Free Report On Strategy Case Analysis Of Calveta Dining Service Inc
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Calveta Dining Service Inc. is a 2 billion dollar company privately owned by Frank Calveta, the chief executive officer and president of the company and Antonio Calveta, the CEO of the company. Calveta Dining Service Inc. was founded by Antonio Calveta in the year 1966. The company started with a small restaurant in the neighborhood in New York City’s Brooklyn area. Antonio was passionate for traditional family values and more importantly for food. This made a poor lad immigrate from a village and start up his own restaurant and his daily hard work of about 16 hours made him a successful and competitive restaurateur. He started with one and then started the second one and then the third and this way the company grown up and reached a milestone of $2billion in the year 2009 (Heskett & Girardi, 2011).
The company provides dining services to about 1000 senior living facilities (SLFs) in USA. After 35 years of hard work Antonio retired in the year 2007 making his elder son Frank the CEO of the company. Antonio asked his son to double the company’s revenue within five years without risking the company’s reputation and changing the culture of the company. He asked his son not to change the way of growing that he followed by serving the customers to its best. But Frank still yet is unable to find any solution to meet up the promises made to his father.
Two major problems faced by Frank for meeting his promises are:
Growing without changing the culture of the company’s service, i.e. keeping in mind, Antonio’s way of handling the company while growing.
These were the main problem Frank was facing in the developing his business. He needs to decide whether increase the revenue by expansion of the business or by being constant and enhancing the services. It is important for him to decide how to grow the business. It is important for him to decide whether to provide franchise for his restaurant or invest money in some other real estate and university and college projects. Along with all thoughts of expansion, it is important for him to keep in mind that he could not disobey his father’s way of business.
Five Force analyses
Five force analyses have been conducted to understand what problem the business faces in a prevailing market and analyze the reason for the problems. It is important to conduct the five force analyses to find out the actual problem the company is facing and recommend proper solution to the problems (Porter, 2003).
Threat of new entry: It becomes difficult for the company to enter a new market or invest in some other business. There occurs a high potential risk of loss that Frank could not afford at the present moment. For making new investment for growing the business he needs to invest more money and therefore he needs an easy solution to solve his problem of expansion.
Supplier Power: As it an open market and the suppliers of the company are the normal commodity sellers, it is important for the company to build up a proper purchasing strategy that will help it to reduce the cost of the products and service. But to build up a good r4elation with the employees as being the service provider of the company, the company needs to develop better human resource management plan to support the goals of the company.
Threat of substitution: The Company works in an open market and has a number of competitors producing substitute products and services for the same customers. Hence Frank needs a good products and service development strategy that would help the company to differentiate its products and services from its competitors.
Buyer power: The main motive of the company is provide best quality services to its customers of 1000 SLFs that lies in the east coast of USA. Hence, it is important for the company to provide best service at cheap rate to retain its customers and gain more profit.
Competitive rivalry: As Calveta works in an open market that is vulnerable to high competition, it is important for the company to decide a good pricing policy to compete with its rivals and gain competitive advantage over them.
Frank need to follow certain strategy to fulfill his promises given to his father. Therefore the strategies of the company are discussed below in the following points (Grant & Grant, 2008):
Innovation strategy: Maintain standard of services by implementing innovating strategy. The company needs to develop its products and services to meet the requirement of the developing and globalized market. It is important for the company to develop an innovating strategy that would help the company to develop its service and products
Policy of no debt: The Company intends to follow a no debt policy as per which it would not take financial help from another company or financial institution.
Stuff training and internal promotion: It is the most important method of developing the services of the company by training the staffs and motivating them to enhance their performance. This help to develop a competitive advantage in the market. With a better human resource management technique, Calveta can differentiate its services from its competitors.
Employee satisfaction survey: Employees or human resource is the backbone of any organization. By getting the feedback of the employees, the company can develop a better human resource management plan that will help it to enhance the performance of the employees and earn more revenue. See “Appendix A” for Employee Satisfaction Survey.
Strength and weakness analysis
The strength and weakness of the company is discussed in the following points (prezi.com, 2015):
It is a family business that is privately owned by Frank and he has all the authority to take decision regarding the business
The company earns high revenue
It works for the development of the employees
The main aim of the company is the fuller satisfaction of the customers
It delivers high quality of services
Has a possibility of growth for the employees
It operates in an open market which is vulnerable to entrance of new competitors.
Having internal problems (conflict between Jennifer and Frank)
No risk taking policy
Improper communication way
No way of fitting core competencies along with the growth strategy
Market research is important to analyze the position of the company in the market. It is important to conduct a market research and know the competitors and their strategy to develop a competitive advantage over its competitors. The first and foremost thing required to develop competitive advantage is to now the target market for the company. As per the company’s strategy, its main target market is the SLFs on the East Coast of America. It mainly targets elderly people who are more concerned about healthy food and catering service (Krajewski & Ritzman, 2002). By conducting a market research it is clearly known that the company has a huge number of competitors and substitute products that make the company face a good competition in the market. It is important for the company to go for products and service development policy and implement a better pricing policy to earn a competitive advantage over its competitors. The best way to survive and earn more revenue is to eliminating the competition. The company needs to develop its service and products in a proper way to differentiate them from its competitor’s products and services.
If we go through the financial statement of the company for last four years from 2005 to 2008, it can be seen that the company has increased its revenue be almost making it double in four years. But due to the increased competition in the market, the company needs to develop its strategies and have to find out substitute ways to increase its revenue (McGee, Thomas & Wilson, 2005). As per the strategy of the company it does not wants to take risk as well as want to take financial help from any financial institutions. Therefore the company needs to develop some other way to reduce the cost of the products and services and needs to reduce the overhead cost to increase profitability. For doing this its needs to implement some cost cutting methods that would help it to reduce the cost of production and service rendering. The financial statement of the company is presented in “Appendix B” for further reference.
Franchise: The Company must use franchise business model that will help it to earn more profit without making further investment. This is the best recommended way of increasing revenue earning by following Antonio’s way of business.
Acquisition with GSD: Great South-West Dining is one of the competitors of this company that serves SLFs on the Western Coast of USA. By collaborating with them, the company can expand its business and earn more revenue.
Monitoring and reduction of cost: By monitoring the cost of products and services and reducing the overhead cost the company can earn more profits and save more for further investment.
Better training program for employees: It is recommended to the company to implement better training and development programs for enhancing the skills and capabilities of the employees. With more skills and capable employees the company can enhance the quality of service and earn competitive advantage over its competitors.
The Calveta Dining Services Inc. is facing a high competition in the market and needs to develop a better plan and strategy to meet the growing competition of the open market in which it is operating. As it can be seen from the case, that the company does not want to invest more in the business by taking loan from other companies, therefore it is recommended to the company to go from offering franchise licenses and acquisition with another company. This will help the company to double its revenue within five years without any large investment. Along with that the company needs to develop the employees training program and employ a HR manager capable of controlling and developing the human resource of the company.
Grant, R., & Grant, R. (2008). Cases to accompany Contemporary strategy analysis. Malden, MA: Blackwell Pub.
Heskett, J., & Girardi, P. (2011). Calveta Dining Service, Inc. : A Recipe for Growth. Briefcase Harvard Business School, 4261.
Krajewski, L., & Ritzman, L. (2002). Operations management. Upper Saddle River, NJ: Prentice Hall.
McGee, J., Thomas, H., & Wilson, D. (2005). Strategy. Maidenhead, Berkshire: McGraw-Hill.
Porter, H. (2003). The right way to plan to write. Five To Eleven, 2(9), xiv-xvi. doi:10.12968/ftoe.2003.2.9.xiv
prezi.com,. (2015). Calveta Dining Services. Retrieved April 2015, from https://prezi.com/utvf6h3t_p7l/calveta-dining-services/
Appendix A: Employee Satisfaction Survey 2008
Appendix B: Financial information for 2005 to 2008 (in $ millions)
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