland’s unique and well-established “direct democracy” tradition. The Swiss system is recognized for its political stability. Since the governance system is based on consensus, no single party can strongly promote a single agenda, so the various ideologies are combined in the decision-making process.
1.3.2 Economic Factor622300403796500Switzerland’s is one of the wealthiest countries in the world, it has a very stable and modern economy. Compared with most other economies, Switzerland has not been hit hard by the global financial crisis. Its unemployment rate has never been higher than 3.2% and remains more or less constant at this level. In 2017, the GDP in Switzerland grew by about 1.07 percent compared to the previous year and the expert forecast a pick-up to 2.3% in 2018 and 1.7% on average in 2019-22. The major expenditure on GDP are from Gross Fixed Investment and Imports of Goods ; Services. In addition to its workforce earning some of the highest salaries in the world, Switzerland maintained one of the lowest unemployment rates in the Europe, despite being affected by the 2008 financial crisis. With higher wages and specialized jobs, economic growth as well as production within the country continued to grow, a fact most evident through values of GDP. As a result, Switzerland’s gross domestic product per capita was ranked among one of the highest in the world. However, economic growth did not occur too rapidly and wages were set at a reasonable controllable amount, which allowed Switzerland to maintain a low inflation rate.
GDP from 2012 to 2022 in Switzerland
1.3.3 Social FactorSocial factors included social behaviors, lifestyles, consumerism, demographics, education level, etc. In Switzerland, they do not have its own language but there are four officially languages, which are German, French, Italian and Romansh. A survey shows, the Swiss are serious culture and the educational level and household income play a main role in access to culture. Switzerland has a population of about 8 million among which 23% are foreigners. Now more than 25% Swiss got higher education (Federal Department of Foreign Affairs Presence Switzerland. 2013). According to a study published jointly on Monday by the Federal Statistics Office and the Federal Culture Office, 93 per cent of the Swiss population visit at least one cultural institution? museum, exhibition, cinema or concert every year. People in Switzerland are highly educated, modern, and culturally. However, there is a challenge of the problem of aging population in the future. According to MarketLine figures, the percentage of the population above 65 years increased from 15.4% in 2005 to 16.9% in 2011. This figure is expected to pass 18.0% by 2015. By 2030, Swiss residents will have an average age of nearly 48 years. Switzerland needs to be careful with healthcare and pensions expenditure to deal with the rising costs of an aging society.
1.3.4 Technological FactorAccording to the 2011 Innovation Alliance Scoreboard, Switzerland is considered as a global innovation leader although the country lacks natural resources. The private sector plays a leading role in the development of technology and bears the cost of over two-thirds of Swiss R&D expenditure. Patents are one of indicators for measuring innovative success. Between 1985 and 2014, the number of patent applications worldwide nearly tripled, to just under 2.7 million annually. Over 43,000 applications were submitted in Switzerland in 2014. In absolute terms, Switzerland ranks eighth in the world; on a per-capita basis, it is number one (source: WIPO). Excellent position is an important reason, also the Switzerland’s liberal, stability-oriented economic policy and traditional emphasis on hard work, dedication and education. In addition, the Swiss are very active in E-markets and E-banking, there are several self-payment counters in every supermarket, it is save time for customers and save labor costs for the employers.
1.3.5 Environmental FactorSwitzerland has its own interest in protecting the environment. Swiss environmental policy has achieved many successes since the 1980s and reduced the pollution of the environment by certain contaminants. As a result, the country’s air quality has improved considerably over the past 25 years. Switzerland still face some environmental problems. According to new climate scenarios, an unchecked rise in global greenhouse gas (GHG) emissions could increase temperatures by over 6°C compared to pre-industrial times by the end of the 21st century. The pressure on surface waters and landscape is growing through high energy consumption, this is mainly reflected in the decline of biodiversity. To response to the current environmental problems, the Federal Council published Green Economy Action Plan in 2013 and Swiss Biodiversity Strategy in 2012.
1.3.6 Legal FactorSwitzerland has a highly developed system in legal framework and policies, in which laws are distinct and the judiciary is independent of any branch of government. The federal government has a relaxed attitude of noninterference toward foreign investment and give the 26 cantons right to set major policies. Swiss law provides for strict rules on consumer protection. The Swiss Federal Consumer Affairs Bureau supports and advances the interests and the protection of the consumers if the market does not respect them. The protection of consumers’ interests focuses on the commercial interests of consumers as to products and services, which means the company should respect legal rights of consumers and guarantee the products safety.
1.4 SWOT Analysis1.4.1 StrengthsThe Ritz Lounge located in the school with cozy and elegant furnishings, providing table tennis and badminton outside if the students need. It is a good place to relaxing and studying for students and teachers. Preparing check in table at the beginning of each term and check out table in the end of each term to make sure the students have a comfortable studying life. Open on Sunday and major holidays. The price of product is lower than the other competitors, like the pizza price is around 12CHF but the Kebab where the fast food outside is around 15CHF. The lounge offers Mocha and ice coffee that student’s favor as well.
1.4.2 WeaknessesThere are three staffs working in lounge to ensure it can open from 07:30 to 23:00 on six days a week. Also, it is free coffee for teachers and SEG staff and the students who live outside, so it causes a high cost and the profits are low during the slack season. It is not a professional service for the guests because only trainee works in the lounge, and the frequent replacement of employees cannot give guests a quality experience.
1.4.3 OpportunitiesCésar Ritz Colleges is near the train station of Le Bouveret. Le Bouveret where is a known for its beautiful beach and amusement parks, offers a multitude of events in summer and people can enjoy themselves by water sports like motor boating, water-skiing or sailing, so the village attract lots of visitors to have a trip on weekends or holiday. If the Ritz Lounge can open for the visitors, it is going to have more potential customers and increase the revenue.
1.4.4 ThreatsThe competitor has delivery service. They put advertisement around the school and deliver the fresh food to school only the students order by phone. Also, the membership system of the competitor is a threat for Ritz Lounge, it is easy to cultivate customer loyalty by membership card. They give one stamp for every payment and handsel a discount after collecting ten stamps.
2. The Guest Experience2.1 The Way to Enhance the Guest ExperienceCustomer experience is the key to winning customers’ hearts. The quality of the product, the friendly customer service. All of these pieces come together to create a unique experience for customers, which will grow loyalty and bring back repeat buyers. Firstly, the staff needs to remember the names of frequent guests and their preference, including the type of coffee, the temperature of milk, the quantity of chocolate powder, as well as the special beverage for the customers. When the staff is familiar with the customer’s preference, they can take action before the customer order and provide a personalized service. Secondly, pay more attention on the star product and the dog product, replace the product that customer dislike. The students as Millennium generation like novelty products rather than stale food. In summer, the Lounge introduce the ice coffee and Ben Jerry’s ice cream. In order to offer a satisfactory service, students can choose two kinds of ice coffee with different sugar and various flavor of ice cream. Not only the increase of revenue, but also upgrade the customer satisfaction of products. Thirdly, the employee conducts the training of staff regularly to improve the level of service. The manager will do a questionnaire about service satisfaction every month. We discuss with each other about the problem and come up with solution, so the staff will serve customers with motivated and initiative.
2.2 Features and Benefits508000288925002.2.1 The Value of Features and BenefitsFeatures are facts about products or services, they add credibility and substance to your sales pitch. Benefit give customers a reason to buy because they explain how the product or service improves their lives. As a company, it should identify the product features, describe some element of your offering, in the hope that the customer will be impressive. Selling a benefit is essentially describing a product feature in some way that it improves the customer’s situation.
In Ritz Lounge, there are lots of specialized machinery and equipment, like coffee machine, orange machine, pizza oven and pastries oven, which can provide high quality of beverage and fresh food. Thus, the customers can enjoy with them to have a wonderful experience. Moreover, the variety of hot and cold beverages and different choices of pastries, snacks and hot food, create a customized service that the guests can ask for multiple coffee syrups cane and vanilla. Also, they can take away sausage roll, croissant, chocolate bread or cinnamon roll as breakfast if the guest does not have enough time to eat here. Several sport facilities and comfortable atmosphere help the guests study well and have a relaxing time in the meantime. Both of these features and benefits give an intimate and attentive service to the guests.
2.2.2 The Marketing of Features and BenefitsBoth features and benefits are important in the marketing. The primary task is understanding the market and determining the reason for market’s need. The major customers of Ritz Lounge are Millennials. They are more educated, most socially responsible. And this generation is more likely to listening and connect with people, they prefer the unique experience. Their needs of Lounge are getting flavorful taste experience and professional service. Make a form of products features and translate these features into benefits the market needs. In order to reach the target market, we choose and replace the product that unpopular in students and ordering some new flavor of products to satisfy the needs of customers. The buyer readiness stage is divided into following step: Awareness, Knowledge, Liking, Preference, Conviction, Purchase. The main marketing tools are advertisement, personal selling and promotional sale. Inform and introduce the new products to customers by tasting and making a poster on the board. Promote the advantage and build relationship with them when the customer is willing to buy. During term break and the beginning of term, do the promotional sale to encourage the purchase and sale because it is slack season.
3. Balanced Scorecard3.1 Customer Perspective
The colleges plan to increase customer’s loyalty and service and product satisfaction. The KPI of Lounge are achieve 95% retention and more than 90% of satisfied, measured by the survey in the end of each month. The Ritz Lounge is in the school, so every teacher come and order coffee twice or three times a day, which make sure the stability of this part of the guests. There are 300 students in the spring term and 190 students in the summer term and more than half of students will buy something twice a day. Increase the mobility of frequent guest and market share by selling new type pf products and communication between students. For the part of customer’s satisfaction, improve the professional skill of staff and shorten the time spent in the waiting line to reduce the guest’s complaints, as well as change the menu regularly to ensure the guest is interested in the Lounge. In addition, focusing on the environment of Lounge, make sure the indoor tables and chairs are cleaned all time, and do deep cleaning once per week.
3.2 Financial Perspective
This perspective ensure the Lounge deliver ever-increasing value to our shareholders. The primary source of revenue is selling related products. The employer considers to increase the profit by lowering the cost and increasing the revenue. The manager replaces the unpopular product and choose the supplier with a lower price. Also, ask the staff should pay more attention on the expired day to avoid the unnecessary loss. Although there is a certain effect on cost reduction by these methods, there is no obvious increase in revenue, due to the customer volume is too small in the off-season.
3.3 Learning and Growth Perspective
This perspective reinvigorating the technical, relationship and leadership skills while fostering and entrepreneurial culture. The employees of Lounge change once every six months because they are trainees who have a six months internship. The turnover of employees is quite frequent but they guarantee a prefect work docking by standard operation procedure and training. The manager usually does training once a month to develop the necessary skills, concentrate on the satisfaction of employee and team building by team outing. Also, our manager establishes an employee evaluation system that included testing irregularly and midterm evaluation, it is a useful way to find the problem and fix them.
3.4 Internal Business Perspective
This perspective is exceled at the specific process which provide our customer with good products and superior service. To improve operating efficiencies, we have a meeting to discuss with each team member twice per month, everyone should explain the problem that encounter at work and purpose the solution, which is beneficial for team communication and sharing opinion. To improve the product and service quality, adopt the top quality of coffee beans since the quality of coffee beans determine to the quality of coffee, as well as ensue the product diversification. By this means to achieve profitability and make shareholders satisfied.
4. Improvement4.1 Recommendations to the Ritz LoungeFirst, enhance the publicity on social media. Now, the manager only send e-mail to all students and teachers at the beginning of each term. In my opinion, we can open an account on Facebook and Instagram to do promotion. Issue the new products and related information of Lounge on it. Social media covers graphic, text, like, and the other ways of interacting with customers. It is easy to attract the customer in viral spread. Second, provide package service. In order to increase the customer’s purchases, we can put pastry and hot beverage together to sale. Introducing breakfast package that included croissant and latte, the package of afternoon tea that included tea, chocolate and nuts, healthy package that included cereal bar, wheat bread and hot milk. Third, increase the type of caffeine-free to meet the diverse needs of customers.
4.2 The Way to Increase the RevenueIt is an important way to increase the revenue by raising the units per transaction and the frequency of transaction. Training employees to acquire sales knowledge about upselling and cross-selling. Upselling is a marketing tool that encourages customers to purchase more expensive products or promises more value. A staff can influence the customer decision into buying the latest version instead of the cheap one by highlighting and displaying the advantages of product. When the customer order coffee, the staff can ask which size you prefer or would you mind buy the big size as long as pay five cents more. Cross-selling is the act of attaching other products or services during the checkout phase. It is meant to buy the new product rather than replace the main product. For example. To guide consumer purchases, the staff can inquiry whether they need one more pastry or chocolate while a customer is paying for beverage. These methods are beneficial to promote the increasing in units per transaction. To attract the regular customers and new customers, the Lounge should keep in touch with customers by email and social media and create special offers.
4.3 The Way to Decrease the CostIdentify inefficiencies to decrease costs. The managers should always be looking for ways to make the Lounge more efficient. They can reduce waste in both materials and time by tightening up the processes and procedures. In other words, the efficiency of serving coffee is the key to profitability. It can increase hourly revenue, customer satisfaction and customer retention. Moreover, the expenses included fixed cost (Insurance, Rent, Salaries, Utilities, Taxes) and variable cost (Direct Materials, Production Supplies, Credit Card Fee). It is better way to saving labor costs by reducing business hours during the off-season. The Lounge serve plastic cup for water fountain and it is a waste of cost and not environmentally friendly, so we dispense water bottle to every student and teacher at the beginning of each term to replace the plastic cup. Also, we serve hot beverage with recyclable mug for teachers, which save the cost of cups and follow the principle of sustainability.
5. InnovationNowadays, fast food ; café is a new trend in food industry. As we know, McCafé is a coffee-house-style food and beverage chain, owned by McDonald’s. The first one opened in Chicago in 2001, and were the largest coffee shop brand in Australia and New Zealand by 2003. Also, the reports indicated that McCafé outlets generated 15% more revenue than a regular McDonald’s. Thus, combine fast food with Ritz Lounge. Offer hamburger, French fries, hot dog, chicken nugget, etc. for students. Most customers of fast food are students and the target market is same as Ritz Lounge. Moreover, the Lounge lacks the types of hot food because only serve four kinds of pizza, it cannot meet the diverse needs of students. The Lounge is equipped with the kitchen facilities of fast food and enough preparation space. For the chef, the college also included Culinary Arts Academy, it will be a practical place for students if the Lounge offer this service. In a word, not only increase the revenue by combining fast food with café, but also provide a practical platform for students.
In the next six months, the fall term and winter term will be upcoming. There will be more than 900 students of each term, so the number of customers in Lounge will increase dramatically. According to the previous situation, the revenue will raise by 2% until March of next year. From April to September next year, it is same situation as now, there will be fewer student and the revenue will decrease.
6. ConclusionAfter analyzing the Ritz Lounge by
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