1. What are the main problems facing organization described in the case?
2. What are the possible solutions for the organization?
3. What is the “best” solution and why?
4. Application of the concept described during the module.
Answer:
1. What are the main problems facing organization described in the case?
Domestic market saturation in full- service restaurant segment
The domestic market Porcini is operating in is becoming more saturated and limiting its
growth opportunities. Saturation occurs across both in- city and shopping mall locations
(pg.1). Moreover, such market saturation creates a challenge to generate revenue, expand,
increase sales and stimulate demand. Expansion to similar markets such as fast- food is a
potential opportunity. However, fast- food markets are mature and with low revenue
growth perspectives (pg.2). It is due to competitive market and well- established big
brands. Moreover, increasing health awareness relating to fast- food consumption is
affecting market saturation increasingly (pg.2). Full- service chain markets are highly
fragmented (pg.3) due to several different offerings within the single segment.
Furthermore, revenues are very economic- sensitive with fluctuating demand due to
disposable income, consumer confidence and lower- priced fast- food (pg.3).
Low brand power and recognition outside operating market
Porcini as a small regional player has a very low brand power outside the regions it is
operating in (pg.1), which challenges it growth and expansion outside domestic markets. A
potential opportunity to expand into a different segment, potentially to fast food, requires a
quick roll- out of new Pronto concept to establish it as a powerful brand (pg.1). However,
quick expansion plans would require adopting franchising or syndication models of
ownership (pg.1). Moreover, fast- food segment is dominated by large national chains
(pg.2) and create intense competition, especially for new segment entrants.
Limited capital and resources
Quick growth for Porcini was also challenged by its limited capital and access to prime
real estate sites (pg.1). There are two potential approaches to solve the problem:
franchising or syndication ownership models. However, it can interfere with their brand
essence and authenticity. Firstly, company’s quality reputation might be damaged (pg.1)
which is considered to be one of the main company’s success factors. Secondly, the pace of
potential growth might be impossible for company to handle with limited capital and
resources and could lead to potential long- term brand damage or crisis.
2. What are the possible solutions for the organization?
“Company own- and- operate”
Expanding Porcini by fully company owned and operated restaurants is one of the possible
approaches for the company to attain. It would provide Porcini with total control of
