Post on 25-Jan-2017
Tori Esser, Cole Monroe, Rachel Peck, Stephanie Steuck, and
Joann Wolfenberg
Strategic Review
Our Recommendation
C2C: “Commit 2 Consume” Strategy
https://en.wikipedia.org/wiki/File:Chipotle_Mexican_Grill_logo.svg
Presentation Agenda1. Company Snapshot2. Trends3. Porter’s Five Forces Model4. Resources and Capabilities5. Diagnosis 6. Strategies
Company Snapshot• Locations in large, populated cities especially along the coasts
• Fast-Casual environment
• Quality ingredients from local suppliers• Loyal customers
• Jason Mraz supplies avocados to Chipotle http://www.huffingtonpost.com/2015/01/13/jason-mraz-avocado-farmer_n_6430822.html
In the News• E. coli: July, 2015• Norovirus: August, 2015• Salmonella: August and September, 2015• E. coli: October, 2015• Norovirus: December, 2015• E. coli: December, 2015
http://a57.foxnews.com/images.foxnews.com/content/fox-news/health/2015/12/08/30-boston-college-students-sickened-after-eating-at-chipotle/_jcr_content/par/featured-media/media-0.img.jpg/876/493/1449546512064.jpg?ve=1&tl=1
Trend: Minimum Wage
Planning and Preparation - Customer retention - Offset costs
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Trend: Healthy Food Options
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Trend: Aging Population
Millennials are the Future - Higher quality food- Affordability
http://yourmarketingdepartmentct.com/millennials-what-makes-tick/
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Porter’s Five Forces
Analysis
Power of Suppliers
Power of Buyers
Threat of Competitive
Rivalry
Threat of New
Entrants
Threat of Substitute Products
Porter’s Five Forces
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Power of Suppliers: High
• Concentration• Product differentiation
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
https://www.chipotle.com/food-with-integrity
Power of Buyers: High• Switching costs• Threat of backward
integration
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
http://www.gettyimages.com/detail/news-photo/bags-of-chips-are-seen-ready-for-customers-in-a-chipotle-news-photo/471371484
Threat of Competitive Rivalry:High
• Number of competitors
• Switching costs
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
http://hackthemenu.com/taco-bell/secret-menu/
http://cincinnatizoo.org/events/wild-about-wine/qdoba-logo/
Grant Model
Resource: Reputation • Encourage new and maintain loyal customers• Satisfy customers’ expectations• Maintain reputation over competition• Control products/ingredients• Strong brand appearance
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Resource: Physical Resources• No physical location =
unsuccessful • Favorable location to
attract customers• More restaurants =
more income/accesshttp://abc7ny.com/food/all-chipotles-open-late-for-employee-presentation-offer-customers-free-burrito/1191719/
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Capabilities: Food Prep
• Sets fast-casual apart from fast-food
• Prevents the spread of diseases
https://www.chipotle.com/foodsafety
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Capabilities: Supply Chain Management
• Cost management• Inventory control• Menu planning variability
http://www.biz-development.com/SupplyChain/6.20.1.supply-chain-management-overview.htm
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Concern Levels• INSERT GRID HEREPrimary Secondary Not a Concern
● Reputation● Buyer Power
● Supplier Power● Competitive Rivalry● Substitute Products● Physical Resources● Food Preparation● Cost Management● Supply Chain
Management
● Minimum Wage● Healthy Food Trend● Aging Population● New Entrants● Finance● Trade Secrets● Customer Service● Human Capital
Management
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
DiagnosisOur feasible strategy must:
– Improve Chipotle’s current reputation– Decrease buyer power
http://www.health24.com/Homepage/Tests/Whats-your-diagnosis-Case-16-numbness-in-forearm-20150618
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Three Feasible Strategies
1.ENE: Encourage and Educate Customers2.Backward Vertical Integration3.C2C: Commit to Consume Subscription Model
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Breakdown of StrategiesImprove
ReputationDecrease
Buyer Power
Decrease Supplier Power
Decrease Competitive
Rivalry
Cost to Implement
Time to Implement
ENE Yes Yes - - Low ShortBackward Vertical Integration
Yes Yes Yes Yes High Long
*C2C* Yes Yes - Yes Low Short
* Recommended Strategy
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Encourage & Educate Customers• Incorporate membership
program• Publicize new changes• Hire new management
http://careers.chipotle.com/
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Encourage & Educate Customers: Pros• Decreased buyer power• Informed customers• Relatively low cost• Easy implementation
http://www.prweb.com/releases/2013/2/prweb10388212.htm
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Encourage & Educate Customers: Cons• Competitive parity• Limited impact• New food preparation - must be effective• Too little, too late?
https://lh3.googleusercontent.com/-SJlYRlsdfOOLU8l6D5SfvBdE5yfA6f7rCAYHIIRJyjkVJBGgzA8JlZv8_mvJvmSTnk=w300
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Backward Vertical Integration• Become our own supplier
– Complete control over ingredients/products• Encourage safety to customers
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Backward Vertical Integration: Pros• Establishes control over ingredients
– Decreases the risk of disease• Reduces cost in the long run• Decreases buyer power
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Backward Vertical Integration: Cons• Expensive• Difficult to implement
–Lengthy process
http://www.chenxicartridge.com/why-are-name-brandgenuine-toner-cartridges-more-expensive-than-compatibles/
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
“C2C” Strategy• Hire management that specializes in public relations • Implement a subscription based membership program
–$15 monthly subscription–3 meals included and unlimited beverages–App ordering and a pickup only lane–Points tracker for meals purchased –Refer a friend incentive
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
“C2C”Strategy: Pros• Revitalize Chipotle’s image• Decrease buyer power • Acquire new/existing customers• Reasonable cost and time to implement
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
“C2C” Strategy: Cons• Getting initial customers to commit • Attracting new customers
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
Improve Reputation
Decrease Buyer Power
Decrease Supplier Power
Decrease Competitive
Rivalry
Cost to Implement
Time to Implement
ENE Yes Yes - - Low ShortBackward Vertical Integration
Yes Yes Yes Yes High Long
*C2C* Yes Yes - Yes Low Short
Trends Porter’s Five Forces Resources & Capabilities Diagnosis Strategies
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Thank You
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