Home assignment 1

OLIVE TREE FOODS LIMITED

Esquire Group is one of the esteemed business conglomerates of the country. It has been proudly and significantly
contributing to the society and national economy through creating remarkable employment opportunities and
exporting globally. The corp started its journey in 1989 with the establishment of Esquire Electronics Ltd. In 1993 it
entered in the RMG sector of Bangladesh and since the inceptions, it has been operating as one of the market leaders
in those sectors.

OLIVE TREE FOODS LIMITED is a 2011 born brainchild of Esquire Group. It was formed with the idea that
stakeholders would like to diversify from their current business portfolios and engage in the restaurant/dinning
industry. Their goal is to introduce the consumer market with hygienically prepared great tasting food at
conveniently located restaurants and stores throughout the cities. They aspire to be first love of every foodie of this
foodland. The visionaries of Esquire Group felt that there is a vacuum in the food industry, there is no reputed
restaurant chain yet unlike Singapore or Thailand, the industry is still very organically spread, and entry to market is
relatively easier than other advanced industries. Since food is one of the very basic necessities, this industry is going
through an exponential growth recently. Most employed people are now having their lunch and dinner outside. With
more women joining the workforce, there is a steady decline on the dependency of homemade food. Over one crore
middle income people spending Taka 200 per day for food outside their house makes this F&B industry a Taka
60,000 crore industry at least.Being the secondary cultural aspect, Café, Fine Dining and Post dinner Dessert culture
is the current hype of the middle to upper class urban and sub urban markets due to the unavailability of other
entertainment alternatives. Olive Tree would like to take advantage of current market conditions and build a strong
presence in the F&B scene in Bangladesh and the region

Specialties of OTFL: Some of the labels under Olive Tree are: Master Franchise of Cold Stone Creamery(from US
based Kahala Brands) in Bangladesh (dessert industry), Mother company of Orange and Half Café (café industry),
Mother company of Watercress Restaurant (fine dining industry). The management has the required learning
curveson the entire urban and sub urban market and now in FnB industry. The Corp brand has a very strong
distribution set up for their electronics, leveraging which seems a little ‘not so happening’ in restaurant and café
industry. But 4 years in this sector has managed a value chain with their local food growers and grocers. The 28
years of respect and reputation in the financial market has earned a smooth crowd sourcing opportunity for the label.
Presently they have one only establishment for both Watercress and Orange and Half in Tejgoan Gulshan area and
two for ColdStone(Gulshan1 and Dhanmondi). Establishing multiple branches has no alternative to match their
strategies with their vision. Uttara, Banani, Mirpur, Bashundhara City might be some lucrative area for them if the
growth is potential. Currently FB pages is one of their main contact points which is giving them a limited exposure
comparing to the competitions who also hae presence in other direct or support media. Ramadan Menu has never
failed to rope in some extra profit for both ColdStone and Watercress. KAhala Brands also have other International
Chains such as Planet Smootie and Taco Time. If the market is ready, these healthy street food labels might assist
OTFL to tap into the street food industry of Bangladesh.

SBU Details: Watercress (2013), a joint venture with US based The Next Ideas is positioned as a fusion fine dining
and managed to ensure a 30% market share in that niche. Investment is required for further growth of this profitable
SBU of OTFL. Some other leaders in high street fine dining niche are Steak House (Continental), Spaghetti Jazz
(Italian), Thai Emerald (Thai), Izumi (Japanese), KhanaKhazana (Indian). One of the competition POPs of
Watercress would be the buffet and A la Carte of all these different cuisines benchmarking the pricing, ambience and
other services as category POP with these competitions. Orange and Half (2013), with expertise acquired from the
San Francisco-based consulting firm, The Next Idea, offers just a little extra punch of vibrancy such as excellent
sandwiches, wraps and desserts along with the usual selection of coffee and other beverages carefully prepared in
high-maintenance kitchens. This seems like a potential brand with a present market share of 25% only if expanded
and nurtured properly. Gloria Jeans, NorthEnd Cafe, Tabaq, George Café, The Second Cup are some of the
competitions in this growing café industry of Bangladesh keeping the first two as market leaders. Cold Stone
Creamery (2016), is comparatively new a name under their umbrella yet earning the highest profitability for the
mother brand with a 43% market share with economies of scale. They believe Cold Stone Creamery could be the
catalyst for creating a new dimension in the food and beverage industry of Bangladesh by introducing the 'fun
factor,' in addition to serving a very high-quality product. Some of the rivals are Move n Pick (first mover),
NZealand Dairy, Taste and Gelato (losing market share rapidly). Cold Stone food menu serves as a POD attribute for
the brand.

Market Dynamics: Bangladesh is currently experiencing a stable political situation with few unorganized unrests here
and there. Recently our economy has labeled been as the tiger economy by one German business delegation due to its
constant growth rate which is 8.13% currently. Currently the estimated per capita income is $1,888 for 2019 and the
Unemployment Rate in Bangladesh increased to 4.30 percent in 2018 from 4.20 percent in 2017. The current inflation rate
here is 5.52 % which is expected to be 5.62% by the end of this year. Interest rate on savings is now 6.66% which was
5.61% previously. As per the experts, this rate might climb upwards in coming years. Currently the technological
orientation of Bangladesh is growing in general, especially the usage of internet capable mobile devices. The total
number of Internet Subscribers has reached 93.102 Million at the end of March, 2019. Our Government is also
investing a huge amount (Tk. 1,64,603 crore for physical infrastructure sector) in infrastructure development. The focus
is to develop metro rails and flyovers inside Dhaka City and reconstruct few important highways connecting major
metros. Another important variable under market dynamics would be the climate change here. Due to the current yearlong
heavy rain situation, most people now a day are preferring staying indoor for their entertainment activities. Eating out is
one of the mostly chosen entertainment activities in Bangladesh due to the lack of other alternatives in this industry.

Other than colossal rivalry, providing premium food for people at a sensible price range seems like the biggest
challenge ever in this price sensitive market where consumer surplus is growing due to the low price alternatives and
substitutes.Brands who not ready to compromise the quality of the food usually face stern competition from the
direct and indirect rivals. On the other hand, due to the investment pattern of the low (in lacks) but the high end (in
crores) industry, everyday a new fair value (low priced) label is being born with poor to fair food quality making the
indirect rivalry even more intense. This me too practice at the lower tier is pushing the industry towards an over
capacity. Achieving economies of scales seems like a distant challenge for these high street brands like
OTFL.However, with an effective Brand Equity, leaders and challengers are maintaining a good guard around their
shares. Anothergood news for these quality brands is the situation that is slowly changing. People are becoming
more label and health conscious in terms of food quality and calorie counts, which is definitely a great news for the
brands focusing on quality.The industry also faces an acute shortage of talented human resource with industry-
specific skills in F&B sector with the highest employee turnover rates. Moreover, Government has recently raised
carbon tax by 3% and lowered the limits of emersion by 2%. Labeling the food information on packed food is
another new policy to be established in the market by this year which will give the customers the right to know and
challenge the producers. Scarcity of fresh ingredients is always a big issue due to the logistic and infrastructure
facilities. Fresh from the organic garden (from the outer belt of the city) is only possible when supplied daily which
gets delayed due to the friendly traffic situation of the city. Good news is these growers have a limited negotiation
power with their not so differentiated supplies over the big restaurant labels who buy in bulk from them but the
Planet and People Approach and the new Gvt price flooring policy in the growers’ favor is pulling down the
restaurant surplus slowly in this FnB market. The new law has drawn widespread criticism as it will impose a flat
15% VAT for all restaurants effective from 2017 keeping the import duty is at 25% on all imported coffee and dairy
products same as 2016. As per the UN forecasts, Bangladesh might have a 8.13%+ (only projected) GDP growth
rate in 2020 comparing to the recent one. Recently the Government has announced ‘a zero % tolerance policy’ for
the quality of the FnB sector with a nationwide strict measurement from this Ramadan onwards.
OTFL wants to increase their profitability in next 3 years of time by incorporating few changes and strategic
directions in their Strategies of Different Levels. Suggest them few directions by answering the following questions.

1. A. Table a SWOT TOWS analysis to find the GAPsin the market.

2. A. Table a PESTLE analysis for OTFL showing the strength/impact of the factors. (use 1 to 5 scale)
B. Draw a Scenario Analysis Graph based on your PESTLE analysis.

3. A. Draw the model, list down the factors and assign points (-3 to3 scale) under the dimensions of Porter’s Five
Forces Model mentioned in this case.
B. Table these factors based on their strength (High. Mid and Low) with regards to OTFL with justification.

There are 3 questions basically

I was thinking of maybe forming groups of 3, 2, 2 for the three questions, this should make it
simpler and faster overall.