Essay On Real World Situations
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The percentage of people who often consume food-away-from home keeps growing in a modern society. Thus, food service industry represents an industry with high competition, which has quite high barriers to entry. The following paper analyzes the performance of two competitive companies, participants of this industry: Panera Bread and Starbucks. Various environmental, legal, social, and economic trends have a significant impact on the companies’ operating activities. Both companies have to follow strict Department of Labor and U.S. Equal Employment Opportunity Commission regulations. Moreover, in order to perform successfully, Panera Bread and Starbucks have to keep a track of fast changing consumer preferences and have to adapt to those changes.
Panera Bread and Starbucks share their similarities, and, of course, have differences. The companies’ cultures are quite similar to each other, because both of them want to provide excellent service and warm atmosphere to the customers and employees. Moreover, two companies have relatively high production costs, which can represent a potential threat for them in future. However, in comparison to Panera Bread, Starbucks has a global brand recognition, because it operates its stores in 65 countries all over the world, while Panera has stores on the territory of United States and Canada (Panerabread.com, starbucks.com). Therefore, the performance ratios for Starbucks are higher than for Panera. There is a big room for further expansion and improvement for Panera Bread, so that it can become closer to Starbucks in terms of performance.
Businesses in a food serving industry operate in a highly competitive environment. For the following analysis paper, I have chosen two companies that operate in this industry: Panera Bread and Starbucks.
It is important to analyze an external environment in which those two companies operate. First, there are various laws, policies and regulations in the country are having an essential effect on the work of the businesses in food serving industry. Every food service establishment has to go through the set of sanctions that would examine the safety of the venue location. Panera Bread is operating 1800 bakery-cafés in different locations on the territory of United states and Canada, and Starbucks has over 21 000 stores in 65 countries (Panerabread.com, starbucks.com). Therefore, the fact that both companies are operating numerous locations tells us that the companies successfully manage to keep up with all the sanctions that the government imposes on the food service industry locations.
Another important aspect of the legal operations of the company is its duty to comply with the employees’ safety. The Fair Labor Standards Act underlines that the companies that are operating in the food services industry have to keep up with the following regulations: minimum wage (it varies in different states), overtime pay, and recordkeeping. Moreover, according to the Occupational Safety and Health Act, the employees also have to abide certain requirements at work, among which are providing a first aid kit in the workplace, providing appropriate training, providing proper protective gear, and providing a Hazard Communication program to all the workers (Dol.gov). Both the managers and associates have to make sure that these requirements are being carefully followed. In addition, companies have to abide the legal regulations that help to prevent the discrimination of employees at the workplace. U.S. Equal Employment Opportunity Commission states that it is illegal to discriminate the potential and current workers on one of the following bases: age, pregnancy, disability, national origin, sex, color, race, and religion (Eeoc.gov).
Social and cultural trends also take a significant place in the life cycle of Panera Bread and Starbucks. Social and cultural trends imply the trends in lifestyles, religions, education levels and values. We can notice that in the modern world more and more people are trying to stick to the healthier lifestyle and are getting more involved into fitness activities and into healthy eating (Ift.org). In the environment with high competition, it is essential to respond to the emerging trends, and Panera Bread and Starbucks are trying to keep up with the changing customers’ needs by offering new menu items and issuing various campaigns. For example, Panera started to offer high-nutrition and low-calories meal options, such as power bowls and power smoothies.
Another aspect of social trends is the fact that there are many people, who profess different religions in United States. As the result, it becomes a challenge for the companies in food serving industry to respond to different needs and food restrictions that some religions have.
Economic trends also have an effect on the food service industry. Food retailers continue to expand their locations, but food service institutions are still gaining customers in their locations. The share of the food service businesses have significantly increased over the last years. United States Department of Agriculture reports: “By 2011, food-away-from-home spending by households and businesses accounted for 48.7% of all food spending, up from 43% in the year 1991” (Ers.usda.gov). It is explained by the fact that the family composition has changed over the years, and there are more single-person or two adults’ households. Moreover, the incomes of the households continue increasing and the preferences of customers move towards convenience foods. As the results, more food retailers started to offer ready-to-eat meals, and some supermarkets have even added a sitting area in their locations (Ers.usda.gov). Thus, in the economic environment, food retailers are trying to keep up with food service businesses.
Panera Bread and Starbucks have to watch carefully various emerging social, economic, demographic, environmental, and governmental trends in order to operate successfully in the food service industry. For a more thorough analysis of those two companies, we need to compare them in terms of performance and operating activities.
Panera Bread and Starbucks are competitors, though, as it was mentioned above, Starbucks significantly overcomes Panera Bread in the number of locations. We can explain this by the fact that Panera Bread is operating only on the territory of United states and Canada, while Starbucks is operating all over the world.
In terms of company culture, the two companies are somehow similar, because they are providing similar services and want to maintain quite similar atmosphere in their locations. Both Panera and Starbucks state that their care about their employees and about the society. Two companies make a huge emphasis on diversity and on the warmth in all of their operating activities. Therefore, we can see that two companies in a highly competitive environment are highlighting the same values that they bring to the society and to employees (Panerabread.com, starbucks.com).
Panera Bread Company is operating as a member of limited liability company, Panera LLC. Panera Bread is a corporation and is a publicly traded company. As far as Starbucks is a company of greater size, its business structure is a little bit different. Starbucks is not operating franchise, but instead it is issuing licenses for the storefronts. The headquarters of the company are located in Washington and “oversee the company” from this spot (Smallbusiness.chron.com).
In terms of leadership styles, Panera Bread and Starbucks a bit differ, because Starbucks identifies its style as ‘servant leadership’, and Panera Bread put greater emphasis at transformational leadership. Still, those styles can be viewed as similar in the case of those two companies, because both of them are willing to thrive. Both companies want to serve for the good of greater community, and both of them want to have constant innovation in all of their activities. Moreover, Panera and Starbucks want to place their leadership styles in a way that will contribute to the way people it, and they want to provide healthier and high quality foods for the good of the society (Businessweek.com, sites.psu.edu).
It is also crucial to use SWOT analysis to look at the performance of the companies. Both companies are big enough and their SWOT analyses are available online. For example, one of the main strengths of Panera Bread is that they have high product differentiation and maintain constant innovation. What concerns Starbucks, the main strength is the global brand recognition. At the same time, it is the biggest difference of two companies. In terms of weaknesses, the most important weakness that both companies should pay attention at is relatively high costs of the offered products. In the competitive environment, it is crucial to maintain the prices affordable to customers and to keep the production costs not very high in order to generate profits (Scholar.harvard.edu).
Thus, we can see that Panera Bread and Starbucks are operating in the environment of high competition in the food service industry. Two companies have their similarities and their differences, and Starbucks probably goes first before Panera in terms of performance and recognition. The suggestion for Panera Bread brand may be going global and expanding their idea to European markets. This move can contribute positively to the brand recognition of Panera and will help the company to become closer to Starbucks in terms of performance.
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Top 10 Food Trends Show Lasting Influence of Weak Economy on Consumers Decisions. (2011, April 22). Retrieved March 5, 2015, from http://www.ift.org/newsroom/news-releases/2011/april/22/top-10-food-trends-show-lasting-influence-of-weak-economy-on-consumers-decisions.aspx
We Are Panera: Our History. (n.d.). Retrieved March 6, 2015, from https://www.panerabread.com/en-us/company/about-panera/our-history.html
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