Project Deliverable 5: Capstone Final Project and PresentationDue Week 10 and worth 180 points This assignment consists of two (2) sections: a final capstone project plan and a closing process PowerP

1.Give your opinion as to whether your chosen company’s industry is maturing or declining, based on its evolution history. Justify your answer.

The fast casual industry is maturing. Fast casual restaurant is a relatively fresh and rapidly growing concept, positioned somewhere between fast food restaurants and dining restaurants. Technically, being the hybrid of the two concepts, they provide counter service and offer more customized freshly prepared and high quality food than traditional QSRs, all in an upscale and inviting ambiance. The annual growth of the industry is 1.6% with an increasing competition. Future innovations include self service kiosks, fast casual formats, delivery services and mobile ordering.

Question 2

What Are the Advantages of Vertical Integration?

(a) Helps in the creation of positive differentiation

Vertical integration creates predictability because more information is available to the organization. There is more access to production inputs. Retail channels produce real-time information that isn’t filtered by third parties. Distribution requirements can be adjusted to promote specific items to unique demographics. By being in more control, from start to finish, an organization can adapt quickly to changes so that the most effective result can be achieved.

(b) Asset investments can focus on specialization.

Instead of seeking our vendors and contractors with specific skill sets, vertical integration allows an organization to invest into internal assets that can specialize in the skill set that is required. This allows a company to differentiate itself from others within its industry, creating a specific brand message and value proposition that resonates consistently with its customer base.

Because an organization controls more of its supply chain, it can leverage specific benefits that a local demographic may need. This allows the organization to obtain a larger market share because they can create a value proposition that is better than what the competition offers.

(d) Transaction costs are lower throughout the supply chain.

With a high level of vertical integration, brands can reduce the transaction costs that occur throughout their supply chain. This is done through the power to leverage the size and scope of the supply chain when dealing with suppliers and vendors that are not part of the integrated process.

(e) Quality assurance can be built into the system.

When vertical integration is successful, it allows an organization to put more eyes on the quality of what is being produced. From the initial supply to the final sale, a better Q/A process within the system creates a value proposition that is more reliable. In return, greater customer satisfaction occurs, which builds brand loyalty and return revenues.

What Are the Disadvantages of Vertical Integration?

(a) It forces a business to operate within an economy of scale.

Economies of scale can provide businesses with numerous advantages, but only if they’re ready to adapt to the changes in their supply chain that occur.

(b) It reduces flexibility.

Brands that work with several vendors or contractors have a certain flexibility that vertical integration normally does not provide. Businesses that have integrated vertically may have a few choices with their supply chain, but a business that uses third parties can make changes whenever they wish without maintenance costs within their infrastructure.

Vertical integration does limit competition, but only when the corporation focused on this process has access to the materials necessary to be competitive in the first place. If raw materials are scarce or a brand’s information access to a local demographic is limited, then even with vertical integration firmly in place, market entry may not be possible.

(d) Confusion is created easily and often.

Vertical integration falls under one specific brand, but the entities within the supply chain may operate as a distinct business. This creates confusion because customers think they are working with one company, only to realize that they are working with a different company. Google is an example of this.

(e) It isn’t a cheap investment.

Capital is required to make a vertical integration effort possible. Even if the integration occurs through partnerships, an investment into specific patents, processes, or proprietary data is often required as part of the deal. New forward or backward vertical integration efforts may require building new facilities, hiring new staff, and understanding new processes that are unfamiliar to the corporation.

Advantages of outsourcing

There are many reasons why a business may choose to outsource a particular task, job or a process. For example, some of the recognised benefits of outsourcing include:

improved focus on core business activities - outsourcing can free up your business to focus on its strengths, allowing your staff to concentrate on their main tasks and on the future strategy

increased efficiency - choosing an outsourcing company that specialises in the process or service you want them to carry out for you can help you achieve a more productive, efficient service, often of greater quality

controlled costs - cost-savings achieved by outsourcing can help you release capital for investment in other areas of your business

increased reach - outsourcing can give you access to capabilities and facilities otherwise not accessible or affordable

greater competitive advantage - outsourcing can help you leverage knowledge and skills along your complete supply chain

Outsourcing can also help to make your business more flexible and agile, able to adapt to changing market conditions and challenges, while providing cost savings and service level improvements.

Disadvantages of outsourcing

Outsourcing involves handing over direct control over a business function or process to a third party. As such, it comes with certain risks. For example, when outsourcing, you may experience problems with:

service delivery - which may fall behind time or below expectation

confidentiality and security - which may be at risk

lack of flexibility - contract could prove too rigid to accommodate change

management difficulties - changes at the outsourcing company could lead to friction

instability - the outsourcing company could go out of business

3.Use the Boston Consulting Group’s growth-share matrix to evaluate the company’s strategic position as of 2013.

BCG Growth-Share Matrix is based on the observation that Walmart’s business units can be classified into four categories based on the combinations of market share and market growth relative to the largest competitor (Palia, De Ryck, & Mak, 2014). The matrix framework is based on the assumption that an increase in relative market share can result in an increase of the generated cash. The assumption is true most of the time because of the experience curve; when the relative market share increases, it implies that Walmart is movingforward on the experience curve relative to its competition, hence a cost advantage is developed (Palia, De Ryck, & Mak, 2014). Secondly, since the retail market is growing, investment is required in the assets to increase capacity and hence lead to consumption of cash. The strategic position of Walmart asof 2013 on the growth –share matrix provides an indication of its cash consumption and cash generation. Since the retail store has been investing in the market to become the market share leader since its formation in the 1960s in a rapidly growing retail market, its business unit’s move along the experience curve and hence develop a cost advantage (Palia, De Ryck, & Mak, 2014). The four categories of the matrix are: dogs, question marks, stars and cash cows.

Dogs have low growth rate and low market share, and hence neither consume nor generate large cash amounts. As of 2013, Walmart business units were in this category. Secondly, question marks grow rapidly and hence large amounts of cash are consumed but since they have low market shares, much cash is not generated. The net cash consumption is therefore larger. Stars on the other hand generate large cash amounts owing to their strong relative market shares, but largeamounts of cash are also consumed since the growth rate is high; and therefore the cash in each direction nets out approximately. As of 2013, the strategic position of Walmart was that of cash cows (Palia, De Ryck, & Mak, 2014). Since Walmart has been a leader in the mature retail market, it exhibits a return on assessment that is larger than the market growth rate.

4. Implementing strategies and Changes decision making, main changes in planning structure and measures of success. Decision making remains a key pillar of Walmart’s success, not today, but even tomorrow. Therefore, effective changes should be implemented aimed at improving results and efficiency of operations both in the United States and other stores offshore. Making effective decisions require the input of a lot of information on the issue at hand. The management of the organization should involve employees more regularly and deeply in decision making process. Business analytics and technology should also be integrated in the decision making process.

REFERENCES

1.Aalders, R., The IT Outsourcing Guide, John Wiley & Sons, Chichester, UK, 2001

2. Adams, W., “New Role for Top Management in Computer Applications,” Financial Executive, April 1972, pp.54-66

3.Folsom, Burton The Myth of the Robber Barons 5th edition. 2007. pg. 65. ISBN 978-0963020314. "only we can develop ability and hold it in our service. Every year should be marked by the promotion of one or more of our young men."