With the onset of 2021, the company’s management has initiated several key measures in order to revitalize its financial performance with respect to the previous year. According to several financial analysts, it is pointed out that for the sake of boosting the productivity of the chain hot pot restaurant; the company has invested a hefty amount; rather than emphasizing on slow expansion of the company with respect to the national economy and prioritizing on freeing the cash flow. The number of store fronts has doubled within a span of one year which is also a risk investment. Since the purchasing power parity of consumers across several Asia Pacific nations and northern American countries are not revitalized to such an extent that affording foreign delicacies or international cuisine is a priority. Under such circumstances, investing in opening a new storefront is an unhedged gamble (1). The consequences of which are also reflected in the company’s decision to close more than 300 stores which were recently inaugurated because of inefficient management of human capital. All the brand equity of the company is sufficient enough in terms of alluring potential consumers towards the brand. However, if appropriate marketing strategies are not carried out before opening these stores, then the store would be experiencing profit swiftly. Brand equity and the quality of food alone under such circumstances is not substantial enough in order to captivate potential consumers towards the company. Further information is required in marketing campaigns in such locations which is also a part of investment. As of now the company’s bottom line has a stable revenue generation, the return on equity and return on assets of the company is inappreciable in nature. Its probability of the new strategy to be executed without any execution is negligible in nature. Therefore, if the company faces any execution risk, then the company would have to further incur loss in terms of resolving the menace (2). As far as investment policy of the company is concerned, the sudden decision of initiating multiple store fronts in the last 18 months and closing some of these stores in the last 12 months is a direct reflection of inappropriate and inadequate research in the investment decision. Prior to investment the company has not substantially evaluated the market landscape and the power of potential rivals in that particular location. The company completely ignored the fact that the consumer in such nations does not have a proportionate amount of in-disposable income after the global pandemic. Almost all of these nations experience massive scale downsizing (3). As a consequence of that in-disposable income of consumers has also deteriorated, which is definitely a shortcoming of the market in which businesses such as Haidilao cannot exist in the long run. Investing in profitable restaurants to market the profit by carrying out marketing campaigns is also a futile project from an investment perspective. Related party transactions of the company have reduced from 67% in 2015 to 38.4 percent in 2018, which also gives a clear image regarding the company’s workflow (18).
4Ps model:
The four P model of the Haidilao company are hereby mentioned below:
Product: One of the characteristic attributes of the Haidilao Company is that its product is not regarded as an intangible asset. On the contrary, its product is viewed as a value that is to be delivered to its target consumer. There are numerous manners in which the product is delivered to the company’s target market. For instance, the quality assurance which comes with the brand equity of the company is a fundamental aspect based on which the product is in high demand in the target market. Unlike other hospitality establishments, the Haidilao company has set itself apart from the crowd by integrating the traditional Hot Pot dishes, with appropriate consumer management strategies with the help of digital media platforms (19). The Haidilao company has been recognized as one of the largest Hot Pot chain establishments across China. In view of the fact that it’s spice broths along with special services have captivated the palates of food lovers across China. Aside from delivering palatable delicacies, the brand equity of Haidilao is also known for its diversification (4). Unlike other hot pot chain restaurants where only traditional foods are served, the menu as well as the traditional dishes of the Haidilao company has been subjected to constant amendment on a continuous basis. This not only assisted the organization to outperform its potential rival, but in order to get ahead of the competitive curve, the company has also strategized various mechanisms through which chefs present in the hot pot chain restaurant experiment on varieties of traditional dishes to make them quite valuable and lucrative even as of now (20).
Price: After meticulously analyzing the current pricing strategy that is practiced by the Haidilao company an inference can be drawn in order to promote their innovative cuisine a cost base strategy is adopted. In this approach the Haidilao company cannot only on mark up a profit in a convenient manner; but at the same time the Haidilao company has also applied market skimming pricing strategy in order to make sure that the company generates substantial amount of revenue from the dishes that are already preferred and are highly rated by the target consumer. When it comes to promoting brand awareness among the customers, the company has always opted for a good value pricing strategy. In this way customers can initially evaluate the taste of a particular dish at a preferable price followed by gradually increasing the price of the product depending on the preferences of the customer (5).
Place: The Haidilao company started its operation in China. However, as of now the Haidilao company has broadened its business horizon to different parts of the world With more than hundred and fifty thousand employees under its wing, the Haidilao company operates in Hong Kong, Thailand, Malaysia, Taiwan, United Kingdom, Singapore, United States, Indonesia, Japan, Vietnam and South Korea. More than 935 stores are present under the banner of the company as of now. As far as establishing channels of communication is concerned, the company has categorized its distribution strategy into two types. The first one being direct distribution where it has opened stores; so that it can directly sell products for certain palatable dishes to the customer. On the other hand, with indirect channels, canned foods and other products that are not perishable in nature are sold through supermarket chains across Europe and Asia Pacific nations (21). According to a recent study published by Kotler in 2017, it is revealed that one of the fundamental reasons as to why this company has accomplished success within a short span of time is because of its indomitable and unchallenged network of distribution. Not only the organization prioritizes on establishing amicable relationships with local vendors and distributors; but at the same time the organization has always emphasized on conducting business deals with individuals belonging from the locality. This is actually one of the fundamental promotion campaigns that have been assisting the organization in terms of achieving its overall objective for the last couple of decades (6).
Promotion: There are five aspects of promotion which the Haidilao company prioritizes. These fundamental elements of the promotional campaign are advertising, personal selling, sales promotion, direct marketing and public relation maintenance. The company utilizes all of this aspect in a cumulative manner, which in the broader context helps the organization in the long run in terms of conveying its objective to its target consumers. For instance, whenever its products are sold in a supermarket chain, there is a special discount given by the particular supermarkets in the product; in order to captivate the attention of the target consumers. On the contrary, whenever a new dish is launched in the hospitality establishment across 935 stores, a special discount is offered by the company on the particular dish. Promotional campaign has assisted the organization to expand its business across Asia Pacific and American nations. To a certain extent the organization has also utilized social media influencers and direct marketing campaigns to make certain that individuals are well versed with the product that is newly developed by the organization.
All of the aforementioned factors are the fundamental elements of the 4P model that the Haidilao Company has utilized appropriately in order to promote its brand value and the target niche (22).
PESTLE model:
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Factors |
Aspects |
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Political |
In the context of business management, the political landscape of a particular nation plays a crucial role in determining whether the nation would be able to substantiate the seamless growth of the Haidilao business or not. For instance, the government regulations as well as deregulation formulated by nations such as Singapore, Taiwan, Hong Kong, China and other Asia Pacific nations can change the course of business dynamics of the Haidilao company. If there is a consistency in policy making and policy implementation, then the probability of the business to get accustomed with the government’s interference would not jeopardize the financial interest of the Haidilao business. Otherwise, it can cause severe impediment for the Haidilao business to generate revenue (24). Additionally, chances of civil unrest which is currently ongoing in Canada can severely affect the bottom line of the Haidilao company. Nations like Singapore have a practice of segregating political responsibilities to different government authorities. This substance really is the manner in which the business is carried out in the nation. Not only does it reduce time in order to resolve business grievances by government authority in the nation; but at the same time it also becomes quite cost-effective from a business perspective. Getting clearances or clarification from government authorities from this nation becomes quite convenient for the Haidilao company. Transition of government or changes in government policy in radical manner is definitely deteriorating for the Haidilao company’s business policy. |
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Economic |
The level of consumer disposable income in a nation projects whether the business of the company can experience profit after its inception. For instance, if a nation has experienced a constant increment in its household income, then the probability of the people in this nation to splurge on delicacies that are provided by the Haidilao company is high. The company can capitalize on such a market in order to expand its business spectrum. If appropriate marketing strategies are incorporated by the organization in order to captivate the target market, then the probability of the Haidilao company to experience profit by hiking its price tag on individual items is also high. The government spending of a nation to promote its business also impacts the business course of the Haidilao company. The company can bank account on such subsidy programs to revitalize its sales or consolidate its business grip over the target market. Monetary and fiscal policies undertaken by a nation influences the company’s profitability. Since, in a tax break culture, the probability of the economic experience barrier in the near future is seamlessly feasible; which would in turn impact the revenue of the company. The rate of inflation is another quintessential aspect of the company’s profitability. Along with it the interest rate of a nation is high then the probability of a company to get a suitable loan with convenient terms and conditions to expand business is less. On a similar note, the rate of unemployment in a nation can also be useful for business growth. For instance, if the nation has skilled labor who are willing to work for a reasonable price, then the quality of the workforce of the company would increase in such circumstances (27). |
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Social |
The trend of demography in a nation influences Haidilao’s business to a great extent. According to a survey conducted by Deloitte in 2016, it is observed that almost all of the Asia-Pacific nations are currently encouraging businesses to be involved in sustainable practices. If the Haidilao company has already initiated the sustainable working function, then the probability of the hospitality establishment to captivate the mindset of such consumers is substantially high. Additionally, the trend of consuming vegan products has also gripped parts of Asia Pacific countries. Attitude towards consuming delicacies also plays a prudential role in Haidilao’s business. |
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Technological |
One of the characteristic attributes of the Asia Pacific nations is that they are attributed with state of the art technology which is a crucial part of conducting the business. However, it also can necessarily translate into the fact that there is a greater chance of technological disruption at any given point of time. Frankly speaking, acceptance of payment through mobile phones is practiced by all of the store fronts of Haidilao company. These fintech services are part and parcel of the technological aspect of a nation. For instance, the number of fintech services and the convenience in which is carried out in China is far greater with respect to the US and Canada. However, the company should always respect locally accepted applications, so that the consumer in the target market could use it. Managing supply chain stakeholders with the help of recently developed technology is also an effort undertaken by the Haidilao company in order to reflect on the transparent practices of the hospitality industry. Additionally, managing the supply chain becomes much more convenient if this application is utilized by the Haidilao company. |
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Legal |
From the legal perspective, the company needs to understand the gravity of the legal circumstances, especially revolving around the health and safety law. Aside from that, Consumer Protection law and adherence to common law. In view of the fact that these legal backgrounds can safeguard the financial interest of the company extensively. If the company is well versed with the legal landscape of a nation then carrying out the business of the Haidilao establishment would not be a challenging aspect for the company in the long run. However, there is a fine line of distinction between strict application of this legal principle in nations such as Hong Kong and Taiwan, where relaxed legal ambiance is present in Singapore and other parts of the Asia Pacific nations. Consistently, practicing appropriate actions which are in compliance with the national legal framework of the country would definitely help the organization to formulate decisions for the growth of the organization (7). |
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Environment |
The magnitude of consumer activism present in a particular nation determines the organization’s principle and working function in the nation. The company’s corporate social responsibility is internationally recognized to be quiet environment friendly in nature. Apart from incorporating sustainable practices of organization also carried out several philanthropic activities in sub Saharan countries. Company’s management should always orient them in terms of developing new renewable technologies (28). Aside from that, respecting environmental regulation both at the local level and the national level can assist the Haidilao company in determining its pricing strategy associated with palatable delicacies or canned products that are sold with the help of distribution channels in Northern American countries. Recently, consumer activism in Taiwan has brought the issue of recycling policies which are practiced by hospitality establishments. The company has decided to adhere with the policy framework that is suggested by consumer activities. Moreover, developing an amicable relationship with the consumers in the target market by successfully carrying out Public Relations campaigns can definitely thwart the challenge that the Haidilao company is currently encountering (8). The transparency of environmental agencies in a nation also is regarded as a critical player in the environmental aspect of conducting business. The main reason being that the environmental regulations which are passed by the judicial system impacts the notion of absolute cost advantage of the hospitality industry. If appropriate action is inculcated at the initial phase, then it can determine whether the Haidilao is going to get ahead of the competition in the target market with respect to its potential rival or not. |
SWOT model:
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Strength ? Strong financial position of the company ? Strong business relationship with suppliers ? Superior quality of product delivered in the target market with respect to potential rivals ? Robust domestic market |
Weakness ? Previous practices are not sustainable in nature ? Inadequate critical talent ? Negligible return on investment ? Weak organizational culture |
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Opportunities ? Lucrative scope of developing business in the international diaspora ? Continual increase of consumer in-disposable income ? Evolving preferences of the target consumer ? Constant increment in international market size |
Threat ? Ever changing dynamics of international geopolitical aspect ? Government regulations and trade relationship with the other nations ? Different business cycle in different nations (9) ? Constant increase in workforce remuneration ? Constant price cut due to securing target market |
Analysis
The capability of the Haidilao company in terms of managing its financial resources is quite exemplary in nature. This is reflected from the fact that the organization has substantially diversified its portfolio of products along with various services which it has offered to the consumers, in order to captivate the potential customer in the target market. After meticulously going through the bottom line of the Haidilao company, it can be pointed out that the return on sales have increased every year consecutively since the day of its operation. Another important aspect that is also noteworthy in nature is the strong business relationship of the Haidilao Company with its suppliers and other stakeholders (29). As per the opinion of Ziqian Zhao, the Haidilao company has broadened its market footprint by leveraging on this business relationship and developing relations with suppliers in the international platform. The customer loyalty towards the Haidilao brand has also helped the organization immensely (10). The superior quality of palatable delicacies that are offered by the Haidilao company has won the hearts of millions of consumers around the world. This has not only assisted the Haidilao organization in terms of revenue generation, but also assisted the Haidilao company to promote its brand value with the help of word of the mouth strategy. The market landscape of the company is quite favorable in nature in Asia Pacific nations. The quality of food it delivers to hundreds of consumers on a daily basis even in foreign lands such as in Canada its ethnic cuisine are known and recognised to be a palatable delicacy. The practices that are currently relevant in the Haidilao organization are not at all sustainable. From the environmental perspective the Haidilao company has also faced severe legal claims and lawsuits filed against its operation in Taiwan, because of infringing environmental policy in Taiwan. In the field of digital transformation and information technology framework, the Haidilao company has not yet upgraded completely which is revealed from the very fact that the organization’s application or the official webpage is not frequented by many of its target customers with respect to its competition. Organizational culture is also deteriorating the Haidilao company’s bottom line (11). Oftentimes, it is observed that projects initiated by certain branch managers are not disclosed up until the moment the project is successful. The consequences of which have hindered the seamless and cumulative growth of the brand equity of the Haidilao company simultaneously. This information which is safeguarded by the branch managers have also resulted in multiple missed opportunities. Absence of critical talent in terms of managing the information technology framework is also impeding the Haidilao company’s workflow and growth in international business forums. Return on investment of the company is not all appreciable in nature. For the reason that both returns on asset and return on equity does not show promise in the near future; even if the balance sheet of the company is quite stable. The workforce of the Haidilao company is not at all diversified, which often results in loss of brand equity. It also hinders the company from accomplishing potential success in the international market. Increase in customer disposable income would eventually help the consumer in the target market to splurge on lucrative delicacies (12). Along with growing market size and increasing disposable income would definitely assist Haidilao organization to expand its business. However, because of constant threat from other companies, the Haidilao company has to reduce its price regarding various items extensively. This is not only influence in the bottom line of the Haidilao company but also reducing the company’s market footprint (13)
With the onset of online marketing the entire dynamics of promotional campaigns carried out by the Haidilao company has been subjected to radical changes. In other words, the company has oriented its marketing promotion with the help of search engine marketing. It is nothing but a popular approach for advertising vehicles. The main reason as to why this is implemented is because once consumers start searching in the browser, then depending on search engine optimization approaches that is undertaken by the Haidilao company (14). The name of the Haidilao company will pop in front of the consumers. In this manner, the probability of the official homepage of the Haidilao company to get more visitors would increase in a convenient and seamless manner. With the help of digital marketing, the probability of receiving prospective and potential consumers towards the brand equity of the company; would also increase with time. On top of that the company can also promote its newly designed product for palatable delicacies to its target consumer all over the world. This is a cost effective strategy to promote the products of the Haidilao company (17). Willing consumers who are looking for getting brief insight regarding the Haidilao company’s product or offer can also get the information directly from the Haidilao company’s concerned authority. These individuals should fill up the registration form. The consequences of which could help the Haidilao company to not only measure its current customer loyalty, but at the same time also inform the committed consumer regarding the Haidilao company’s product and pricing related to a product directly through newsletters and emails (15). The data accumulated by the Haidilao company in this manner is also then subjected to statistical analysis, so that it can be quantified accordingly. This would definitely help the Haidilao company in the upcoming days for target marketing and surveying the preferences of the target consumers. Depending upon the consumer responses, new palatable delicacies could also be developed by the Haidilao company. This marketing strategy is actually used by the Haidilao company in order to promote its brand equity. It really reflects the magnitude of Haidilao Company’s interest in analyzing the consumer’s opinion (16).
The research reflects that business decisions and investment policies of the company which have been undertaken during the course of the covid is not appropriate in terms of addressing the current shortcoming of the market landscape which are influenced under global pandemic. Even in such circumstances, inaugurating several store fronts and closing them after a few months because of inappropriate human capital and financial adequacy is deteriorating the company’s brand value extensively. Additionally, the company is also experiencing certain legal allegations in its operation across Taiwan due to absence of sustainable practices. The company’s sudden expansion of the market horizon cumulated with the loss of brand equity in Asia Pacific nations in an unprecedented manner has severely posed a challenge for the chain restaurant in terms of profit realization. The only silver lining that can be attributed to chain restaurant’s current condition is its stable bottom line. However, the return on equity as well as return on assets of the company has consecutively shown a poor performance, this is only because of lack of appropriate decision formulation by the firm’s management; especially decisions which are related with investment opportunities are not appropriately managed by organizations. The fundamental reason behind this is that branch managers of the company undertake decisions on their own without discussing with higher authorities. The name Chinese hot pot Haidilao is recognized globally as a chain restaurant which serves palatable delicacies in authentic Chinese cuisine. The chain restaurant has been experiencing impediment which is reflected in lack of adequate table turnover ratios along with constant profit decline at older restaurants. Hence, the company has formulated to open new store fronts only based on consumer demand and the pace of opening new restaurants has also been redefined; so that the company could take care of its business decision regarding investment opportunities. Additionally, the top management of the organization is also looking forward to diversification. The subsequent slump of spending from the consumer’s end has drastically influenced the company’s bottom line. Moreover, the catering industry of China has experienced 4.7% deterioration in the last year. However, despite the critical circumstances, the company managed to grow at 3.1% rate in 2021; which reflects that the current strategy undertaken by the organization is gradually realizing its true potential. Doubling of storefronts to 1600 has cost the organization dearly, which is why the company has shut down 200 of its stores in order to increase the table turnover rate. The company has also lost more than HK$7.76 million in 2021’s first quarter; the consequences of which is also reflected in the company’s share price deterioration from HK$86 to HK$30. As far as diversification is concerned the company has opened fast food outlets with its signature Sichuan dish. Another attempt is also reflected in terms of diversification where the company has opened three bars in its restaurant located in Beijing. Approximately $409.6 million yuan is recovered from this approach which can be translated into the fact that 4.2 % of the deterioration which took place in the first half of 2020 is recovered with a single move.
There are several limitations which have hindered the seamless approach of the research. Noteworthy limitations are mentioned as follows:
Unavailability of appropriate resources that are adequate for conducting the research seamlessly is not available in abundance. In other words, the wealth of literature is extensively limited. Since the number of literature on the relevant topic is quite limited in nature. It is a time consuming process to accumulate necessary information and evaluate the conditions and landscape coherent with the company’s working principle.
On the contrary, the time allocated for completion of the research is also limited in nature. Since, inadequate literature has increased the time frame of conducting the research. Limited time frame has further complicated the issue of completing the project within its deadline. Limited time that is allocated for the research also poses a great threat to the overall credibility of the research. The reason being that if inappropriate data are substantiated in the study, then the chances of misrepresenting crucial information associated with the company would increase.
The method of data collection is also flawed; since there is not appropriate consistency or standard test format that is practiced in terms of data collection. Along with that the context of data collection is not always relevant in nature with respect to the company’s working function. Some of the data accumulated from secondary sources which are not credible in terms of analyzing the crucial information are pertinent to the company’s working function. Hence, the lack of assurance in terms of data-validation decreases the probability of the research to be quite credible in nature. However, in order to mitigate such circumstances completely from the research, more time is required. One of the noticeable aspects in this particular context is that the legal framework as well as the political governance regarding regulations changes from nation to nation; only for the catering industry and other hospitality industries. Hence, it is imperative to understand the policies of a nation with respect to its hospitality industry. This is definitely a time taking process. In order to maintain an appropriate format of transparency throughout the course of the study, every single policy and regulation regarding the hospitality industry is meticulously analyzed before mentioning it in the study.
Lack of financial resources is another crucial aspect which has severely impeded the research process. The researcher has to generalize a substantial proportion of the data accumulated because of inappropriate financial support. Inadequate financial support has also acted as an impediment for the researcher in terms of accumulating crucial information. There are several unanticipated challenges in the research work which can be conveniently resolved with financial fluency. However, because of inappropriate fund position associated with the research, the course of the research is even elongated, otherwise this research can be conveniently completed within a short span of time.
All the aforementioned aspects are the shortcomings due to which the research is impeded
There are a plethora of opportunities that can be capitalized on for future research purposes which are hereby mentioned below:
Prior to starting the research it is imperative for the researcher to evaluate the depth of the literature that is already available and coherent with the topic. The reason behind this approach is that if the literature adequacy is abundant in nature, then the probability of the research to be completed within its predetermined time frame can be conveniently accomplished. Otherwise, new measures should be formulated in order to make up for the time.
Building upon the findings of the research through meticulously analyzing the literature that is already available along with the inclusion of information accumulated through the process of data collection is a time-consuming process. For future scope, various journals and articles along with websites should be taken into consideration before initiating the process of the research. Due to the fact that these websites are attributed with the feature of giving substantial amounts of information to the researcher which will definitely help the research to determine the course of the research and prepare the study materials for completing the research within its time frame.
There are certain general attributes that always impede the research. The foremost of these impediments are financial inadequacy, lack of context of literature and lack of time. In both of these aspects, allocation of a substantial amount of funds is definitely mandatory for a research to be quite credible and viable in nature. Along with that appropriately, an abundance of literature should be determined before initiating the course of the research work. In case of time management, if the first two aspects are well taken care of, then the probability of time to be an issue in the research and act as an impediment would reduce substantially with experience of the researcher. However, even in certain instances, it is observed that time has acted as an impediment. In that case it is as in the initial aspect of the research which is important for the research to be emphasized upon by the researcher. These aspects or factors should be considered before carrying on or moving to another aspect of the research. For instance in this case understanding the national policy of regulations regarding the hospitality industry and the economic condition of different nations would aid in understanding the manner in which it would influence the 935 store fronts of the company. It is extremely crucial if appropriate actions regarding evaluating the national framework of accepting such businesses are not evaluated, then it is not feasible to understand whether the business in this nation would progress or whether their return on investment on such a nation would actually gain some value in the long run.
There are various theories that are always utilized in the research to increase its credibility. Expanding on this theory and reassessing the conditions associated with the company in relation to the theory is also an opportunity to increase the credibility of the research to a great extent.
Conclusion:
To conclude an inference can be drawn that the company has a substantial amount of brand equity which would definitely help the organization in terms of revitalizing its original financial Position during the course of the global pandemic. Even after the nationwide lockdowns are lifted. After going through the company’s bottom line, it can be inferred that the company has strong management in order to revive its financial position. The study reflects on various models which revolve around the company’s condition with respect to the national economy of various nations in which the business operates. Along with that the company’s investment is also analyzed meticulously to understand whether the return on investment is appropriate in nature.
References:
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