AB3601 Strategic

Management

Benedict Lim Li Shili

U1221025F
U1210073F

Mahalim
U1211190E

Ng Song Yang Teo Kok Hien

U1211040B
U1121448E

STRATEGIC AUDIT PROJECT:

BREADTALK
Background | BreadTalk was established in 2000 and was listed on SGX in 2003.
It expanded to several countries in the same year, starting first with Indonesia,
then China and a slew of other countries including the Middle East. As of 2014,
BreadTalk operates 800 outlets across 8 brands. The BCG matrix shows that
BreadTalk's Restaurant business, which accounts for 22.8% of BreadTalks
revenue, is a Question Mark; while Food Atrium (26.6%) and Bakery (50.6%) are
stars and cash cow.
China accounts for 32.2% of BreadTalks revenue, and an examination of her
external environment reveals high liability of foreignness for BreadTalk from a
political and economic standpoint. China as opposed to Singapore has strong
emphasis on Guanxi which requires costly relationship management and also has
a higher corporate tax rate.
Competitive Analysis |The core of the presentation hinges on analyzing
BreadTalks business-level strategy from 2000 to 2013 and is focused on the
artisan bakery business in Singapore, which is wholly-owned and has a future
positioning on operational efficiency and sit-down cafes.
The competitive dynamics analysis reveals PrimaDeli to be a key competitor with
high market commonality (behavioral- and pricing-wise) and high resource
similarity (observed using 3 proxies outlets representing reach; strategic
location representing convenience; and bread/cake variety representing
innovation). This is further validated by the strategic group map which shows
that both bakeries operate on similar key success factors: convenience, variety
and location. PrimaDeli is poised to attack and respond to BreadTalks attack.
Value Chain Analysis |Distribution is both a differentiation and cost driver while
marketing and sales and human resource activities are differentiation drivers.
Hence, BreadTalk is operating on an integrated cost leadership and
differentiation strategy. The cost leadership strategy comes mainly from its 4-in-1
retail concept while its differentiation strategy is derived mainly from 4 key
drivers: strategic outlets; brand management; management expertise and
leadership; and also innovation.
Competitive Advantages |The above drivers identified were further
consolidated into 3 hybrid capabilities: outlet location management (comprising
of side-by-side, high consumer traffic outlets), brand management and talent
management (comprising of a capable executive management; creative
personnel and influential procurement employees) which made out to be
competitive advantages vis--vis PrimaDeli when put through the VRIN
framework. In toto, BreadTalk has been very successful in converting its key
capabilities into its competitive advantages.
SWOT | Adopting a neutral and external view, there are high levels of threats
and strengths and BreadTalk should prioritize on first a diversification strategy
and then a defensive strategy. The threats come mainly from the competitive
and saturated artisan bakery industry while opportunities are presented in the
form of a fragmented industry and the nation's rising household income.

AB3601 Strategic
Management
Rumelts Criteria |Adopting an internal view, BreadTalks existing strategies,
while building its competitive advantage and are feasible, are neither consistent
nor have consonance.
Recommendations | Therefore, it is recommended for BreadTalk to engage in
unrelated diversification which it has attempted successfully on multiple
occasions and to focus on differentiation rather than to utilize an integrated
strategy.