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Strategic factor analysis summary

4.4 Research on viability

4.4.1 Strategic factor analysis summary

and evaluate a company by identifying its internal and external factors, while each factor will be given weights and ratings. This analysis is comprised of three parts, the Internal Factor Analysis Summary (IFAS), which shows the company's internal strengths and weaknesses, the External Factor Analysis Summary (EFAS), which shows the company's external opportunities and threats, and finally a combined Strategic Factor Analysis Summary (SFAS), which shows a combined overview of both the internal and external factors. The SFAS relates back to chapter 2.2 Strategic analysis/plan of the theoretical framework.

INTERNAL FACTOR ANALYSIS SUMMARY (IFAS)

The IFAS is the first part of the total analysis, which looks at the internal factors of the company, the strengths and weaknesses. Each factor is given a weight from 0 (not important), to 1 (most important). Combined, all factors should have a weight of 1 (100%). After the weights have been set ratings must be given. The ratings reflect how good or bad the company scores, 1 being low, and 5 being high. Then the weights will be multiplied with the ratings given, which will then result into the weighted score. The higher the total rating, the better the company stands. So a rating of one would mean that the company is in a very poor position, whereas a rating of five means the company's position is very well. In this case, the rating is about the company's internal position; however the same method applies to the EFAS, and SFAS. All weights and ratings are based on my own impression of each factors’ importance, and the effect it has on the company.

Internal Factors Analysis Summary Table

Internal Factors Weight Rating Weighted Score Comments

STRENGTHS unique modern Japanese style atmosphere that isn’t found

Relatively high prices 0.10 3 0.30 Products offered by this company

will be offered for premium prices

which may put people off

The EFAS focuses on the external factors of the company, the opportunities and threats. When it comes to the weights, ratings, and weighted score, the same method applies which has been used in the IFAS.

External Factors Analysis Summary Table External Factors Weight Rating Weighted

Score Comments

health conscious and consume healthy food

Internationally minded

society 0.05 3 0.15 Dutch people aren’t afraid to try new

foods and drinks.

Expansion of operations 0.10 1 0.10 As the society is transitioning to an on-the-go culture, there is still room for expansion and growth

Diversification of

product offering 0.05 2 0.10 More types of beverages and food could

help attract more customers

Substitute goods 0.20 2 0.40 There are many alternatives customers could go to

Competitive Established

Market 0.20 3 0.60 The market for tea/coffee bars already

exists and is long established before our startup. factors will be chosen to come up with a final rating for the company as a whole. The SFAS gives a great overview of the position of the company looking at its strengths, weaknesses, opportunities, and threats. The difference between the IFAS/EFAS and the SFAS is that "Duration" is added. The Duration shows the time each factor holds.

Strategic Factors Analysis Summary Table Duration

Strategic Factors Weight Rating Weighted Score

people off

Nowadays society is getting more health conscious and

There are many alternatives customers could go to

TOTAL 1.00 3.40

SFAS CONCLUSION

Looking at the Strategic Factor Analysis Summary, the main strength of our business venture is our unique concept. Instead of starting a regular coffee/tea bar, we diversify by opening a business that is based on green tea. This is the company’s competitive advantage and will stay this way until other companies imitate our concept. The second strength is the outstanding service and atmosphere the company will offer. In Japan, politeness is very important and customers are seen as gods. This will be reflected in our company as well. In combination with the beautiful Japanese style atmosphere, the company will be able to attract and keep customers.

However there are also weaknesses. First of all, we have limited funds to our disposal. This limits us in what we can, and cannot do. The company will need to apply for a loan, which begs the question if we even get the loan at the first place. Secondly, the products we will offer are at relatively high prices. We want to portray our business as a premium store, but this may scare people away. To fight this we will have promotional events, and discount coupons to let people familiarize with our company and products we offer.

There are also some opportunities. The Dutch coffee and tea market is huge. This means that there is a lot of potential to grow. We realize that there are many competitors, however if done correctly, we have opportunities to grow and capture market share. The second opportunity is the fact that people are becoming health conscious. Matcha Green tea has a lot of great benefits to the health of people, and marketing our products correctly, this could potentially attract more customers.

There are many dangers threatening the business too, one ranked high among them is the fact there

have been in the Dutch market for a long time, and captured most of the market share. This makes it difficult for us to penetrate the market unless we really offer something different that’s not already there. Lastly, we have to realize that there are many substitutes in this branch. There are unlimited cafes and other stores that sell beverages, so in order to survive in this market, we need to keep customers by our unique green tea based food and beverages, combined with outstanding service. A rating of 3.40 is reasonable, and the future of this business can be profitable.