Using Porters Five Model: A Case Study of Bethesda Blues & Jazz Restaurant

Background

All companies operating in various industrial sectors strive to ensure that the services and the products they offer to their customers easily relate to the customers’ expectation, otherwise business success is limited. Bethesda Blues and Jazz Restaurant is a company striving to fulfil this business excellence necessity. This restaurant is located next to the Bethesda Theatre, the area’s leading cinema place. It operates as a small concert hall specializing in serving quality drinks and food, featuring 300 seats with an additional 200 seats available in case the primary seats are sold out. Notably, this restaurant enables the customers to view their favourite artists under the experience of an acoustic, intimate and elegant setting (Bethesda Blues & Jazz Supper Club, 2012). The business concept implemented by Bethesda Blues and Jazz Restaurant is relatively successful in its current US setting. However, in the pursuit of operations expansion to other markets, such as in the UK, the analysis of the underlying macro-economic environment factors both in the US and in the UK is necessary. With the resulting information from such analysis, it is then possible to make viable expansion decisions.

Industrial Sector Analysis

The success of every business entity is strongly related with the extent to which it relates with the industrial sector it operates under. Additionally, in the pursuit of implementing expansionary activities especially in terms of venturing into new market places, each business entity must not only evaluate factors in its current jurisdiction but also those of the new frontier it plans to venture into. In light of this, the management of Bethesda Blues and Jazz Restaurant must be aware of the underlying factors affecting their sector of operation both in the United States and in the United Kingdom.

Relationship with the Tourism Sector

The total amount of spending by tourist in a given country usually counts in determining the country’s international tourist receipt. Notably, the United States is among the nations with high tourism receipts, accounting up to about 16% (Villarreal, 2003). Apparently, the tourism sector incorporates a number of prominent sub-sectors due to the various services and reasons that promote either domestic or foreign tourism. One of these sub-sectors of tourism is the entertainment sector. The Bethesda Blues and Jazz Restaurant operations are strategically inclined towards fulfilling the needs of those who seek entertainment, either in terms of music or excellent food and drinks. Apparently, this business entity has been able to thrive in its operations since it perfectly relates to the needs of the entertainment sub-sector of the tourism sector, standing out as a leading entertainment choice in its location.

While venturing into the UK market, Bethesda Blues and Jazz Restaurant’s management should be aware of the fact the basic outlook of the tourism industry along with its sub-sectors are relatively different from those in the US. Specifically, the success in the US for this company can be directly associated with how well the food and choice of music has effectively related with the needs of its customers. However, the customer entertainment preference and needs in terms of these key basics of this company, food and music, might be relatively different in the UK.

Business Structure and Ownership

Under its current business operations in the United States, Bethesda Blues and Jazz Restaurant operates as a private entity. More so, this business entity is operated as a unit venture without branches elsewhere but for the Maryland based supper club. It is owned and run by Rick Brown, a third generation resident of Washington, alongside his brothers and cousins. Majorly, this business structure stands out due the fact that the Brown family are indigenously from the Washington area and hence understands it very well. In addition, the Brown family also bears a history in the Jazz music thus the choice of music.

However, if the future of this restaurant sees its operations expand into the United Kingdom’s market tourism and entertainment industry, it is most definite that the basic structure and ownership will require adjustments. Apparently, the management will require implementing suitable market entry strategies such as joint ventures so as to penetrate the market with ease (Wolf, 2000). The use of additional personnel who understands the UK market as the Brown family understands the US market will be necessary. With such strategies, the Brown family will no longer be sole proprietors but business partners instead.

Competition Analysis

Apparently, competition is a factor that characterizes modern business operations especially in legendary industrial sectors that have been operating for a long time. With reference to this fact, the Bethesda Blues and Jazz Restaurant is subject to significant competition from various other players pursuing business in the entertainment sub-sector of the tourism industry. Notably, there are a number of restaurants that double as restaurants in the Washington, DC area. 9:30 Club features international, national and local live music performances in all genres and is a favourite. U Street Music Hall rocks two perfectly stocked bars and a dance floor about 1200 square foot. The Hamilton is located a few blocks to the White House and is operated under the Clyde Restaurant Group and operates 24 hours (Cooper, 2014). With specific relation to the brand of music in the Bethesda Blues and Jazz Restaurant, there is the Bohemian Caverns which stands out as the largest jazz club in the area and the Blues Alley which is the oldest jazz supper club with a rich list of all the jazz legendaries having played there. With respect to food and drinks, Gypsy Sally’s dinner can seat about 150 with its bar seating over 140 patrons. Howard Theatre also features here with a dining menu characterized majorly by American cuisine (Cooper, 2014).

Competition is not limited to the US market only; it is also present in the UK market as well. Notably, the best place to feature the expansion for Bethesda Blues and Jazz Restaurant in the UK market is in London since it is the most famous city in the UK. In light of this, it is important for the management this business entity to understand that there are already established super clubs that Bethesda Blues and Jazz Restaurant must face during its expansionary phase in London. The Market Place features a centrally located bar, arranges for breakfast, lunch and late night meals. It also hosts acoustic music each Wednesday. There is also Club Area which features three dance floors, five bars, smoking terraces and enough space to enjoy the sophisticated surrounding it offers. Due to the differences in the local markets between the US and the UK, the supper clubs in London mostly feature live DJs, a feature that Bethesda Blues and Jazz Restaurant should consider incorporating. Other potential competitors in London include also the Lightbox, Fabric and Pacha London (View London Ltd, 2014).

Capital Structure

The financial stability of every business entity also plays an important role in determining its ability to succeed in its industrial sector. Apparently, most activities related to business excellence require financial back-up for stability. In light of this, the capital structure of Bethesda Blues and Jazz Restaurant is limited to the personal contribution of its proprietor, Rick Brown. In its first year of operation, he invested over 4.5 million dollars in the renovation and set up of the lounge, the bar, and the dance floor. In the same five years, the company generated over 800,000 dollars in ticket sales alone (Metcalf, 2014). Together with other sources of income, this means a payback period of about five years.

Most supper clubs incorporate capital structures that depend on private monetary contributions from the proprietors. This is the case across the world, including both the US and the UK. However, in the case of Bethesda Blues and Jazz Restaurant venturing into the UK market, the proprietor should try to establish a either a partnership or a joint venture so as to ensure that the capital structure is wider and it attains the relevant level necessary for a business entity trying to penetrate a market in a foreign nation (Fleseriu & Pop, 2009).

Opportunities and Threats in the Company’s Expansion Objectives

There are a number of ways and means to determine the extent of opportunities and threats that arise in a business operation, especially with reference to new product launch or venture into new markets. With respect to the Bethesda Blues and Jazz Restaurant, the Porter’s Five Forces Model is readily applicable (Grundy, 2006). Through the application of this model, strategic analysts can easily determine whether the new venture in the UK market will be profitable for this company (Ahlstrom & Bruton, 2009). With the resulting information, this theory helps in identifying the strengths so as to improve any surfacing weaknesses as well as avoid mistakes.

One force is the supplier power and the other the buyer power (Jaradat, Almomani, & Bataineh, 2013). Apparently, the fact that there is already a good number of supper clubs operating in UK, and especially in London, the buyer power is in favour of the Bethesda Blues and Jazz Restaurant. Also, this too means that the suppliers of the services to be offered, such as the music bands and other entertainment features, the food and drinks, all are readily available and from diverse sources, thus at affordable costs. These two forces indicate opportunities.

The third power is the competitive rivalry (Jaradat, Almomani, & Bataineh, 2013). As aforementioned, there is a huge number of already practicing supper clubs in London and the entire of the United Kingdom. This on the other hand means a threat on the expansion objectives of this company since it will start fighting for a market share and the existing competitors will make counter moves. The forth power lies in the threat of substitution. Basically, this relates to the fact that there may be close substitutes to what the company offers and the customers may prefer such. This may pose as a threat to an extent. However, specifically for Bethesda Blues and Jazz Restaurant, it might also be an opportunity to unleash all its experience from the US market and take advantage of introducing it in the UK market.

Finally, the threat for new entry poses as the fifth force (Jaradat, Almomani, & Bataineh, 2013). It is common that new entrants are usually attracted by profits. However, the economic environment, capital requirements and government policies determine whether it is worth to venture into the new market. It is common for up to a third of small start up businesses in the UK, even the local, to fail in their first three years (The Times 100, 2014). As a result, this stands out as a threat that Bethesda Blues and Jazz Restaurant should strategize upon.

Strategic Future Direction

With respect to this company’s expansionary objective through establishment in new frontiers, specifically venturing in the UK market, a strategic plan is necessary to pave way for a successful future. In matters of extending its operations to the UK, it is important for the company to understand various important factors necessary for effective market penetration, to be implemented both before and after the eventual entry into the UK entertainment industry (Fleseriu & Pop, 2009). The diagram below shows a five year projection of the necessary steps to be taken by Bethesda Blues and Jazz Restaurant with respect to its expansionary objectives in the UK.

 

Taking into consideration the presence of active players in the UK market such as the aforementioned competitors, the Porter’s Five Forces indicates an entry threat due to stiff competition. However, proper implementation of the above projection activities gives this company a better chance to succeed in penetrating the UK market. Notably, it might take a relatively longer time, but persistence will see it through. In short, joint venture and partnership stands out as a the most suitable strategies that will see to it that this company makes it in attaining its expansionary objectives as far as venturing in the UK market is concerned (Wolf, 2000). Therefore, the management of Bethesda Blues and Jazz Restaurant should consider applying them in the pursuit of their expansionary objectives in the UK.

References

  • Ahlstrom, D., & Bruton, G. (2009). International Management: Strategy and Culture in the Emerging World. London: Cengage Learning.
  • Bethesda Blues & Jazz Supper Club. (2012). Bethesda Blues & Jazz Supper Club. Retrieved April 28, 2014, from bethesdabluesjazz.com: http://www.bethesdabluesjazz.com/
  • Cooper, R. (2014). Top 10 Live Music Clubs in Washington, DC. Retrieved April 28, 2014, from About.com: http://dc.about.com/od/washingtondcnightclubs/tp/toplivemusicDC.htm
  • Fleseriu, C., & Pop, M. D. (2009). The Penetration Strategies of International Hotel Chains on the Romanian Tourist Market. The Proceedings of the International Conference “Marketing – from Information to Decision” (pp. 199-210). Cluj-Napoca: Babes Bolyai University.
  • Grundy, T. (2006). Rethinking and Reinventing Michael Porters Five Forces Model. Strategic Change , 213.
  • Jaradat, S., Almomani, S., & Bataineh, M. (2013). The Impact of Porter Model’s Five Competence Powers on Selecting Business Strategy: “An Empirical Study on Jordanian Food Industrial Companies”. Interdisciplinary Journal of Contemporary Research In Business , 457-470.
  • Metcalf, A. (2014). After First Year, Owner Hopes Bethesda Blues and Jazz Turns Profit. Retrieved April 28, 2014, from Bethesda Beat : http://hwww.bethesdamagazine.com/Bethesda-Beat/2014/After-First-Year-Owner-Hopes-Bethesda-Blues-and-Jazz-Turns-Profit/
  • The Times 100. (2014). Strategy Theory. Retrieved April 28, 2014, from Business Case Studies: http://businesscasestudies.co.uk/business-theory/strategy/business-failure.html#axzz2wPeaS5MF
  • View London Ltd. (2014). Recommended Superclubs in London. Retrieved April 28, 2014, from View London: http://www.viewlondon.co.uk/clubs/superclubs-in-london-recommended-london-251.html
  • Villarreal, M. A. (2003). The Tourism Industry and Economic Issues Affecting It. Washington, DC: Congressional Research Service.
  • Wolf, R. C. (2000). Effective International Joint Venture Management: Practical Legal Insights for Successful Organization and Implementation. Berlin: M.E. Sharpe.
HTML Snippets Powered By : XYZScripts.com