Autor: tasha129082 09 November 2009
Words: 820 | Pages: 4
Panera Breadâ€™s sales growth rate for 2003 was 28.1% and 38.1% in 2002; therefore the sales growth rate for the company is increasing at a decreasing rate. The decreasing rate of sales growth may be attributed to the companyâ€™s current marketing strategy. The companyâ€™s ad-to-sale ratio was only 2.1% compared to the category average of 4% Also; Panera Bread does not have a lot sufficient of bargaining power with its suppliers, which may affect its net income.
A loaf of bread in every arm is the current mission statement for Panera Bread, which is a narrow statement and limits the scope of the companyâ€™s activities in terms of products and services. Considering the company is in the casual dining industry, the mission statement is irrelevant and inappropriate.
Revenues increased from $350.8 million in 2000 too $977.1 million in 2003 along with ROS, ROI, and ROE (see appendix 1); therefore leading to the conclusion Panera Bread has a quality top management team. Also, the company has a diversified Board of Directors with only one insider and five outsiders and the Board of Directors appears too be active in the company.
Panera Bread has several external factors which may affect the company, such as climate, inflation rates, unemployment level, and wage levels. Climate can have a dramatic effect on Panera Bread. If crops, such as wheat, lettuce, and tomatoes are damaged due to severe weather the price of the crops will increase. The increase in the price of crops will force Panera to either suffer the loss to net income or pass the increased cost to consumers. An increase in inflation rates causes the general price level of products and services to rise, therefore decreasing the purchasing power of the dollar
and forcing consumers to slow down their spending. If unemployment levels rise the labor force decreases, which decreases the buying power of those consumers. Wage levels can also have either a positive or negative impact on Panera Bread; if wage levels increase consumers have more disposable income and vice versa.
The sociocultural factors that may have an affect on Panera Bread is life style changes, and life expectancies. Consumers are becoming more health conscious; therefore more consumers are going to be seeking healthy alternatives for food consumption. Also, since seniors are included in the companyâ€™s niche market, the growth of the aging population could have a positive impact on sales.
There is a high threat of new entrants entering the casual dining industry; therefore the company needs to address the issue by creating entry barriers through product and service differentiation and economies of scale. Considering substitute products fill the same need as Paneraâ€™s products, the company needs to differentiate its products and services to create a want for Paneraâ€™s product instead of a need. The bargaining power of suppliers may be a potential weakness for the company, because the company has contracts with all of its suppliers.
The company appears to have a functional structure, which is appropriate for this type of business. The corporate culture of Panera Bread leads to efficient operations, because everyone in the organization appears to share the same beliefs, expectations, and values. Also, the company appears to have knowledgeable employees and franchise owners, which enhances the companyâ€™s performance.
The final recommendation for Panera Bread at the corporate level is to become less aggressive with its growth strategy; and use the competitive strategy on the business
level. Considering the sales growth rate is increasing at a decreasing rate and the company mainly uses product promotion and word-of-mouth as its marketing strategy: Panera Bread needs to use a functional strategy to achieve its corporate and business strategies through a market development strategy. This will give the company the opportunity to increase sales, capture a larger share of its existing market and new markets through market saturation and penetration. Panera Bread needs to do more media advertisement in order to gain consumers awareness for its products and services, which in return will allow the company to gain additional market share.
On the business level Panera Bread needs to use a competitive strategy, which is focused on differentiation. Using differentiation focus the company can concentrate its efforts on better serving its target market. Panera Bread can gain brand loyal customers by focusing on better serving the special needs and wants of its target market, which can lead to positive word-of-mouth advertisement from current customers and the possibility of gaining new customers.
Finally, Panera Bread has contracts with its suppliers, which may cause a decrease in net income if the cost of goods is higher than other suppliers. The company needs to let its current contracts with its suppliers expire. By allowing the supplierâ€™s contracts to expire, Panera Bread is leaving its options open for new suppliers, who may offer cost of goods at a lower cost; therefore decreasing the cost of goods and increasing net income.