3 Fran?ois, Demetris, José and Giuseppe are a group of students from different Mediterranean countries, taking their
MBA in a large UK city. As part of their course requirements, the group has to come up with an innovative business
idea, research into the feasibility of that idea and then present their business plan to a panel. After considerable
brainstorming they have come up with the idea of a themed restaurant based around Mediterranean cooking, menus
and service provisionally called ‘Casa del Mediterraneo’ and located in the city centre.
Initial research has revealed suitable premises to rent, but also the severe competition they will face in a city that is
very cosmopolitan and well provided for with restaurants serving cuisine from many parts of the world. The city has
a student population of around 100,000 and this, together with a young working population, means that there is a
very vibrant social life and a real willingness to sample food from different parts of the world.
Required:
(a) Identify and evaluate the critical success factors and associated competences that the group should consider
in developing their business plan for the restaurant. (12 marks)
(a) New ventures are notoriously risky and it is vital that the group has a clear idea of the factors that will be critical to the
restaurant’s success and the capabilities and competences needed to achieve their critical success factors. Johnson, Scholes
and Whittington define critical success factors as ‘those product (or service) features that are particularly valued by a group
of customers, and, therefore where the organisation must excel to outperform. the competition’. The group have chosen to
enter a highly competitive market and one where it is very difficult to create a distinctive product or service for the customer.
It is important in establishing what factors are important that they know the features their potential customers will particularly
value in the restaurant business. All too often firms design products or services on the basis of what the ‘expert’ inside the
company thinks the customer wants. One of the major problems in setting up a new restaurant is that customers can easily
compare one restaurant with another. Often they are in close proximity making all aspects of the service, particularly price,
easily open to customer evaluation.
Clearly, service will be a critical factor but precisely how will it be defined? Does the customer look for fast food service with
an emphasis on being served quickly? This seems unlikely and a more likely requirement is that the table service replicates
the friendly ambience experienced at restaurants on the Mediterranean. Many of their customers will have experienced this
first-hand and this would reinforce the Mediterranean theme. To deliver this service the waiters/waitresses will need
appropriate training. The menu and quality of food will be key factors – they lie at the heart of the reason for setting up the
business. How is distinctiveness to be achieved? The quality of the chef and kitchen staff will determine the quality of the
food served. The design of the restaurant and its layout and seating are also features, which it is important to get right. Aboveall, there is the need to create a price/value combination that is difficult for competitors to beat.
The critical success factors will stem from using the restaurant’s resources in a distinctive way. In Hamel and Prahalad’s
terms, there are three tests that can identify core competences in a company. Firstly, the core competence has the potential
for transfer across a variety of markets – less likely in a small business. Secondly, a core competence should make a significant
contribution to the perceived customer benefits of the end product or service. Finally, the core competence will be difficult for
a competitor to imitate. In service businesses such as restaurants, imitation of less tangible factors such as the quality of tableservice may be much more difficult to copy than the features designed into a tangible product.