Challenges Faced by Tung Lok Company

The two main issues in the business functioning of Tung Lok Company is related to less effective business functioning which happened due to high employee turnover and loss of its business output which arise due to the failure of its value chain activities in many business levels.  The main strategy which company should undertake in its business to make the possible changes would be re-engineering of its business value chain activities. 
The main recommended strategy for Tung Lok Company is cost differentiation strategy. It is the strategy which will assist organization to provide its goods and services at lowest price in market without compromising with the quality. It is analyzed that if company wants to win over the market then it will first have to create core competency in market to position itself to keep its business ahead from the existing rivals. It is analyzed that Company needs to strengthen the work functions of the research and development department which will result to create strong product differentiation and cost leadership strategy.

It is international restaurant chain which has established its several restaurants in Singapore. This company was founded by Andrew Tjioe in 1980. It is analyzed that company needs to focus on achieving the set objectives and goals by using the effective business chain. Company has focused on using the product differentiation and customized business strategies to win over the market. It has several subsidiaries Tung Lok Millennium Pte Ltd, Club Chinois Pte Ltd, and more that have been offering restaurant services in market to achieve its consolidated short term and long term objective.

The liquidity ratio of company has shown that company has invested its capital more in its current assets. It reflects that company might face issue of high cost of capital which may increase the overall cost of its business. The liquidity ratio of company has increased to 1.98 points in 2017 which is .98 points higher as compared to last year. This shows that company has increased its overall investment in its current assets which will eventually increase the overall outcomes and efficiency of the business.  This liquidity ratio reflects that company has made strong liquidity position in market and increased its quick and current ratio with a view to strengthen its business position in long run. Tung Lok Company has increased its investment in the current assets with a view to strengthen its value chain activities and operational plans to meet current and potential future demand of its offered products in market.

Proposed Strategy: Re-engineering of Value Chain Activities

The profitability ratio of company has also increased which shows that if company has increased its profitability throughout the time which may increase the overall outcomes and business efficiency of the organization. It shows how much profit company has earned from its overall sales. It is also used to determine the potential profit earning capacity of company in the long run. The return on capital employed of company has increased its overall its capital investment which has also increased its overall return by 22% since last two years. Currently, company has increased its overall return on capital employed with the increase in its overall investment. With the increasing ramified business changes and increased investment in its research and development department, company has followed product differentiation strategy to strengthen its overall sales in market. It has also increased the overall profit earning capacity.  The return on assets has also increased by 12% since last two years. It has reflected that with the increase in the investment in its current assets company has also increased the earning capacity of business.  However, with the increase outflow of cash from its business, company has lower down the return on capital employed which might negatively impact the business functioning of organization in long run.

This ratio reflects the relation between equity and debt portion of company in its capital structure. However, it is hard to determine the optimum capital structure in the business. Company has maintained .65: 35 debts to capital ratio i.e. 35% are debt and 65% is capital in the overall capital structure of organization. It reflects that company has higher financial leverage and maintained high debt capital in its capital part. Nonetheless, higher debt capital is the capital will lower down the overall cost of capital but at the same time will increase the overall financial leverage.

The business financial trend of Tung Lok Company is showing the good amount of business growth in coming years. It is analyzed that company need to lower down its financial leverage by reducing its debt capital. The debt capital of company is high which ultimate lower down the overall cost of capital of business. It reflects that increased return on capital employed reflects that company will have high sustainability. In addition to this, company needs to focus on creating strong brand image.  The share price of company has also increased which shows that company has created value on its investment.  The net profit of company has also increased to 24% which shows that company has increased its profitability throughout the time. It has shown that company is planning to invest more capital in its research and development department to strengthen its business in long run. Its increased profitability reflects that company has strong performance in market and with the increased business investment it will consistently increase its overall profitability and earning capacity of the business in long run.

Recommended Strategy: Cost Differentiation

External analysis

This analysis is used to evaluate the all the external opportunities and threats available to organization. However, in order to determine the exact market opportunity and available business scope, company needs to evaluate whether the existing business resources is enough to expand the business in the existing and new market (Wang, Zhu, & Tong, 2017).

It is analyzed that Tung Lok Company is international Singapore Company which is indulged in offering food and beverage services through its different restaurants. It has position itself with its newly developed cyber computing enterprises resources planning system in its value chain activities to set up the automation in its value chain activities. It is analyzed that company needs to follow proper strategic program with a view to meet its current and future demand of the market. It is analyzed that the GDP per capital of Singapore is 52,960.71 USD ‎(2016) which has increased by 2% since last two years which reflects the good potential for the business growth of the Tung Lok Company (Lo, Tung,  & Huang, (2017).  It is considered with the increasing GDP rate of Singapore, people will also have increased purchasing power of the clients. It is analyzed that with the increasing purchasing power of the people in Singapore, Tung Lok Company could easily strengthen its overall sales and profitability at large. However, people are more inclined towards going to restaurants which are using the advance technologies and at the same time offering best quality foods and beverage to clients at affordable price. In addition to this, the political environment and legal factors are also showing the positive factors for the business growth of organization. This economic trend and use of advance technologies have shown that company would have strong business potential in long run. This trend reflects that if company customized its all the products and services as per the client’s needs and demand it will result to increased overall business outcomes and efficiency in long run (Galindo, 2017).

It is analyzed that Tung Lok Company has adopted international business working chain. However, with the increasing GDP rate and economic growth of Singapore, it is considered that Tung Lok Company could easily strengthen its business functioning and increased business turnover by using customized business strategy in long run. It is analyzed that company by positioning itself in market by following the market leadership program and customized business strategy could win over the market in long run.  It is analyzed that company could also expand its business by using the diversified business strategy and product development strategic program. This strategic program will not only increase the overall outcomes but also increase the overall business efficiency in long run (Siguaw, & Simpson, 2015).

Financial Trends of Tung Lok Company

With the increasing return available in this food and beverage restaurant business, it is analyzed that many new comers and organizations are diversifying their business in this industry to earn good amount of return on their investment. It is analyzed that if new entrants will offer high quality foods and beverage and advance technologies is used in their value chain activities then it will surely beat the existing market of the Tung Lok Company. It could be considered as biggest threat to company and if it is not mitigated then it might destruct the business functioning of company in long run (Jin, et al. 2015).

The Tung Lok Company is international restaurant chain which offer high quality food and beverage products in long run. It is analyzed that the with the strong brand image of its business, company should focus on investing its capital to expand its business on international level. India, China and Brazil are the most potential countries which will offer high amount of return on capital employed if Tung Lok Company invests its capital in these countries. The GDP rate and less strengthen compliance program will allow company to expand its business in these countries. Nonetheless, Tung Lok Company needs to undertake strategic program such as joint venture, merger and amalgamation while tapping these new markets for starting up new restaurant business in these countries (Wei,, Samiee, & Lee, 2014).

The strategic plan of the organization reflects that company could easily increase the overall business outcomes if it reshuffles its capital structure. This reshuffling of capital structure of company will also assist company to lower down the cost of its business and also increase the overall profitability of the business at large.

The internal analysis is done to identify the strength and weakness of the value chain activities of organization. It is analyzed that internal analysis is an exploration of organization’s competency competitive viability of the marketplace and cost position. In order to conduct the internal analysis there are several tools such as SWOT and situation analysis. These tools are used to gauge the viability of company in context with the market factors (Wei, Samiee, & Lee, 2014).

This analysis is used to measure the strength, weakness, opportunity and threats of the organization (Conway, 2013).

Strength- Tung Lok Company is an international organization which have created strong brand image on international level. Company has also used cyber computing enterprises resources planning and online system in its business process to strengthen the communication program which will increase the overall outcomes and efficiency of the business.  It is analyzed that company has also opened up various sub units and subsidiaries in Singapore to operate its restaurant business. It is analyzed that company followed customized business strategy to win over the rivals and market (Boshyk, 2016).

External Analysis of Tung Lok Company

Weakness- With the increasing legal compliance program and non-effective business, company has faced legal issues. Company needs to manage its business to avoid the possible penalties from its business. It is analyzed that company needs to set up the proper legal department and also need to enter into strategic alliance with the other organization while tapping the new market (Fern&es, Ferreira, & Moura, 2016).

Opportunity

The increased GDP rate of Singapore and people and people inclination towards quality products and services will strengthen the market share of company. Tung Lok Company could increase its overall market share by focusing on increased quality of the foods and beverage and adopting new technologies in its business units.

The main threat of company is related to new entrants in market who are coming up with the high financial resources and advance technologies. It will not only steep the quality of the business but also showcase high competition in market. Company needs to strengthen its business if it wants to win over the rivals in market (Goi, 2015).

It is analyzed that Tung Lok Company the Capabilities behind the competencies that create value in its value chain activities is related to use of the advance technologies and highly expert IT team members. These are the persons who are indulged in taking the effective business strategic decisions (Johnston, & Bate, 2013). It is analyzed that company by using the customized food and beverage products could easily attract more clients in market to increase its overall market share.  However, clients are more inclined towards buying goods and services from the organization that are using advance technologies and high quality products at affordable price. It will not only assist organization to increase its overall existing market share and also position itself in long run. Furthermore, company has also followed strategy to adapt with the changing business environment which will increase the overall output and efficiency of its business in long run (Mohd, Idris, & Momani, 2013).

Change in corporate value chain is the consistent steps of Company to adapt its business with the ramified business growth. It is analyzed that company needs to focus on creating strong brand image by using online business methods which will interlink its all business process each other. In addition to this, CSR activities program of company has also focused on providing the social benefits to society with a view to pay back to society what company has taken while running and operating its business (Rashid, & Ghose, 2015). It has been considered that company has been investing more than 2% of its average five year net profit in the business operation to create value on the investment. Therefore, after analyzing these details, it could be inferred that the future of the Tung Lok Company is showing the profitable growth rate. It is analyzed that if company could offer customized food and beverage products in its restaurants then it will add value for the business growth of the organization. However, company needs to lower down its financial leverage by lower down its equity to debt capital in long run (Schmidt, Spann, & Zeithammer, 2014).

Expanding Business in India, China, and Brazil

With the increasing business complexity, company has faced several issues in its value chain activities. However, there are main two issues have been found which is required to be dealt by the management to achieve its short term and long term objectives in long run.

There are 3 main measures which company needs to undertake to make the changes in its business (Siguaw, & Simpson, 2015).

• The increased employee turnover in its business operation may increase the overall costing of the business and may be risky for the sustainable business functions in long run. It will also require hiring of experts employees and adopting innovation and creation in its research and development department is very much required for the effective growth of the business in long run. This is the biggest issue which company needs to meet for its long term business sustainability in long run. It is analyzed that if company needs to arrange proper training and development program to make employees adaptable with the newly designed needs of the process. If they are not given proper training then it might result to increased employee turn over The employee turnover issue has several impacts such as increased business costing, changes in the business process system and hiring of more employees which will ultimately impact the future growth of business (Wei, Samiee, & Lee, 2014).
• The changes in the value chain activities and re-engineering of its system process need to be done by using the Enterprises resources planning cyber computing system which will strengthen the work process system of organization (Abam, 2018).  This newly designed re-engineering strategic program assists organization to adapt the business process to meet its short term and long term objectives in long run. However, it will require company to make more capital investment in the process to adopt the new technologies and system process which will add value to the business organization in long run. It is analyzed that if company installs new system process such as MIS, design support system and other online tools then it could easily meet its short term and long term objectives (Armstrong, et al. (2015). It will also set up online automation process in the value chain activities which will set up automation in its several activities which will lower down the cost of its business process.

The main issue which Tung Lok Company has been facing is related to employee turnover. The increased employee turnover is not only destructing the business functioning but also increase the overall costing of the business. It is analyzed that many of the employees are leaving their jobs in Tung Lok due to its increased complexity and less effective training and development program (Arrawatia, 2018). Company also needs to use the motivation theories to motivate employees in their work such as Maslow motivational theory and ERG motivational theory. The employee turnover could be reduced by company by using the proper training and development program to assist employees to adapt with the changing business environment. Therefore, it could be inferred that the best method to mitigate increased employee turnover would be using training and development program and motivation theories as well (Boehe, & Cruz, 2010).

Strategies	Staging	Arenas	Vehicles	Economic logic	Differentiators
Product differentiation strategy	It is the strategy which will keep its products and services offered in market different from all other rivals’ offering. This strategy will speedily attract clients and will assists in increasing overall market share in long run.	Tung Lok will be active in changing the value chain activities and adapting towards installing advance technologies in its business value chain.	Company could easily get to achieve its set objectives and goals if it adopt the Six sigma quality method in its value chain process and adopt new technologies to make its products and services more quality oriented.	Firm could easily obtain its set objective by using the advance system and online channels. It will in the starting increase the overall capital investment but in long run it will assist company to create value on its investment.	The firm will win market by using the product differentiation strategy.
Cost leadership	Company needs to lower down its cost of production by using the advance technologies and hiring more experts’ employees.	It will sell quality of its food and beverage products in its restaurant at affordable price.	It will assist organization to lead the market with its high quality food and beverage products at affordable price	Company will over the market by keeping the price of its products as low as its rivals offering.	It will increase the overall turnover and market share of company.
Re-engineering of its value chain	The corporate value chain is accompanied with the key board activities and strategic plans which company needs to take to make its business more effective (Br&, & Roll&, (2018).	It is analyzed that company needs to hire more expert employees in its system.	It will focus on six sigma process and hiring more expert employees to make business more customized.	Company needs to hire more expert employees who could focus on increasing the quality of products and services offered in market (Brace, 2018).	It will attract more clients and will assist organization to earn more profit from its business.

Tung Lok Company needs to take the strategic actions and setting up of different committees in its key managerial persons who will take all the strategic decisions. It is further analyzed that company needs to hire more line mangers who will take tactical decisions to run the business operation at different work (Brinckmann, & Kim, 2015).

Company should follow the product differentiation strategy to win over the market. It will assist organization to provide compete with its rivals in market. In addition to this, it has been observed that company has also kept the quality and design of its offered food and beverage products unique in market which is different in market. It is analyzed that company has followed product differentiation strategy which might add value for the future business of organization (Chernev, 2018).

The main strength of product differentiation strategy is to offer food and beverage products unique in market which will add value to the client’s satisfaction in long run. It will also force organization to adopt the advance technologies and customized its products as per the clients need and demand in market (Grant, 2016)  

It will increase the overall financial capital investment of company in the value chain activities which will be negative for the organization in the initial time. It will increase the complexity and may result to high employee turnover (McDonald, & Wilson, 2016).

Conclusion

In the starting, it will increase the overall costing of the business but in the future, it will increase the business sustainability in long run (McKenzie, 2017).

Implementation of the new product differentiation strategy

The main product differentiation strategy could be implemented by changing the value chain activities and arranging the proper training and development program for employees to make changes in its existing work (Rosati, & Conti, 2016).

How corporate value chain will chain

The corporate value chain is accompanied with the key board activities and strategic and line managers who will take the required strategic decisions. However, new learning process and communication system will be adopted for all the concerned persons to adapt with the changes (Rushton, Croucher, & Baker, 2014).

• Installing new advance technologies and system
• Hiring of more experts employees
• Adopting six sigma quality check in the process

Company should use proper CSR activities to reduce the negative impact of its value chain activities on society. However, installing new eco-system support plan will lower down the emission of the hazardous substance in market and increase the business efficiency in long run (Schmidt, et al.  (2014).

Conclusion

After assessing all the details and business strategies of Tung Lok Company, it is analyzed that company needs to evaluate company needs to strengthen its research and development department to adapt with the ramified changing business environment. It is further analyzed that financial structure of company is divulging high capital leverage which may negatively impact the business growth and increase the overall financial risk. Tung Lok Company could win over the market by using the product differentiation strategy which could add value to its business in long run. Now in the end, it could be inferred that company should adopt advance technologies and cyber system in its value chain activities which could lower down the overall costing and increase the business efficiency in long run.

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