Eat2Eat. com 27th of November 2012 Strategic Management – Questions 1. What are the key success factors for competing in the online restaurant booking industry ? 2. What are the fundamental aspects of Eat2Eat’s strategy ? Which of the 5 generic strategies do you believe Eat2Eat is pursuing ? Has the strategy evolved since the company’s conception ? 3. Perform a SWOT analysis for Eat2Eat. 4. What role have strategic alliances played in Eat2Eat’s success ? What types of partners are most valuable to Eat2Eat ?
Which partners does Eat2Eat have the greatest potential to benefit ? Which partnerships should Eat2Eat focus on forming in the immediate future ? 5. Provide recommendations concerning Eat2Eat’s future strategy. 1. What are the key success factors for competing in the online restaurant booking industry? * Quality of restaurants contracted * A large network of restaurants in strategic places * Good interface with relevant criteria (Place, time, ambiance, cuisine price, rating,…) * Clever communication * Favorable reputation * Good knowledge of the market Ability to respond quickly to shifting market conditions * Technical capability to make innovative improvements * Fast, accurate, technical assistance * Superior information system * Access to financial capital 2. What are the fundamental aspects of Eat2Eat’s strategy? Which of the 5 generic strategies do you believe Eat2Eat is pursuing? Has the strategy evolved since the company’s conception? First let’s say that Eat2Eat. com is an internet based restaurant portal, promoting fine dining in Asia pacific region, through twelve cities.
The website is a guide to the region’s best restaurants with an online reservation service. The founder of this website believed that there was a value proposition in connecting dinners both corporate and personal with restaurants, with the help of a highly automatic process like the airline bookings, hotel reservations or car rentals. He also believed that restaurants could benefit by having a presence on the internet. And we think it is important to precise also that the revenue generated by Eat2Eat is different from other restaurants portal on the internet. 0% of their total revenue came from their commissions on the restaurants (between 7% to 10% of the customer’s bill); 20% of the company total revenue are from banner advertising on the website, and the last 40% came from the preferred arrangements between credit cards companies and restaurants. Whereas most of other portals derive revenues from advertising alone. Therefore one of the major customers for Eat2Eat remains the restaurants’ owners (through the commission and the advertisements), Eat2Eat signed them up as suppliers, but also there can’t be any commission without any bookings. Corporate strategy Looking at Eat2Eat present corporate strategy, it is following a growth strategy and more specifically an internal growth. Eat2Eat strategy is to capitalise on its core competencies, expanding its existing resources. We have the example in the case when the company wants to increase its geographic coverage, launching in Kyoto, Melbourne and Phuket. We can also add that this choice of strategy follows Aggarwal’s desire to conserve full ownership and control on his company. * Generic strategy
The reason why we think Eat2Eat is following a broad differentiation strategy is the augmented services and their high quality. First, let’s say that comparing to other websites Eat2Eat is offering a wealth of supporting information, these extra features include: restaurants reviews, recipes, interviews with leading chief and list of tops establishments in various categories. To propose this service in a more convenient way, the restaurant can be search according to various criteria including location, ambiance and accessibility for disabled diners, smoking preference, cuisine, price range, quality rating and hotel affiliation.
The launch of the content and the booking function through the WAP system improved also the accessibility of the service for the user. * Leader offensive strategy Eat2Eat can be considered as a leader because comparing to the other Asian pacific portals which are only city specific, Eat2Eat. com is offering regional coverage. Google and Yahoo! , search engines consistently ranked Eat2Eat. com first in search results for Asian restaurant reviews and reservations. And also the Smart Diners Organisation in the United-States has rated Eat2Eat. om as the top restaurant information and reservation site in the world. * A transnational strategy Because Eat2Eat is dealing with cross-country variations in buyer preferences and market conditions, it is very important to notice the differences between those markets (as market observations in exhibit 4) . Eat2Eat employed a combination of global local strategy. Eat2Eat has the same basic competitive strategy in all country market, but it is also able to develop the capability to customise service offerings in different countries.
To illustrate this point, the launch of equivalent sites in Japanese and Korean to cover the restaurants in Tokyo and Seoul is an example of this “think global, act local” strategy. Focusing on Tokyo again, another example could highlight this strategy: when Japanese corporations were reluctant to encourage their employee to sign up for the service and also because many first-tier restaurants in Japan had their own website but not the technology to support on-line reservations, Eat2Eat. com enabled the reservation for the restaurants’ website. This is clearly an example of a small adjustment for a specific market. Has the strategy evolved since the company conception? In a way, we could say, yes the strategy evolved, because first Eat2Eat was focusing its promotional efforts on corporate customers. It seems at the beginning the best way to reach customers, and this strategy worked well because both the corporation and Eat2Eat were wining (except in Japan as we observed previously, and the cultural adjustment were the first step to an increase in personal dinners booking in Tokyo). The strategy evolution from corporate customers to individual customers probably occurred with the success of the adaptation of Eat2Eat. om for mobile phones for Japanese and Korean customers. In order to reach its potential, Eat2Eat had to do all it can to increase the customer base in the personal market. The partnership with The Asian Wall Street Journal seemed the best way to reach the customer base. And even if the Eat! had little immediate impact on Eat2Eat. com reservations and revenue, it allowed the company to expand its restaurant base in current cities and established the business in new cities. With the same idea to reach more individual customers, Aggarwal thought of an agreement with credit card companies.
We can also add that due to the lack of time and resources it may appear now to Aggarwal’s mind, that an external strategic alliances might be taken into consideration and may be the best way to improve Eat2Eat efficiency. 3. Perform a SWOT Analysis. * * Strengths * Highly rated Eat2Eat. com was the most highly rated Internet based restaurant reservation service covering major cities in the Asia Pacific region. * Airline booking The airline booking is highly automated process. * 12. 000 customers After only five years of operations, the company already has 12. 00 customers from differents countries. Eat2Eat. com covered 823 restaurants in Bangkok, Hong Kong etc. * Team members Vikram Aggarwal hired 1 chief officer, 1 programmer, 2 other people in order to help with the workload. It was a little company, with competent personal and easy to manage. Moreover, the personnel costs should not be high. * Revenues The company makes 40% of total revenues with 7-10% of bill’s customer. Then, in 2005, advertisements on the website contributed an additional 20% of the revenues. * Recognition The company had received considerable recognition.
A poll taken by the Smart Diners Organization in the United Staes had rated the company as the top restaurant information and reservation site the world. Moreover, Google and Yahoo ranked Eat2Eat. com first in search results for Asian restaurant reviews and reservations. * On mobile phone In 2004, the company was adapted to make its content and booking function accessible on mobile phones. This added accessibility would significantly extend the company’s reach and utilization, considering the high penetrationof mobile phone in the region. * Weaknesses * Enable on certain cities The service became popular but lagged elsewhere.
The service had not found greater acceptance in cities like Hong-Kong or Singapore. * Approach customers Vikram Aggarwal approached himself their customers but this technique is much too long. May be he can ask to professionals to make it A SA PLACE. * No time As we have just said before, Vikram Aggarwal had no time to convince all partners. * Second-tier restaurants Eat2Eat. com dealt exclusively for first-tier restaurants, there were moderately expensive or very popular and busy. Because second-tier restaurants did not accpet reservations and therefore were of no to Aggarwal. Resources The company did not have the employees or finanacial resources needed to pursue such a vast market. * Opportunities * Third party The company engaged in another complementary business : negotiated arrangment between credit card companies and restaurants for the benefit of credit card holder This third-party negotiations contributed the remaining 40% of revenues. And a partnership with a single credit card company might expose Eat2Eat. com to millions of new customers. * Discounts He negotiated discounts for corporate customers and commissions for Eat2Eat. Easy to access The website was an easy to access for secretaries and personal assistants. * Corporations Aggarwal focused his promotional efforts on corporate customers. Because he thought personal diners were too numerous and consequently, too dificult and expensive to reach. So, this approach would bring more value for Aggarwal efforts and would be the best way to reach customers. Roughly 80% of the companies he approached endorsed the program. * Partners Aggarwal wanted to find partners as hotels, local or regional newspapers and airlines companies. * Investment 0% of the new capital would be spent on public relationss and marketing activites to reach the personal dining market segmetn. And 10% would be spent on a technology upgrade. Only if the company raise $2 million in additional capital. * Threats * Equivalent sites There were other restaurants portals on the Internet, covering Adia Pacific and other regions but Eat2Eat. com was different, in fact the company offered regional coverage compare to competitors which derived revenue from advertising alone. * Languages The original website appeared in English. * Bank Loan
Eat2Eat had not yet established a profitable track record, so, it would be difficult to obtain bank loan. * Cost of maintenance The cost of maintenance of a website can be more and more expensive * Conclusion The situation of the company is quite good because the company is the most highly rated Internet based restaurant reservation service, and they have a real recognition. Moreover, they can find some partners to improve their service. Perhaps Vikram Aggawal has to be careful about potential new entrants, their resources and he has to find some solutions about his investment to improve his strategy. . What role have strategic alliances played in Eat2Eat’s success? What types of partners are most valuable to Eat2Eat? Which partners does Eat2Eat have the greatest potential to benefit? Which partnerships should Eat2Eat focus on forming in the immediate future? * What role have strategic alliances played in Eat2Eat’s success? First of all, strategic alliances are short or long-term partnerships of two or more firms working on a specific project or cooperating in a specific business area. Those alliances can be in form of joint ventures, franchises or licensing agreements, which are the main alliances.
Actually, Eat2Eat has made several strategic alliances. First, the core alliances, on which the business model is based, are the alliances made with each restaurant. Indeed, Eat2Eat brings customers to the restaurants and those latters pay a commission to Eat2Eat. Thus, this first type of alliance has played a key role on the revenue of Eat2Eat. Then, the second alliance was one with a regional newspaper : The Asian Wall Street Journal. In the long-run, it had a tremendous impact on Eat2Eat revenue. In addition, the number of the website users increased thanks to the Eat! romotion put in the well-known critics’ pages. Now, Eat2Eat needs a new strategic alliance. Indeed, the issue that Eat2Eat faces is to find a way to get an increase in the capital of the company : exactly, US$2 million more than actually. * What types of partners are most valuable to Eat2Eat? One of the most valuable partners would be an Internet company such as Yahoo. Indeed, it would provide the recognition needed for the growth of Eat2Eat. In addition, another valuable partner could be credit card companies. This alliance would allow Eat2Eat to get access to larges customer’s databases.
That would have a great impact on the number of the website users. Even if it takes time to create a relationship, those types of companies would have a serious and positive impact on the Eat2Eat success. Then, given that no Internet company was interested in Eat2Eat, they had to think about potential venture. There were two possible types of ventures : venture with capital firms and one with entrepreneurial companies. In the first venture, the companies expect a return around 30% within 5 years, but with a minimum investment whereas in the second one, they only want to maximize their profit.
Therefore, the most valuable partner between the two options above is the last one : the venture with entrepreneurial companies. Indeed, the main reason is that they have the same business expectation on the investment than Eat2Eat. Furthermore, this latter wants to do a venture with only entrepreneurial companies which cover the entire Asian region. * Which partners does Eat2Eat have the greatest potential to benefit ? Eat2Eat will probably make several partnerships. In fact, Eat2Eat knew that, in order to increase its success, they will need to do some partnerships with firms in other businesses.
As an example, Eat2Eat wanted to work with firms such as hotels chains or airlines companies. However, they can continue working with other companies in the sector as themselves. In other words, it could be some other websites, but which cover only limited areas. In addition, we think that Eat2Eat will undoubtedly benefit from local Asian restaurant website partners. Even if the Asian website partners cover a limited area, they are already implanted in a specific town. * Which partnership should Eat2Eat focus on forming in the immediate future?
The current problem of Eat2Eat company is to get recognition. Indeed, this lack of recognition is a crucial issue for the company at the time being. It leads the companies to face problems in the process of making deals such as valuable partnerships with other corporations. Therefore, in the immediate future, Eat2Eat should focus on the partnership with all the Asian restaurant websites. Then, when Eat2Eat had covered enough key towns, their coverage provided from it will give them the credibility to do ventures with some banks.
And then, in this way, they will get the database of customer needed to grow. 5. Provide recommendations concerning Eat2Eat’s future strategy. Brigitte CISS As we could see, the company Eat2eat has a great concept which pleases a lot of consumers. The idea and the way it is implented is are good, and the only remaining issue, is the recognition. Indeed, Eat2eat has a problem being considered by “serious” companes such as banks, and trusted by businesses. Therefore, to be more recognized, the company needs to have contacts with big websites such as Yahoo! or Google, to be more available on the Internet, to increase the awareness and the knowledge of people. As the case said, also, Eat2eat has to be in a relationship with credit card companies to facilitate the online payment, and to create joint ventures with such companies. To increase the recognition, the company has to broaden its services to big cities, outside of Asia. Why not ? There are no infrastructures to take care of since it is an online operation, and it might be well known internationally. We would also recommend to the CEO to hire people specially for public relations.
Going to every potential partner himself is a long process, and the opportunity cost is quite high, with the amount of time lost. With more people available, the company could bring to her much more clients. After creating a more efficient network, maybe Eat2eat. com should now spend a bit on advertising. A quick ad on the Internet, not for businesses but directly destined to end consumers who are looking for restaurants, would increase the awareness and therefore the profits. On the long run, the company could even try to advertise on television.
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