Analyzing Strategic Concerns of Spaghetti House Case Study Sample

Introduction of Analyzing Strategic Concerns of Spaghetti House in UK

To thrive in today's dynamic economic climate, corporations must address several critical strategic concerns. Strategic concerns may be found in a wide range of forms. The key to long-term, sustainable development is understanding and controlling the strategic concerns of a respective business. In the present report, the issues and challenges faced by Spaghetti House are illustrated in detail. The company has been operating in London science 1955 and has 10 individual branches in Central London. The organization offers different Italian dishes along with space and rooms for private events and cooking classes. However, in the present times, the organization is facing monetary and other related issues which have been highlighted in the report. Internal and external market analysis tools have also been specified to identify challenges and opportunities for the business in the relevant industry. Along with the issues and challenges, the solutions to the problems have also been discussed in the report. Porter's Five Forces have also been demonstrated to identify the attractiveness of the industry and the way Spaghetti House can use this attractiveness to enhance its brand among its clients and customers. The impact of the problems and issues is one of the areas which has also been depicted in the present report.

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Existing problems in the sector

Some several problems and issues are faced by the restaurant sector. Gathering financial resources is considered to be one of the areas that lead to operational issues for the organization in the restaurant industry. A company's longevity may be compromised if it did not have access to sufficient funding to keep it going for an adequate amount of time, during which it could establish itself in the market. Owners should have enough money to run the business for at least the first year, and they should have enough money to cope with unexpected cost increases.

An internal environment analysis is one of the ways through which the existing problems of Spaghetti House can be identified.

• Strength: Spaghetti House offers different and large numbers of dishes which is considered to be one of the strengths of the enterprise. Furthermore, cooking classes are one of the innovative services which are provided by the company in the restaurant industry (Indra et al., 2022). This allows the business to gather customers for cooking classes which also turns out to be a strength as it influences and increases the brand image of the business.
• Weakness: In the United Kingdom, there is a substantial rivalry for customers, so restaurants there have to work hard to get their fair share. If one restaurant starts drawing an abnormally large number of diners, it might force the other to close. The similar fare to that seen elsewhere might become old fast. Some customers find it difficult to decide where to eat because of this (Hakkarainen, 2022). But, restaurants with poorer advertising may find it difficult to fill their tables. One of the main challenges Spaghetti House must overcome is adopting innovative promotion.

• Opportunities: The need and requirements to consume Italian dishes in the UK are rising. With the rising demand for Italian food, Spaghetti House can offer trendy food products and Italian dishes to its customers (Italian food in Britain, 2023). Thus it can be assumed that the need for Italian food among UK consumers will lead to an opportunity for the company. The organization also has a takeaway option which is included on their company website (Werenowska, 2020). This is one of the options that may lead to opportunities for the business as the enterprise can increase its customer base by offering discounts and promotions on the purchase of food through online mode. Thus, it can be considered that takeaway options may lead to opportunities for the business.
• Threats: When people's cost of living rises, they have less disposable income to spend at the restaurant. Spaghetti House is experiencing strategic difficulties as a result of the present trend of growing expenses because of its inability to deliver new services to its clients (Hakkarainen. 2022). Yet, failing to differentiate between products or services is another reason why businesses' strategy development efforts fall short. It follows that the restaurant business has encountered strategic challenges due to characteristics of distinctiveness.

Impact of the barriers on the business

In identifying the impact of barriers on the organization it is relevant to perform a Pestle analysis. The external environment analysis has been demonstrated below.

• Political: Many rules and regulations imposed by the state affect the restaurant industry. Health and safety legislation may be quite severe and controlled in certain countries, while in others, monitoring might be relatively lax even though the standards themselves are rigid (Filimonau et al., 2020). One of the difficulties for Spaghetti House is the lack of clear regulations. Brexit was harming commerce and worsening shortfalls, and political unrest appeared more likely to dissuade investment. This led to decline in exports and imports of products which directly led to decrease in economy for the country.
• Economic: As the cost of living rises, individuals are opting to eat at home more often rather than going out to restaurants. Spaghetti House faces competition from other restaurants as well as a decline in consumer desire for dining out. According to a recent poll conducted in the UK by SellCell, more than half of the 3000 people polled had no plans to ever dine at a restaurant or buy takeout again (Eggsoldiers.co.uk, 2023). This is one of the issues that resulted in decline of sales and revenues for restaurant sector due to Ukraine Russia war. The shortage of ingredients and vegetables has led to change in prices of products. Ineffective management of the alimentary supply chain, resulting price increases and labor shortages resulted in more work for the kitchen staff. This effective the entire supply chain operation of different restaurant business.

• Social: Unlike in other countries, where dining at home is more common, many people in some of those countries make eating out a regular part of their schedule (Frederick and Parappagoudar, 2021). Whilst the restaurant industry is well-developed and varied in many developed countries, in many developing countries it is just getting off the ground and luring multinational fast-food brands. As a result of increased prosperity, people in many countries are busier than they have ever been. Because they're so busy with work, they seldom get home in time for a home-cooked meal. So, restaurants gain immensely from the popularity of takeaways.
• Technological: Spaghetti House has taken advantage of the convenience of online ordering and delivery services made possible by the proliferation of modern technologies. Technological factors also allow the business to assist its marketing strategies. Companies that have invested in cybersecurity and operational improvements often fail to capitalize on their innovations (Frederick and Parappagoudar, 2021). Setting aside time for innovation every week, month, or quarter allows the IT staff to improve upon current technologies and explore new possibilities to give the most all-encompassing solutions for the company.
• Legal: It is the law in the United Kingdom for restaurants to be assessed on their hygiene and sanitation and for those grades to be made public in both physical and digital formats. One may give a rating anywhere from five stars (the highest) to no stars (the lowest). When clients get an unfavourable opinion of a company because of poor evaluations, it presents a problem for the business.
• Environmental: Customer shipping often has unintended consequences on the environment because of its lack of durability. Thus, Spaghetti House must prioritize environmentalism alongside dining sales and profits. More and more consumers in the restaurant industry are concerned about the impact of corporations on the environment (Choudhary, 2019). Some shoppers have shown their support for environmentally conscious businesses by opting to buy from those that use sustainable business strategies like reusing materials and employing renewable power sources like solar and biodegradable packaging. Spaghetti House may improve environmental protection, consumer loyalty, and bottom lines by adapting to external pressures like these. Improving environmental protection will develop the brand image of the business in other countries and regions.Porter's Five Forces are also one of the frameworks that allow for identifying the problems and their impact on the organization.
• Rivalry competition: The restaurant sector is very competitive because of the large number of businesses operating in the area. High levels of competition mean Spaghetti House may have trouble differentiating itself in the market. So, it is reasonable to expect that the firm may have difficulties in the market due to the presence of fierce competition. An increase in rivalries for Spaghetti House may lead to lower profit margins and less flexibility in the prices of the food products that are offered to the customers in the market (Anastasiu et al., 2020). Another positive impact of the factor is the more extensive focus of the organization on the customers leading to the development of innovative strategies and products.

• Substitution threat: There are many competitors in the market, which poses a significant risk of substitution and other difficulties for the business. Spaghetti House may have difficulties as a consequence of the many options consumers have in the food business (Chen and Cheng, 2019). A company's capacity to make money is at risk when customers have access to comparable alternatives that are either cheaper or of higher quality. Businesses with goods or offerings that have few close equivalents have a greater chance of succeeding in the market. Furthermore, as they have greater leeway in setting pricing, they may easily raise prices to maximize profit. Hence it can be assumed that if Spaghetti House can manage substitutional threats then the mentioned factor will result in a positive impact on the business.
• Vendor power: Supplier strength is heavily dependent on the size and prominence of restaurant groups. Because Spaghetti House is so successful, it has a ripple effect on the whole restaurant business. So, it is safe to presume that the company has successfully established itself as the market leader in terms of supplier negotiating power. Power of suppliers may allow Spaghetti House to raise the cost of goods (Anastasiu et al., 2020). Raising the cost of dishes may lead to a loss of customer base. Suppliers in the restaurant industry with market power may exert pressure on Spaghetti House by increasing prices, decreasing product quality, or limiting product availability. The enterprise will incur more expenses as a result. More so, a formidable provider might increase competition in the market, cutting into the buyer's potential for profit.
• Customers' power: Customers have a lot of leverage in the market since businesses provide vastly diverse prices and goods. The business must keep its eye on the competition and adapt to the changing wants of its clientele. The power of the customer may result in changing the price of products and services offered by Spaghetti House. This will result in a negative impact on the business as the organization will have to maintain a price range as per the customers which will lead to low revenues for the business.
• Risk of New Entrants: The Food Industry Requires a Modest Amount of Start-Up Capital. As a result, it's safe to conclude that new competitors pose a danger to established ones. The threat of new entrants will result in low sales and profitability along with a shifting of the customer base for Spaghetti House. Lack of customer loyalty is another area that may impact the operation of the business in the restaurant industry.

Solutions

The report here has analysed and investigated the strategic and business issues faced by Spaghetti House. By deploying various tools and theoretical frameworks, analysis and understanding regarding this issue have been followed up. However, this section of the report will emphasise providing solutions and various reliefs to these issues.

In the previous section of the report has been seen and identification of various challenges has been traced. One such issue that is holistically found is the challenge of the restaurant chain in its survival in the industry without any problems. This problem requires an immediate solution as it will enable Spaghetti House to be more efficient and effective in its services. The aim of the solutions in this section of the report is to make a situation for the restaurant chain to develop and flourish to a greater extent in which it will achieve a competitive advantage in the service industry. By analysing the business situation of the company, from various angles and by deploying three different theoretical frameworks, likely, SWOT, PESTLE, and Porter's five forces, a list of challenges has come forward. And to address the impactful challenges it is necessary to outline the solutions. By utilising“Kotter's Change Management Model”, this section of the report will outline the change management method which is deemed necessary for eradicating the challenges and providing spaghetti houses with opportunities and enhanced strengths in the restaurant industry (Toor et al., 2022).

• “Kotter's Change Management Model” is a theoretical framework by which organisations change by deploying eight different steps these processes will enable an organisation to change, holistically and it will be beneficial.
• “Creating Urgency” is the first step among the other eight which the restaurant chain will follow up for initiating change within. Initiation of change in the organisation has multi-layered roles for every employee. However, the leaders and managers will be more emphasised in this role, and they will elaborate on the urgency and requirement of the change within this organisation. Staff and managers of Spaghetti House will enable every one of these holistic changes.
• “Gathering the right ream” for managing and initiating the change within the organisation forms the second step. The BoD and leaders of this restaurant chain require to identify and formulate the best team with efficient members and employees. They must be efficient enough to formulate the change without any hindrances. This will enable the restaurant chain to report back to its investors and stakeholders properly in a holistic manner. The right team of employees for managing the organisational level change will benefit Spaghetti house to deploy organisational and strategical transformation as per the requirement.
• “Development of vision and strategies” forms the third step in which the change management formulates a specific vision or strategy. This step is significant for SPaghetti House, as it will enable them to formulate the necessary and required organisational aim for the future, which will be different from the previous aims and objectives. Thus this step will find the path that the House will adopt and materialise shortly. However, this step is often limited to the deciding and managing board of the company.
• “Communicating the Change” is the step that will outline the ways by which the deciding and the managing board of the company will let the employees and other serving staff (Laig, and Abocejo, 2021). This process includes the methods of departing the knowledge of change to the employees and encouraging them to follow up on the organisational requirement. This step can be materialised in numerous ways, and Spaghetti House can use methods of discussions, sessions, and meetings to make everyone aware and fit for accepting the required change. this process will enable everyone to be clear of any confusion regarding the change and everyone including the investors will be aware and can participate in the change process.
• “Removing Barriers” forms another step which is designated for removing any kinds of hindrances and difficulties while materialising the change (Laig, and Abocejo, 2021). The basic problems regarding the change can be faced by the House from the staff and employees who were comfortable in their previous position, even though that did not promise growth. This issue is quite common and requires strict handling as often the resistance and barriers are quite difficult to remove and address (Mayhew, 2019). Spaghetti House can address this by reshaping its company policies and can also include discussion sessions with the revolting employees.
• “Acquiring short-term wins” is the process in which organisations reap newer and strategically significant wins in specific markets (Laig, and Abocejo, 2021). This will enable the organisation in concern here to deploy and use resources more holistically and efficiently. These short-term wins will also enable the employees to understand the importance of change within an organisation.
• “Building on the change” is an elongated process just the process of organisational change in itself. Organisational change requires a lot of time for it to materialise and uplift the results (Laig, and Abocejo, 2021). Thus this process outlines and anticipates the implementation of the change in every aspect of the organisation. This process is undertaken by various teams and SPaghetti house must deploy such teams to observe the change has been implemented on every angle of the company as per requirement.
• “Anchor the change in corporate culture” is the last step in the Kotters change model, and this step reevaluates the change to the investors and shareholders by showcasing the desired results and industrial requirements (Laig, and Abocejo, 2021). The comparison is also done by analysing the previous requirements and the situation after the change.

Implementation

Solutions have been materialised by which change and organisational transformation have been operated. This has been told to enable the Spaghetti House to solve the most striking identified issue in this industry, that is, the sustenance of the company. Solutions to organisational change can only be holistic and comprehensive if only the company undertakes a sound and quality implementation plan. To address the challenge of survival in the industry, Spaghetti House can undertake the implementation plan of “digitalising”. Digitalising, the process can be elaborated as the method of technologically transforming its actions and processes of work, which might make it more efficient and will also cut excessive costs wasted on human assets (Stone et al., 2020). This cost reduction by applying AI-generated services will provide the company to focus mostly on its R&D department and will also enable the House to focus more on marketing. Digitalisation will only cut costs of operating and services by will increase the quality of it to a more enhanced manner. This will provide the company with opportunities to increase its brand name and value, which in turn will increase its chances of survival in this industry. The prime focus will also be able to provide digital marketing, which is in practice if the company takes up the implementation plan as digitalisation (Lies, 2021). Not only digital marketing but also omnichannel marketing by the company will enable them to connect with the customers. This connection with the customers will make Spaghetti House thrive in the industry with a popular audience selection and an enhanced brand name.

For holistically undertaking that issue of digitalisation, the company can use various types of software. Among them “ERP software” must be applied for tracking and following its inventories. This software will help in the process of accounting, management and operations of the functionalities of the restaurant and supply chain, enabling the business to reduce costs at unnecessary spots. The previously mentioned implementation plan that is connected with omnichannel marketing and digitalisation can be elaborated here. Technologically advanced omnichannel marketing enables the creation of audience and target market analysis by finding and providing solutions to the issues (Cui et al., 2021). This will provide the company in concern, specific areas to grow and develop its marketing targets, by properly analysing the target audience. Digitalised omnichannel promises to provide Spaghetti House with multilayered opportunities for handling and expanding audiences as per requirement. These processes will enable the company to address the individual customers' requirements and by that, they holistically will increase their market share, audience, and loyalty in the market (Nguyen et al., 2022).

Comparative analysis of the market from time to time is another implementation plan which will give Spaghetti House opportunities to evaluate, outline, and understand its competitors in the market with greater knowledge. This will enable the company to deploy greater strategic actions and plans by which it can handle the rivals of the industry. To materialise this the House can either collaborate with analysts or organisations that carry out such analysis or can create an internal managerial team which will compare and contrast the situations of the House and its position in the industry with others. This will provide comparative solutions and innovations on behalf of the concerned company, and emphasis on digitalisation in the functioning also enhances the whole process in general.

Recommendations

The report here has provided various types of weaknesses and threats that Spaghetti House is facing or can face in the future. For identification of such issues, the report here has deployed various forms of theoretical frameworks and models, likely, SWOT, PESTLE, and Porter's five forces for which substantial amounts of weaknesses, threats, and problems have traced this part of the report thus will focus on providing holistic recommendations that will enable the House to address these issues. Restaurant chains in the UK are always in a competitive position and the target market is always shifting and dynamic, with poorer advertising issues. In the implementation section, the recommendation for this problem has already been mentioned. Adaptation and implementation of the process of digital marketing and omnichannel will produce opportunities for the House to improve its marketing and will immediately increase its audience with greater customer satisfaction.

The threat of inflation in the UK, with the rise of the prices of products, services, and other items is seen everywhere. The audience might move away from the luxury of eating at a restaurant hampering the business (Bradford, and Richard, 2021). Thus the recommendation is to digitalise the organisationalfunctionings which will immediately cut excessive costs. This cost-cutting will enable the restaurant to reduce its food prices, enabling the customers to continue to come to restaurants in this inflation-prone market. The company lacks clear regulations and this issue can be solved by the recommendation of organisational change. Stricter and clever organisational policies must be adopted by the company which will make the employees and staff follow them without fail. With defined policies, the staff and employees of the company will be able to handle legal and political issues impacting the restaurant industry in the UK. To survive in this industry and the socially and environmentally conscious state of the UK, Spaghetti House must focus on its CSR activities (Shim et al., 2021). They must Pledge to net zero carbon footprint production and must provide communities with opportunities for social growth. This will enable the company to grow and address the rising environmental problems and doing that automatically increases its brand name and audience.

The company must deploy organisational change and must include innovation and creation in their activities which will help to make themselves unique. This unique feature will automatically increase the levels of attractiveness that must enable Spaghetti House to address the competitive rivalry (Distanont, and Khongmalai, 2020). By making the House unique in its functionalities and progress, the company can also eradicate substitutional threats from the market. Internal and external policies of the company must be heavily defined and that will automatically eliminate the possibilities of the bargaining power of either the customers or the suppliers. However, discussion and annual meetings must be included in the recommendation list for running this eradication of the bargaining power in a smother and holistic manner. Spaghetti House with digitalisation, lower cost prices in the inflation situation, organisational change, omnichannel, emphasised customer service, and stronger policy can remove the threats of any new entrants in this specific industry for a long time.

Conclusion

Spaghetti House is one of the leading organizations in the restaurant industry in the Uk that offers Italian food products. It can be concluded that the company needs to focus more on the customers to mitigate the issues of rivalries and substitutional products in the market. It has been found that sustaining on the market is one of the challenges for the organization due to intense rivalry in the UK restaurant sector. Furthermore, the organization can also use technologies for influencing its presence among customers in the UK restaurant sector. It has been found that the organization offers cooking classes to the customers which is one of the strategies of the business in increasing its presence among individuals in the relevant industry. The findings of the report also present that the organization also offers rooms for events and meetings along with restaurant services which is an opportunity for increasing revenues for Spaghetti House. The trend of Italian foods is increasing in the Uk which is considered to be an opportunity for the organization. It has also been found that Spaghetti House needs to focus on sustainable packaging and doof products to increase its responsibility towards environmental factors. Introducing sustainable and ethical standards will allow the business to enhance its brand image. Enhancing the brand image may lead to an increase in the customer base and gaining of competitive edge in the relevant industry.

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