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INTRODUCTION (purpose, your company of choice, industry)


PESTLE Analysis: PESTLE analysis is a tool that can aid organisations making strategies by helping them understand the external environment in which they operate now and will operate in the future. It is a method of examining the many different external factors affecting an organization - the outside influences on success or failure.

PESTLE stands for: Political - The current and potential influences from political pressures Economic - The local, national and world economy impact Social - The ways in which changes in society affect us Technological - How new and emerging technology affects our business Legal - How local, national and world legislation affects us Environmental - The local, national and world environmental issues

The PESTLE analysis will be used to identify and understand the important factors Starbucks must consider in all areas of the business. Political: * Taxation policy - high taxation imposed on farmers in those countries producing the meat will usually mean Bee Cheng Hiang has to pay higher price for the meat they purchase. Any fluctuations in taxation levels in the industry are almost certainly ultimately passed on to the consumer. * International trade regulations/tariffs - Trade issues will affect Bee Cheng Hiang when exporting and importing goods. When another country's government imposes a tariff it not only results in an efficiency loss for Bee Cheng Hiang but large income transfers can become inconsistent with equity.

* Government stability Bee Cheng Hiang should thoroughly investigate the political stability of any country they plan to expand to. Changes in government can lead to changes in

taxation and legislation. (E.g.: The elections may have an effect on BCH as new legislation or new or existing government may bring in taxes. Also, those countries in political turmoil or civil war should be approached with great caution when considering new ventures) * Employment law - A reduction in licensing and permit costs in those countries producing the meat for Bee Cheng Hiang would lower production costs for farmers. This saving would in turn be passed on to the purchaser/consumer.


* Economic Growth - If growth is low in the nation of location of Bee Cheng Hiang then sales may also fall. Consumer incomes tend to fall in periods of negative growth and having less disposable income to spend. Consumer confidence in products can also fall if the economic 'mood' is low * Inflation rates - Inflation is a condition of increasing prices. Business costs will rise for Bee Cheng Hiang through inflation. * Competitors pricing - Competitive pricing from competitors can start a price war for Bee Cheng Hiang that can drive down profits and profit margins as they attempt to increase, or at least maintain, their share of the market.

* Quality The quality assurance plays a big role to ensure customer have faith on

the product, especially when it comes to nutrition and hygiene. * Choice as Gift - Being a delicacy, Bakkwa is a popular choice as gift item during festive season. Consumers would present them to their parents, siblings, in laws, relatives or friends.
* Location - Transport needs to the stores must be considered for both staff and customers. Easy access is vital to ensure there is no excuse for staff to arrive late or for customers not to visit. * Health consciousness - Good health and foodstuffs associated with healthy living are important in today's market place. Bee Cheng Hiang can use this as an opportunity when deciding the additional products to sell to those who are health conscious.


* IT development Bee Cheng Hiang has launched e-commerce Web site, and they are able to deliver new features to the market in the shortest time possible.

LEGAL: * Trade and product restrictions Bee Cheng Hiang needs to be aware of the trade laws in the various countries they occupy and do business with. They need to ensure they are not in violation of e.g., religious laws. Also, certain countries impose a tariff that has to be paid when goods are imported / exported so this must be taken into considerations.

* Health and Safety regulations It would be wise though to enforce a universally high standard of health and safety throughout all its stores to maintain a good image and ensure all laws are abided by.

* Natural Disaster Flood & Disease causes both shortage in raw materials and increase fears of the customers.


Porter's Five Forces analysis: Porter's five forces analysis is an important tool for analyzing an organizations industry structure in strategic processes. It helps the marketer to contrast a competitive environment. It tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products.
1. Entry of competitors - assessing the ability of new entrants to start operations and the structural barriers they must overcome; 2. Threat of substitutes - assessing the ability of new products with superior characteristics to replace existing product(s) or service(s); 3. Bargaining power of buyers - assessing the relative strength and number of buyers;* 4. Bargaining power of suppliers - assessing the relative strength and number of sellers;* 5. Rivalry among the existing players - assessing the relative competitive strength of rival firms.*

Threat of new entrants (Medium)

y y y

Large capital requirements required to build chain of stores Favorable locations are already occupied Product and brand differentiation

Capital requirements for individual stores are low, however new entrants wishing to compete on a like basis with national store networks, distribution channels, brand equity development and advertising, face large capital requirements to gain market share. Premium locations in Singapore are scarce and command high prices with most of the favorable locations within town, airport and MRT stations already being occupied.

Rivalry among existing competitors (High)

y y y y

High concentration of rivals e.g. Fragrance Foodstuff, Lim Chee Guan, Kim Hwa Guan, etc. Static market growth High fixed costs - locations Perishable products - food

The competitors in the industry are all competing for the same customers. Bakkwa chains (e.g. Bee Hock Guan, Fragrance Foodstuff) are all competing to be number one in the market. While product differentiation is limited, there is fierce differentiation by product range, brand and store ambience.

Market growth is static, which promotes fierce fighting for market share, and there is saturation of competition due to the limited number of prime locations available for outlets.

Threat of substitutes (Medium)

y y

Large choice of alternatives with similar products No switching costs

Although a consumer can choose from multiple substitutes (e.g. desserts, pastries), the stores/chain compete based on convenience and opportunity. Most people buy when they are travelling, shopping or meeting people. This is evidenced by the location of the store, which is concentrated around such as MRT stations, and shopping centers. For a consumer this becomes a competitive choice rather than a substitute choice (e.g. do I buy the Bakkwa from Fragrance Foodstuff or Lim Chee Guan).

Power of suppliers (High)


Few suppliers to choose from and high switching costs within the industry

Power of buyers (High)

y y

Buyers have low switching costs Buyers can postpone to purchase at a later date

INTERNAL ENVIRONMENT Physical resources:

The physical resources of Bee Cheng Hiang are the shops and the factories they own. Today, Bee Cheng Hiang has more than 160 retail outlets located across 6 countries.

Human Resource Management:

Bee Cheng Hiang believes that employees are the greatest assets. The Management & staff are inculcated with core values of hardworking & honesty;

Technology development;
Bee Cheng Hiang has uses technology to enable customers to order their products over the internet and provide delivery service. They do have their own R&D, own food technologists to carry out regular checks to ascertain that their

quality standards are maintained when it comes to nutrition and hygiene. Operations;
This is the stage where Bee Cheng Hiang grills the Bakkwa in the store and packages it.

Outbound logistics
This is collection, storage and distribution of Bakkwa, the customer actually purchasing the Bakkwa from the store.

Marketing and Sales

This is how consumers become aware of Bee Cheng Hiang and purchase it. Bee Cheng Hiang brand is recognized all over Singapore. It participates in Food Festival and liaises with local bank for promotion.
Bee Cheng Hiang is also one of the first to make use of mobile advertisements by placing advertisements on lorry and trucks

SWOT Analysis
STRENGTH: y The Bee Cheng Hiang outlets open concept design allows customers and shoppers to view the workers at work.

y y y y y y y y y

Strong/reputation brand name. Production process has been awarded the ISO9001 certificate and we are HACCP certified. Quality standards are maintained when it comes to nutrition and hygiene by food technologist Has the slogan: FOR EVERYONE, FOR ANY OCCASION. Has catered the Halal Bakkwa to Muslim customers. Continued to innovate and to introduce new products. Wide range of products From 2002 to 2005, Bee Cheng Hiang was recognized as one of the most recognizable brands in Singapore with the awarding of the Singapore promising brand award . It has 30 outlets in Singapore and almost 105 outlets abroad spreading across China, HK, Indonesia,Malaysia, Phillipines, Korea, Taiwan. E-Commerce/E-shopping Has an account with Facebook as a marketing strategy

WEAKNESS: y y Some outlets are inaccessible due to the location. The new product development and creativity remain vulnerable to the possibility that their innovation may falter over time.

OPPORTUNITY: y y y International expansion - to Europe country Making a reward cards for discount purposes Sponsor more town events to increase recognition

THREATS: y y y y intense competition Lim Chee Guan, Fragrance Foodstuff, etc Economic Downturn situation is a threat due to the desire to save money. Any changes in government regulations on Meat product would impact consumers spending even further. Disease may frighten consumers spending power.

y y y

Who knows if the market for Bakkwa will grow and stay in favor with customers, or whether another type of snacks or leisure activity will replace Bakkwa in the future? are exposed to rises in the cost of meat and meat products Bee Cheng Hiang' success has lead to the market entry of many competitors and copy cat brands that pose potential threats.