Evaluation Of Consumer Preferences And Competitor Strength: Scenario Analysis

Identifying Changes in Consumer Preference and Evaluation of Competitor’s Strength

From the overall evaluation increment in cost of sales can be identified with difference in evaluation of the prices that will be needed for purchasing the raw materials. The case study directly indicates that the budget was blown out by 4.5% where expenses incurred by the restaurant and beverages were relevantly assume the less than what actually happened. From the valuation it could be identified that the incremental cost of both food and beverages might be because of the rising prices of raw materials for the restaurant and bar industry. In addition, the relevant expenses such as cost of food and cost of beverages are relatively increasing, which is in turn raising the cost of expenses of the restaurant. Moreover, reduction in discounts could mainly resultant high expenses incurred by the organisation. The third point is mainly addressing the overall ability of the company to get goods with cash payments. Many suppliers use discounts for cash payments, which are conducted by organisation. This extensive use of credit facilities by suppliers could eventually increase cost of sales and reduced profits of the organisation (Davids, Beeres and van 2013).

A first area that needs to be evaluated is the supplier’s prices that are quoted to the organisation. The increment in supplier’s raw material prices could eventually result in risk expenses for the company. For example, increment in value of the purchases of food materials such as vegetable and other grain products could directly result in higher cost of purchases for the restaurant. In addition, the purchase price of beverage at higher prices could also result in high cost of goods, which might directly affect the budgeted values. Andrews and Ha (2014) mentioned that due to the increment in demand and low supply capability suppliers tend to raise the overall prices of proudest, as it help in generating higher income.

The second area that needs to be evaluated is the inflation rate that is currently being present in the economy. The evaluation of inflation rate could eventually help in protecting the overall incremental cost of goods, which could lead to increment in sales price. The rising inflation rate could increase the overall prices of products and raise the Budget variance of the organisation. For example budgets are mainly prepared by evaluating the overall inflation rate that could increase value of both sales price and cost incurred by the organisation. However, the estimation of overall inflation rate could increase budget variance and hamper activities of the organisation. De Bruin 2014) mentioned that inflation rate could eventually allow the organisation to estimate the accurate changes in prices that would incur in future.

The third area of evaluation could be conducted regarding cash payment that is been conducted by the company, the increment in cash payment would eventually allow the organisation to get relevant discounts and reduce cost of sales. However, the increment in credit purchases could eventually raise cost of sales of the organisation. Therefore, relevant estimation needs to be conducted regarding discounts that are received by the company.

Scenario 1: Evaluation of Incremental Cost of Sales

The fourth areas of investigation need to be conducted on the overall estimation and requirement of the goods needed by the restaurant for supporting rising demand. The overall low estimation of goods that will be needed for the increased demand could eventually lead up to the budget variance situation that is being faced by the organisation (Flageul et al. 2014).

The fifth area that needs to be investigated is the overall forecasting figures that are used in the budgeting figures, which could directly result in increased variance. Therefore, the estimation that is made by the analyst in the current budget needs to be evaluated, as they have left out some points, which needs to be investigated (Hla et al. 2016).

The overall five external factors that could contribute to the opposite trend occurrence are increment in competition, change in preference of consumers, decline in income of consumers, social media and increase in senior population. These identified external factors could directly impact the change in trend of the hotel Futura, where their income would decline. Lefeuvre et al. (2014) mentioned that changing trend for the hotel is relatively an indication of catastrophe, as the overall revenue might decline forcing the hotel to close down due to high fixed costs. The scenario directly indicates that relevant decline in trend could eventually reduce revenue, which intern might hamper financial stability of the hotel. Majority of the hotels have a high fixed cost,   while the variable cost varies as the operations conducted by the employees. There are different ways in which the overall detection of the external factors could be identified for hotel business. The company mainly needs to address the following actions for identifying the factors affecting its trend (Lindberg and Vanyushyn 2013).

The evaluation of overall competitive strength could help in identifying the relevant impact on trend of the Hotel Futura. This relevant increment could eventually result in declining sales of the company, while resulting in reduced profitability. The evaluation could also help in identifying the strengths and weaknesses of the competitors, which could be used by Hotel Futura for continuing with the trend (Lueg 2015).

The identification consumer preference could be conducted by initiating service of the consumers that used to use the services of Hotel Futura. This move could eventually allow the organisation to detect the consumer preference and make adequate changes to its services.

The negative impact from declining income of consumers could be identified by evaluating the market condition and economy. Evaluation of the market condition could be conducted by seeing the current market indices, which represent capital performance of the economy.

The evaluation of overall social media platform could also help in identifying the changing Trend and preference of consumer. This could also help it detecting whether competitors are luring in consumers but providing different beneficial packages (McDonald and Wilson 2016).

Evaluating demography of its customers:

The factors regarding incremental old age citizens could be evaluated and by making service and identifying the demography of its customers. Changes in the demographic condition of the consumers could eventually hamper revenue generation capacity of the company. This detection of changes in demographic could be conducted through both service and online platforms.

Suppliers’ Pricing

From the evaluation it could be identified that kitchen and food cost have a higher variance, as the actual amount is greater than budgeted amount. This is due to the low estimation of cost needed in food or kitchen services. Therefore, adequate vitamins need to be conducted on the budgeted amount that is needed buy food and kitchen cost, as it might hamper the overall operations of the hotel business. Food and kitchen is one of the essential essences of hotel industry, as it needs to be evaluated accordingly so that it could increase productivity and profitability of the hotel (Mugambi and Theuri 2014).

Raw material inventory account needs to be conducted by Hotel Futura, as it might help in identifying the overall issues currently present in the case study.

After the detection of overall opportunity by F&B manager could have consulted by the financial controller and finance department. The involvement of the finance department could eventually help the F&B manager to identify the overall level of inventory that needs to be maintained for reducing the cash shortage.

The issues can only be rectified by using adequate discounting measures, where the sale for bottle of Hills of Blessings could be conducted for reducing the cash flow problems. This sale could eventually help in boosting sales of the hotel and help in attaining the extra benefits from sale of beverages. Moreover, the overall restriction on F&B manager could be imposed and relevant inventory level should be maintained (Palia 2014).

Currently the cash flow issue could be addressed by using relative measures of beverage sales, which might help in generating the required level of cash flow into the business. This relevant increment in sales value could eventually help in generating the overall profitability for the company. 

References and Bibliographies:

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