2. 3
4
6
8
9
11
12
13
14
15
16
17
18
19
22
24
25
26
27
29
30
31
32
33
34
37
39
43
44
45
49
51
52
Economic Factors…………………………………………………………………………………………………………..
Social Factors………………………………………………………………………………………………………………
Political Factors……………………………………………………………………………………………………………
Technological Factors…………………………………………………………………………………………………….
TOOL 3: COHESION ANALYSIS………………………………………………………………………………………………….
TOOL 4: STRATEGIC BUSINESS UNITS………………………………………………………………………………………
Organizational Structure…………………………………………………………………………………………………
Key Success Factors………….……………………………………………………………………………………………
TOOL 5: REMOTE ENVIRONMENT ANALYSIS…………………………………………………………………………..
TABLE OF CONTENTS
EXECUTIVE SUMMARY……………………………………………………………….…………...…………………………..….
TOOL 1: HISTORICAL ANALYSIS………………………………………………….……………………………………………
TOOL 2: MISSION STATEMENT ANALYSIS………………………………….……………………………………………
Market Orientation Analysis…………………………………………………………………………………….……..
Ecological Factors…………………………………………………………………………………………………………
TOOL 6: GLOBALIZATION ASSESMENT……………………………………………………………………………………
Method of Entry…………………………………………………………………………………………………………….
TOOL 8: LIFE CYCLE ANALYSIS………………………………………………………………………………………………….
TOOL 9: PORTER'S 5 FORCES ANALYSIS…………………………………………………………………………………..
TOOL 7: INDUSTRY STRUCTURE……………………………………………………………………………………………….
Perceptual Map and Market Share……………………………………………………………………………….……
Power of Buyers…………………………………………………………………………………………………………….
Power of Suppliers…………………………………………………………………………………………………………
Barriers to Entry……………………………………………………………………………………………………………
Strategy Recommendation………………………………………………………………………………………………
Availability of Substitutes……………………………………………………………………………………………….
Rivalry Among Competitors……………………………………………………………………………………………..
TOOL 10: COMPETITIVE ADVANTAGE ANALYSIS…………………………………………………………………….
TOOL 11: INTERNAL AUDIT ANALYSIS……………………………………………………………………………………..
TOOL 12: FINANCIAL ANALYSIS……………………………………………………………………………………………….
Common Size Statements……………………………………………………………………………………………….
Financial Ratios……………………………………………………………………………………………………………
TOOL 13: GENERIC STRATEGY ANALYSIS…………………………………………………………………………………
TOOL 14: SWOT ANALYSIS………………………………………………………………………………………………………
Company Analysis Project: Kona Grill, Inc. Page 2 Prepared by Daniel G. Gode
3. 1
http://www.konagrill.com/more/investors/stock-info
EXECUTIVE SUMMARY
The intent of this project is to further develop an understanding of strategic management
processes. This is accomplished by analyzing the organization's internal and external environments.
After determining strengths, weaknesses, opportunities, and threats, an analyst can begin to formulate
recommendations that will help strengthen the position of an organization in the industry.
Kona Grill, Inc. opened the first restaurant in Scottsdale, Arizona in 1998. Kona Grill went public
in 2005, and since then Kona Grill has expanded to 37 establishments domestically, with future
international expansion plans for Mexico and the Middle East proposed in 2015. Growth has been
realized due to careful planning and selection of locations in high income areas, with emphasis on
providing an affordable, yet exceptional, upscale casual dining experience.
1
The analysis of Kona Grill throughout this project has taught me the importance of
understanding that a variety of factors can contribute to the success or demise of a firm. As a decision
maker it is imperative to stay informed by continuously monitoring not only the internal environment,
but the external environments as well. Additionally, the project taught me that while strengths and
opportunities can help give a firm a competitive edge, its the weaknesses and threats that can be
capitalized on by formulating strategies to position a firm so that these can be exploited.
Restaurants are designed to provide a contemporary ambience, with distinct dining areas,
that are capable of seating well over 200 guests comfortably. Each restaurant is uniquely designed and
situated in high consumer traffic areas with lunch and dinner served daily. Kona Grill offers over 40
house made signature sauces as part of their menu of award winning sushi and contemporary American
dishes. Due to the unique dining atmosphere, alcohol sales account for at least 30% of annual sales.
Growth has been realized in recent years despite market conditions or industry slowdowns.
1
Therefore,
further analysis of Kona Grill is necessary to determine how this has been accomplished, and if the
growth is sustainable given the saturated domestic industry it operates in.
Company Analysis Project: Kona Grill, Inc. Page 3 Prepared by Daniel G. Gode
7. Product Scope 1 2 4 5
Market Scope 2 3 4 5
Unique Competencies 2 3 4 5
Concern for Survival 1 3 4 5
Summary
Kona Grill fails to identify the target customer in the statement. The company website often
states that Kona Grill offers a sophisticated upscale casual dining experience, which could have been
incorporated into the statement concerning customer demographics.
2
The conveyed message is that
the public image will be great customer service, product, in a pleasant atmosphere.
Kona Grill attempts to differentiate itself from competitors by alluding to an exceptional
experience with industry leading customer service. However, this is the same message that competitors
try to convey, as quality service is expected throughout the food and service industry.
Kona Grill's concern for survival is partially evident in the mission statement, as customer
experience is one of the critical components to the organizations success or failure.
2
http://www.konagrill.com/more/investors/presentations
TOOL TWO: MISSION STATEMENT ANALYSIS
Kona Grill's Mission Statement
Our mission is to deliver an outstanding guest experience to every guest, every day and in every
restaurant
1
Mission Statement Ranking and Analysis
(Ranking: 1 being the worst to 5 being the best)
Kona Grill identifies the food and service industry with the mention of restaurants, however, no
mention of product offerings, such as, fresh sushi, cocktails, or other popular entrée items. The main
product being addressed is the intent to provide exceptional customer service. Therefore, this is a
customer oriented mission statement with a philosophy to deliver an outstanding guest experience,
which relates to the intended quality of service and product.
1
http://retailindustry.about.com/od/retailcompanymissionstatements/ig/Corporate-Mission-Statements-US-Global-Retail-amp-Restaurant-Companies/Kona-
Grill-History-Founders-Facts-and-Trivia.htm
Overall, the mission statement ranks as a 2 with room for improvement. The improvements could
start with product scope, by detailing how the food, drinks, or restaurant stands out from competitors
in the industry. Market scope is lacking in the statement, which could be addressed by using key words
like upscale or sophisticated along with casual when referring to the experience in the statement.
Development is needed in the unique competencies category, perhaps adding how the proprietary
sauces for the food might be rated in the industry in order to deliver a unique food experience.
Company Analysis Project: Kona Grill, Inc. Page 7 Prepared by Daniel G. Gode
8. Strongly
Disagree
Disagree
NeitherAgree
orDisagree
Agree
StronglyAgree
1 1 2 3 4
2 1 2 3 4
Evidence: 10k Annual reports discuss the use and reliance upon
Management Information Systems, social media platforms,
and Konavore loyalty program, in order to monitoring
customer traffic and feedback in order to improve procedures
and menu items.2
3 1 2 3 5
4 1 3 4 5
5 1 2 4 5
Evidence: 10k Annual report discusses monitoring customer
satisfaction, but does not discuss specific measures other
than sales growth.3
6 1 2 4 5
7 1 2 3 5
8 1 2 3 5
Evidence: Kona Grill provides a contact page on website for customers
to provide feedback, additionally social media platforms, such
as Facebook, Twitter, Instagram, Foursquare, and online
review systems such as Yelp and Google.4
9 1 2 4 5
Evidence: 10k Annual report states that the MIS is used in conjunction
with customer feedback to improve processes and menu
items, but no evidence to suggest how this is accomplished or
how often this is reviewed5
10 2 3 4 5
Evidence: Kona Grill is not using the available online tools to effectively
assess customer service
5
http://www.konagrill.com/more/investors/financial-reports
Kona Grill Market Orientation Scale
(Based on Deshpande & Farley, 1996)1
1
Based upon Deshapande and Farley.
Understanding Market Orientation: A Prospectively Designed Meta-Analysis of Three Market Orientation Scales
2
http://www.konagrill.com/more/investors/financial-reports
3
http://www.konagrill.com/more/investors/financial-reports
4
http://www.konagrill.com/more/contact
There is evidence that Kona Grill disseminates data/information
gathered about customer satisfaction.
There is evidence of the measures Kona Grill uses to assess
customer service
TOOL TWO: MARKET ORIENTATION ANALYSIS
Kona Grill's company mission and objectives seem to be driven
primarily by customer satisfaction.
I believe Kona Grill exists primarily to serve customers.
There is evidence that Kona Grill gathers information from
customers to assess the quality of their products and services.
There is visible evidence that Kona Grill monitors their level of
commitment to serving their customer needs.
Kona Grill's strategy for competitive advantage is based on an
understanding of customer needs.
Kona Grill seems to communicate information and experiences
about their competitors.
There is visible evidence that Kona Grill measures customer
satisfaction systematically and on an on-going basis.
I believe Kona Grill is more customer-focused than their chief
competitors.
Company Analysis Project: Kona Grill, Inc. Page 8 Prepared by Daniel G. Gode
10. Assessment:
1
http://www.konagrill.com/more/investors/financial-reports
2
http://media.corporate-ir.net/media_files/IROL/19/191864/Committees/CodeBusinessConductEthics.pdf
3
http://www.konagrill.com/more/investors/presentations
TOOL THREE: COHESION ANALYSIS
Kona Grill, Inc. does not clearly outline goals and objectives; however, policies and objectives can be found in the
annual reports to support forward looking statements, which are stated in investor presentations and related material. The
stated goals, objectives, and policies do not clearly align with the company mission statement, as the statement has a broad
focus on customer satisfaction, but overall goals will still have an impact on customer satisfaction and therefore will support
the company mission.
Analysis: (Rating 4) Aligns and supports mission of providing exceptional guest experience
Analysis: (Rating 3) Integrates with mission to deliver exceptional experience in every restaurant
Analysis: (Rating 5) Disciplined franchise model will attract both consumers and investors, which will
strengthen Kona Grill's position in the industry
Goals
• Pursue Disciplined Growth
Objectives
•"We plan to grow organically through unit expansion, with a target of 20% unit growth annually over the next
several years. We achieved a unit growth rate of 20% for 2014, with five openings during the year."1
Policies
•"We review potential sites in both new and existing markets that meet our target customer demographics,
real estate, and investment return criteria."1
Goals
• Legally Compliant International Expansion
Objectives
•"Executed development agreement for Mexico with 6 restaurants to be opened over a 7 year period", and
signed letter of intent for the Middle East; development agreement in process"3
Policies
•"All employees and directors must respect and obey the laws of the cities, states, and countries in which the
Company operates."2
Goals
• Continue to Develop a Disciplined Franchise Model To Attract Domestic and
International Investors
Objectives
•" We expect to open seven new restaurants in 2015."1 "Although the actual preopening expenses for a
particular location depend upon numerous factors, we expect cash preopening expenses of approximately
$425,000 per location, and non-cash preopening rent expense ranging from $50,000 to $100,000 per
location."1
Policies
•"All of the Company’s books, records, accounts, and financial statements must be maintained in reasonable
detail, must appropriately reflect the Company’s transactions, and must conform both to applicable legal
requirements and to the Company’s system of internal controls."2
Company Analysis Project: Kona Grill, Inc. Page 10 Prepared by Daniel G. Gode
12. Assessment:
1
http://www.konagrill.com/more/investors/presentations
2
http://www.konagrill.com/more/investors/financial-reports
3
http://www.konagrill.com/menu
Developing strategic business units as the company continues to grow will be
an opportunity for Kona Grill to differentiate its product line and provide additional
sources of revenue.
TOOL 4a: ORGANIZATIONAL CHART
Kona Grill, Inc. Executive Officers
Kona Grill operates as one unit or independently and does not have strategic business units
to assess for tool four.
Revenue for 2014: $119,097,000 USD2
TOOL 4c: STRATEGIC BUSINESS UNITS
President & Chief
Executive Officer
Berke Bakay
Chief Financial
Officer
Christi Hing
VP of
Development
Marci Riude
VP of Operations
Jenny Elkins
VP of Food and
Beverage
Chris Moran
VP of
International
Development
Carlos de Leon
Company Analysis Project: Kona Grill, Inc. Page 12 Prepared by Daniel G. Gode
13. Key Success Factors (KSF)
Kona Grill, Inc.
Ranking
Determinants of KSF
Guest Satisfaction (service)
Number of Complaints
Growth of Loyalty Program
Superior Product
Industry Awards
Menu Mix
Product Differentiation
Maximize Revenue/Cost Control
Adjusted EBITDA
Sales Growth
New Unit Sales Performance
Average Weekly Sales
Market Share
Number of Restaurant Openings
Current Domestic Units
Benchmarking versus industry
Unit Growth vs. Same Store Sales
Average Check vs. Competition
(KSF Ranked 1 to 5 in terms of priority, 1=least important, 5=most important)
1
http://hospitalityindustrygeek.blogspot.com/2012/12/key-success-factors-for-restaurants.html
2
http://investors.thecheesecakefactory.com/phoenix.zhtml?c=109258&p=irol-reportsannual
3
http://investors.bbrg.com/secfiling.cfm?filingid=1495479-14-5&cik=
4
http://www.konagrill.com/more/investors/financial-reports
5
http://www.konagrill.com/more/investors/presentations
1
TOOL 4b: KEY SUCCESS FACTORS
Industry
Ranking
Strength or
Weakness
Overall Analysis
Kona Grill, Inc. uses a number of key measures that are considered relevant in the full service
restaurant industry. Kona Grill's main weakness lies with its overall position in the market, as Kona Grill is
still entering its growth phase. Kona Grill places a high priority on new restaurant openings, however, the
main emphasis has been on performance of the stores. Kona Grill executives have shut down several
stores due to poor sales. The main risk for Kona Grill's continued growth is related to maintaining a good
brand image. Kona Grill has won a variety of awards for food, as well as restaurant atmosphere, and is
developing a loyal following. This is evident by the growth of its loyalty program Konavore, as well as,
market growth.
Strength
Strength
Strength
Neutral
1 5 Weakness
4
3
5
2
3
2
4
Company Analysis Project: Kona Grill, Inc. Page 13 Prepared by Daniel G. Gode
16. Weights
Highly
Unattractive
Mildly
Unattractive
Neutral
Mildly
Attractive
Highly
Attractive
Present
Rating
Future
Rating
Threator
Opportunity
1 2 3 4 5
1.00 3.28 2.88 Threat
1
http://www.epi.org/publication/restaurant-workers/
2
http://www.sandandsuccotash.com/significance-of-the-work-ethic-in-restaurants/
3
http://marketrealist.com/2015/05/consumer-confidence-impacts-restaurant-industry/
4
http://smallbusiness.chron.com/seasonal-factors-affecting-restaurant-industry-31192.html
5
https://restaurantsustainability.files.wordpress.com/.../why-are-young-managers-leaving-the-restaurant-industry
0.42
0.39 0.26
1.12 0.84
Changes in Quality of Life5
0.13 Threat
Work Ethic2
0.23 Opportunity
Consumer Confidence3
0.28 Threat
Social Factors
0.66 0.44
0.69 0.92
SOCIAL FACTORS
Degree of Unionization1
0.22
0.42
TOOL 5: ANALYSIS OF THE REMOTE ENVIRONMENT:
Threat
Seasonal Changes
4
0.14 Neutral
Company Analysis Project: Kona Grill, Inc. Page 16 Prepared by Daniel G. Gode
17. Weights
Highly
Unattractive
Mildly
Unattractive
Neutral
Mildly
Attractive
Highly
Attractive
Present
Rating
Future
Rating
Threator
Opportunity
1 2 3 4 5
1.00 3.00 2.28 Threat
1
http://www.foodpolitics.com/tag/calorie-labeling/
2
http://www.restaurant.org/advocacy/Minimum-Wage
3
http://marketrealist.com/2014/12/chipotle-funds-restaurant-unit-growth-without-debt/
4
https://www.transparency.org/country/#MEX
5
https://www.qsrmagazine.com/executive-insights/top-10-taxes-and-fees
TOOL 5: ANALYSIS OF THE REMOTE ENVIRONMENT:
Foreign Corruption4
0.2 0.6 0.4 Threat
0.22 0.66 0.44 Threat
Ease of Capital Movement
3
0.15 0.45 0.45 Neutral
Taxation Levels5
Minimum Wage Regulation2
0.3 0.9 0.6 Threat
Political Factors
FDA Regulation Changes1
0.13 0.39
POLITICAL FACTORS
0.39 Neutral
Company Analysis Project: Kona Grill, Inc. Page 17 Prepared by Daniel G. Gode
18. Weights
Highly
Unattractive
Mildly
Unattractive
Neutral
Mildly
Attractive
Highly
Attractive
Present
Rating
Future
Rating
Threator
Opportunity
1 2 3 4 5
1.00 3.25 3.21 Opportunity
1
http://www.restaurant.org/advocacy/Data-Security
2
http://www.restaurant.org/News-Research/News/Find-out-how-mobile-technology-will-drive-restaura
4
https://www.linkedin.com/pulse/10-trends-reshaping-restaurant-industry-aaron-d-allen
5
http://jht.sagepub.com/content/25/4/386
TOOL 5: ANALYSIS OF THE REMOTE ENVIRONMENT:
Complexity5
0.05 0.1 0.15 Neutral
Innovation
4
0.13 0.39 0.52 Opportunity
Mobile Application2
0.3 1.2 1.5 Opportunity
Trademarks/ Patents3
0.25 0.75 0.5 Threat
System/ Data Security1
0.27 0.81 0.54 Threat
Technological Factors
TECHNOLOGICAL FACTORS
3
http://www.garestaurants.org/legal-knowledge-center-blog/sorry-were-closed-why-trademark-protection-is-important-in-the-restaurant-industry
Company Analysis Project: Kona Grill, Inc. Page 18 Prepared by Daniel G. Gode
19. Weights
Highly
Unattractive
Mildly
Unattractive
Neutral
Mildly
Attractive
Highly
Attractive
Present
Rating
Future
Rating
Threator
Opportunity
1 2 3 4 5
1.00 3.00 3.01 Opportunity
1
http://www.theguardian.com/environment/2014/mar/31/climate-change-food-supply-un
2
http://www.restaurant.org/Industry-Impact/Conservation
3
http://www.restaurant.org/News-Research/News/Turn-up-the-heat-on-energy-efficiency
4
https://www3.epa.gov/
5
ir.uiowa.edu/cgi/viewcontent.cgi?article=5369&context=etd
Noise5
0.08 0.24 0.16 Threat
TOOL 5: ANALYSIS OF THE REMOTE ENVIRONMENT:
Energy Conservation
Requirements3 0.22 0.66 0.88 Opportunity
Air Pollution Controls
4
0.17 0.51 0.51 Neutral
Applicability of Recycling2
0.2 0.6 0.8 Opportunity
Climate Change/ Natural
Disasters1 0.33 0.99 0.66 Threat
Ecological Factors
ECOLOGICAL FACTORS
Company Analysis Project: Kona Grill, Inc. Page 19 Prepared by Daniel G. Gode
20. Economic Factors
Social Factors
Political Factors
Minimum Wage Regulation
Foreign Corruption
Taxation Levels
Attributes Opportunity/Threat Assessment
REMOTE ENVIRONMENT ANALYSIS:
CONCLUSIONS
Unemployment Rate
Disposable Income
Inflation Rate
Overall Assessment
Oil Prices/Energy Costs
Degree of Unionization
Work Ethic
Consumer Confidence
Changes in Quality of Life
Overall Assessment
Overall Assessment
Threat
Threat
Threat
Threat
Threat
Opportunity
Opportunity
Threat
Opportunity
Threat
Disposable income is increasing
Rate is falling, decreased supply of labor
Inflation is slowing, market stability
Prices are rising, cost of operations affected
Health of domestic economy improving
Industry has experienced labor strikes,
demand for increased wages
Increased wages, increased productivity
Threat
Threat
Threat
Opportunity
Confidence is fluctuating, upcoming
elections
Healthcare Affordability Act, increasing
penalties and costs
Uncertainty of labor, mandatory quality of
life costs, and consumer confidence
States raising minimum wage rates
Inflation adjustment tax, and state changes
International expansion into Mexico
proposed.
Increased operating costs related to
political factors
Company Analysis Project: Kona Grill, Inc. Page 20 Prepared by Daniel G. Gode
21. Technological Factors
Ecological Factors
REMOTE ENVIRONMENT ANALYSIS:
CONCLUSIONS (CONTINUED)
Attributes Opportunity/Threat Assessment
Mobile Application
Trademarks/Patents
Innovation
Overall Assessment
System/Data Security
Climate Change/Natural Disasters
Applicability of Recycling
Energy Conservation Requirement
Noise
Overall Assessment
Threat
Opportunity
Opportunity
Threat
Opportunity
Opportunity
Opportunity
Threat
Opportunity
Threat
Advancements are improving efficiency and
customer satisfaction
Increased Ransomware attacks
Focused marketing, customer satisfaction,
and operating efficiency
Patent assertion entities are targeting
restaurants
Automation, mobile applications, and food
processes
Impacting food supplies, environmental
policies increase operating costs
Recycling costs are relatively low in many
areas
Energy efficiency standards result in
increased energy savings over time
Increased noise in urban centers impacting
restaurant atmosphere
CSR can result in increased profits, as cost
savings, or increased customer loyalty
Company Analysis Project: Kona Grill, Inc. Page 21 Prepared by Daniel G. Gode
23. I. Synopsis
Executed development agreement for Mexico
6 restaurants to be opened over a 7 year period (Mexico City and Monterrey)1
Signed letter of intent for the Middle East; development agreement in process1
1
http://www.konagrill.com/more/investors/presentations
TOOL 6: GLOBALIZATION ASSESSMENT
Kona Grill's Domestic Footprint1
Kona Grill's International Footprint
Kona Grill does not have an international footprint at this time; however, international expansion plans are as
follows:
Kona Grill currently operates 37 restaurants domestically, which are represented on this U.S. map.
Company Analysis Project: Kona Grill, Inc. Page 23 Prepared by Daniel G. Gode
24. II. Int. Revenues vs. Domestic III. Int. Prop. & Eqiup. vs. Domestic
Domestic International Domestic International
revenues 119 0 2014 Property & Equipment (in millions USD)2
54 0
IV. International Revenues vs. Domestic (2012-2014)
2010 2011 2012 2013 2014
Domestic Revenue 88 94 96 98 119
International Revenue0 0 0 0 0
Franchising
Opportunities:
Threats:
1
http://www.transparency.org/country/#MEX
2
http://www.konagrill.com/more/investors/financial-reports
3
http://www.transparency.org/country/#CAN
Opportunities exist for the expansion of domestic restaurants; however, international expansion provides the
opportunity to enter new markets that have fewer upscale dining establishments. Key considerations when entering new
markets relate to corruption, crime, infrastructure, and affordability. Mexico provides opportunities in the coastal tourist
destinations. Franchising would be ideal as this has less risk for a relatively new business in the industry. We will benefit from
the North American Free Trade Agreement (NAFTA), as this will reduce barriers that would restrict movement of capital or the
import or export of goods necessary to meet quality control.
Mexico is a riskier proposition than Canada, which is also part of NAFTA, as Mexico has a corruption perceptions
index rank of 95 out of 168 countries with a score of 35 out of 100.1
A score of 0 means the most corrupt, with 100
representing no corruption. In comparison Canada has a score of 83 out of 100, and ranks 9th out of 168 countries, and has a
population with higher income levels, but with added competition as the main threat in this market.3
The Middle East poses a
great deal of risk due to current political and civil unrest throughout the region, however, a few areas are exceptions to this
risk, such as the United Arab Emirates.
GLOBALIZATION ASSESSMENT
(CONTINUED)
Preferred Method of Entry:
119,
100%
0, 0%
2014 Revenues (in millions USD)2
Domestic
International 54,
100%
0, 0%
2014 Property & Equipment (in
millions USD)2
Domestic
International
88
94
96
98
119
0
0
0
0
0
0 20 40 60 80 100 120 140
2010
2012
2014
USD in Millions
Years
Kona Grill, Inc. Revenue (2010-2014)2
International Revenue Domestic Revenue
Company Analysis Project: Kona Grill, Inc. Page 24 Prepared by Daniel G. Gode
26. NAICS code 722511: Full-Service Restaurants
Sales (2014)
2
BJ's $845,570,000
The Cheesecake Factory $1,144,900,000
Yard House $250,000,000
Bonefish Grill $500,000,000
Bravo Brio $408,310,000
Joe's Crab Shack $837,000,000
Kona Grill $119,100,000
Del Frisco's Grille $301,800,000
2
http://bi.galegroup.com/essentials/company/1286411?u=tel_a_apsu
3
http://www.statista.com/statistics/218829/us-full-service-restaurants-food-and-drink-sales/
0.141%
1
http://siccode.com/en/naicscodes/722511/fullservice-restaurants
TOOL SEVEN: DEFINING THE INDUSTRY
This U.S. industry comprises establishments primarily engaged in providing food services to patrons who
order and are served while seated (i.e., waiter/waitress service) and pay after eating. These establishments
may provide this type of food service to patrons in combination with selling alcoholic beverages, providing
carryout services, or presenting live nontheatrical entertainment.
1
Kona Grill matches this industry definition as the restaurants provide an upscale seated environment, food
prepared from scratch, as well as, beverages that are either alcoholic or non-alcoholic, which are served by
waitstaff.
Below is the perceptual map of Kona Grill's market share compared to direct competitors in the restaurant industry
Market Share (2014)3
Market Share of Kona Grill's Competitors
0.396%
0.536%
0.117%
0.234%
0.191%
0.392%
0.006%
Profitability
Products
Company Analysis Project: Kona Grill, Inc. Page 26 Prepared by Daniel G. Gode
28. Fiscal year ends in December. USD in millions except per share data.2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Kona Revenue (USD in Millions)37 51 72 76 81 88 94 96 98 119
Industry Revenue (USD in Billions)101 117 127 140 147 155 143 102 121 139
Analysis:
1
http://bi.galegroup.com.ezproxy.lib.apsu.edu/essentials/comparisonTool/industry?u=tel_a_apsu&entities=722511&metric=revenue#
TOOL 8: LIFECYCLE ANALYSIS
Kona Grill opened the first restaurant in 1998 and has since expanded to 37 locations. Based off
expansion and marketing we are set to move out of the introduction stage, and into the growth cycle
relative to a mature industry. This is evident starting from 2012, where we continued to enjoy increased
revenues despite an industry slowdown.
37
51
72 76
81
88
94 96 98
119
101
117
127
140
147
155
143
102
121
139
0
20
40
60
80
100
120
140
160
180
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Kona Grill, Inc. vs. Industry
Total Revenue
Kona Revenue (USD in Millions) Industry Revenue (USD in Billions)
Company Analysis Project: Kona Grill, Inc. Page 28 Prepared by Daniel G. Gode
30. Weights
Highly
Unattractive
Mildly
Unattractive
Neutral
Mildly
Attractive
Highly
Attractive
Present
Rating
Future
Rating
Threator
Opportunity
1 2 3 4 5
1.00 2.43 2.86 Opportunity
1
http://www.restaurant.org/News-Research/Research/Facts-at-a-Glance
4
http://www.bls.gov/opub/btn/volume-3/how-does-consumer-spending-change-during-boom-recession-and-recovery.htm
5
http://www.123helpme.com/power-of-suppliers-and-power-of-buyers-view.asp?id=166907
2
https://www.ohiodominican.edu/uploadedFiles/Library/CoursePages/Courses/Bus/Bus498/Application-PortersFiveForcesModelPaperExample.pdf
3
http://www.thinkingbookworm.com/blog/2012/05/effects-of-a-switching-cost-and-b-differentiated-products-in-porters-five-forces-model.html
TOOL 9: PORTER'S 5 FORCES ANALYSIS:
Buyer Volume
5
0.08 0.24 0.32 Opportunity
0.54 Threat
0.4 Opportunity
Threat
Changes in Consumer Traffic
Patterns
2 0.25 0.75 1
POWER OF BUYERS
Opportunity
Power of Buyers
Large Number of Providers
1
0.3 0.6 0.6
Buyer Switching Costs3
0.27 0.54
Changes in Consumer Spending
Patterns4 0.1 0.3
Company Analysis Project: Kona Grill, Inc. Page 30 Prepared by Daniel G. Gode
31. Weights
HighlyUnattractive
MildlyUnattractive
Neutral
MildlyAttractive
HighlyAttractive
PresentRating
FutureRating
Threator
Opportunity
1 2 3 4 5
1.00 3.00 3.73 Opportunity
1
http://www.gourmetmarketing.net/bargaining-power-suppliers-restaurant-industry/
2
https://www.cleverism.com/bargaining-power-of-suppliers-porters-five-forces/
3
http://panmore.com/burger-king-five-forces-analysis-porters-model
4
http://www.businessnewsdaily.com/5446-porters-five-forces.html
Power of Suppliers
Farming Practices1
0.3 0.9 1.2
TOOL 9: PORTER'S 5 FORCES ANALYSIS:
POWER OF SUPPLIERS
Government Stockpiling
1
0.08 0.24 0.24 Neutral
0.92 Opportunity
Changes in Inventory Levels2
0.15 0.45 0.45 Neutral
0.23 0.69
Number of Important Suppliers5
0.2 0.6 0.8 Opportunity
Threat of Forward Integration
3
0.04 0.12 0.12 Neutral
Opportunity
Suppliers' Contribution to
Quality or Services
4
5
https://www.ohiodominican.edu/uploadedFiles/Library/CoursePages/Courses/Bus/Bus498/Application-PortersFiveForcesModelPaperExample.pdf
Company Analysis Project: Kona Grill, Inc. Page 31 Prepared by Daniel G. Gode
32. Weights
HighlyUnattractive
MildlyUnattractive
Neutral
MildlyAttractive
HighlyAttractive
PresentRating
FutureRating
Threator
Opportunity
1 2 3 4 5
1.00 3.00 3.03 Threat
1
http://people.ucsc.edu/~nuclear/econ1/testinfo/chapter16.pdf
2
http://smallbusiness.chron.com/entry-barriers-restaurants-36947.html
4
http://changingminds.org/disciplines/marketing/understanding_markets/barriers_entry.htm
5
http://www.referenceforbusiness.com/small/A-Bo/Barriers-to-Market-Entry.html
6
http://www.econoclass.com/imperfectcompetition.html
7
http://smallbusiness.chron.com/economies-scale-service-industry-81253.html
3
https://www.ohiodominican.edu/uploadedFiles/Library/CoursePages/Courses/Bus/Bus498/Application-PortersFiveForcesModelPaperExample.pdf
Brand Loyalty6
0.09 0.27 0.36 Opportunity
Access to Distribution
3
0.25 0.75 1.00 Opportunity
Threat
Government Regulation
4
Neutral0.6 0.6
0.260.39
0.2
Economies of Scale
7
0.05 0.15 0.15 Neutral
Capital Requirements5
0.13
0.3 0.3 Neutral
Availability of Property2
0.18 0.54 0.36 Threat
Barriers to Entry
Product Differentiation1
0.1
TOOL 9: PORTER'S 5 FORCES ANALYSIS:
BARRIERS TO ENTRY
Company Analysis Project: Kona Grill, Inc. Page 32 Prepared by Daniel G. Gode
33. Weights
HighlyUnattractive
MildlyUnattractive
Neutral
MildlyAttractive
HighlyAttractive
PresentRating
FutureRating
Threator
Opportunity
1 2 3 4 5
1.00 3.00 2.2 Threat
2
http://www.investopedia.com/articles/personal-finance/102315/why-restaurant-biz-has-narrow-profit-margins.asp
3
http://knowledgecenterforstudents.blogspot.com/2011/10/restaurant-industry-analysis.html
5
http://scholarsarchive.jwu.edu/cgi/viewcontent.cgi?article=1008&context=mba_student
1
http://www.thinkingbookworm.com/blog/2012/05/effects-of-a-switching-cost-and-b-differentiated-products-in-porters-five-forces-model.html
Availability of Substitutes
User Switching Costs1
0.21
TOOL 9: PORTER'S 5 FORCES ANALYSIS:
AVAILABILITY OF SUBSTITUTES
Leisure Substitutes
3
0.19 0.57 0.38 Threat
0.63 0.42 Threat
Substitute Price/Value2
0.22 0.66 0.44 Threat
Profitability of Substitute
Producers
5 0.18 0.54 0.36 Threat
Availability of Close Substitutes4
0.2 0.6 0.6 Neutral
4
https://www.ohiodominican.edu/uploadedFiles/Library/CoursePages/Courses/Bus/Bus498/Application-PortersFiveForcesModelPaperExample.pdf
Company Analysis Project: Kona Grill, Inc. Page 33 Prepared by Daniel G. Gode
34. Weights
HighlyUnattractive
MildlyUnattractive
Neutral
MildlyAttractive
HighlyAttractive
PresentRating
FutureRating
Threator
Opportunity
1 2 3 4 5
1.00 3.15 3.64 Opportunity
1
http://www.statista.com/statistics/300819/cost-of-online-advertising-in-franchise-restaurants-us/
2
http://smallbusiness.chron.com/variable-fixed-costs-restaurant-operation-81771.html
3
http://marketrealist.com/2014/12/overview-u-s-restaurant-industry/
4
http://www.restaurant.org/News-Research/Research/Forecast-2016
5
https://www.ohiodominican.edu/uploadedFiles/Library/CoursePages/Courses/Bus/Bus498/Application-PortersFiveForcesModelPaperExample.pdf
0.63 0.63 Neutral
Rivalry among Competitors
Advertising Costs1
0.18
TOOL 9: PORTER'S 5 FORCES ANALYSIS:
RIVALRY AMONG COMPETITORS
Diversity of Competitors5
0.15 0.6 0.45 Threat
Relative Industry Growth4
0.24 0.72 0.96 Opportunity
Product Features
3
0.22 0.66 0.88 Opportunity
0.54 0.72 Opportunity
Fixed Costs2
0.21
Company Analysis Project: Kona Grill, Inc. Page 34 Prepared by Daniel G. Gode
35. Power of Buyers
Power of Suppliers
Barriers to Entry
Large Number of Providers Threat Market saturation providing alternatives
PORTER'S 5 FORCES ANALYSIS:
CONCLUSIONS
Attributes Opportunity/Threat Assessment
Changes in Consumer Traffic Patterns Opportunity Seeking improvement for healthier diet
Changes in Consumer Spending
Patterns
Opportunity Desire fresh and healthy ingredients
Buyer Switching Costs Threat Low cost/ high market saturation
Buyer Volume Opportunity Frequent dining out
Overall Assessment Opportunity
Consumer's are seeking healthier food
options at moderate cost
Number of Important Suppliers Opportunity Increase in specialty food suppliers
Farming Practices Opportunity Increased supply of organic food
Suppliers' Contribution to Quality or
Service
Opportunity Increase in sustainability practices
Access to Distribution Opportunity Increased access in highly developed areas
Brand Loyalty Opportunity Variety sought by consumers
Capital Requirements Threat Increased cost, increased capital needs
Overall Assessment Opportunity
Increased supply results in more
competition
Availability of Property Threat Class A commercial space is in limited supply
Overall Assessment Threat Limited capital resulting in slower growth
Company Analysis Project: Kona Grill, Inc. Page 35 Prepared by Daniel G. Gode
36. Availability of Substitutes
Rivalry among Competitors
CONCLUSIONS (CONTINUED)
User Switching Costs Threat Low cost goods, high market saturation
PORTER'S 5 FORCES ANALYSIS:
Substitute Price / Value Threat High market saturation of substitutes
Attributes Opportunity/Threat Assessment
Leisure Substitutes Threat High market saturation of substitutes
Profitability of Substitute Producers Threat
Low cost leader options such as fast food
chains
Overall Assessment Threat
Saturation of market, increased
competition, lower profit margins
Advertising Costs Opportunity
Competitors still focused on mass marketing
advertising
Product Features Opportunity Limited menu from competitors
Relative Industry Growth Opportunity Growth in a mature industry
Diversity of Competitors Threat Wide array of products in industry
Overall Assessment Opportunity Ability to adapt to consumer demands
Company Analysis Project: Kona Grill, Inc. Page 36 Prepared by Daniel G. Gode
37. Image:https://leaderchat.files.wordpress.com/2011/09/career-growth-image.jpg
The purpose of this tool is to analyze the threats associated with our major competitors, and identify
the opportunities that will allow us to successfully position ourselves in order to compete against
them in the marketplace.
Company Analysis Project: Kona Grill, Inc. Page 37 Prepared by Daniel G. Gode
38. Sales (2014)2
Yard House #########
Bonefish Grill#########
Bravo Brio #########
Kona Grill #########
Del Frisco's Grille#########
Weights
Kona Grill,
Inc.
Bonefish
Grill
Bravo Brio
Del
Frisco's
Grille
Yard
House
0.22 4 5 3 2 1
0.19 3 2 1 4 5
0.21 5 4 3 2 1
0.2 1 5 4 2 3
0.18 2 3 5 1 4
3.06 3.86 3.18 2.2 2.7
Analysis:
1
http://bi.galegroup.com/essentials/company/1286411?u=tel_a_apsu
TOOL 10: COMPETITIVE ADVANTAGE ANALYSIS
Opportunity for Maximizing Revenue and Cost Control: We currently realize growth while not operating at
peak efficiency, which is evident in the lack of information in areas of our financial reports. Additionally,
international expansion will require further development of cost controls due to increased risk related to
foreign markets.
Threat related to Market Share: Against direct competitors we make up 7% of the industry and are still
vulnerable to changes in comparable restaurant sales, market conditions, and consumer awareness of our
brand.
Benchmarking vs. Industry: This is rated neutral, as all of the competitors implement benchmarking in the
industry in order to stay on top of current trends in a competitive industry.
Opportunity of Superior Product: Our focus on creating stand out dishes, sauces, and cocktails has been
recognized by customers and industry critics, resulting in various awards. These awards are giving us a
competitive advantage against competitors through marketing initiatives.
Key Success Factors (KSF)
Total Success Rating
(Rating Scale 1 to 5, with 5 being the best)
Opportunity for Guest Satisfaction: Kona Grill's focus on serving award winning dishes in a casual upscale
atmosphere is a competitive advantage versus known competitors in this industry.
Guest Satisfaction
Superior Product
Maximize Revenue/Cost Control
Market Share
Benchmarking vs. Industry
Yard House
16%
Bonefish Grill
32%
Bravo Brio
26%
Kona Grill
7%
Del Frisco's Grille
19%
Market Share by Revenue of Direct Competitors (2014)1
Yard House
Bonefish Grill
Bravo Brio
Kona Grill
Del Frisco's Grille
Company Analysis Project: Kona Grill, Inc. Page 38 Prepared by Daniel G. Gode
40. MARKETING
Breadth of Product Line [ ] [ ] [ X ] [ ] [ ] [- -]
Sales Concentration (few products/customers) [ ] [ ] [ X ] [ ] [ ] [- -]
Marketing Research Capability [ ] [ X ] [ ] [ ] [ ] [W]
Market or Submarket Share [ ] [ ] [ ] [ X ] [ ] [ S ]
Product/Service Expansion Potential [ ] [ ] [ ] [ X ] [ ] [ S ]
Life Cycle of Key Products [ ] [ ] [ X ] [ ] [ ] [- -]
Distribution Channels (#, Coverage, Control) [ ] [ X ] [ ] [ ] [ ] [W]
Effectiveness of Sales Force [ ] [ X ] [ ] [ ] [ ] [W]
Image, Reputation, & Quality of Product/Service [ ] [ ] [ ] [ X ] [ ] [ S ]
Effectiveness of Sales Promotion & Advertising [ ] [ ] [ X ] [ ] [ ] [- -]
Pricing Strategy & Pricing Flexibility [ ] [ ] [ X ] [ ] [ ] [- -]
Marketing Input to New Product Development [ ] [ X ] [ ] [ ] [ ] [W]
After-Sale Service Capability [ ] [ ] [ X ] [ ] [ ] [- -]
Goodwill, Brand Loyalty [ ] [ ] [ X ] [ ] [ ] [- -]
Assessment
Ability to Raise Short Term Capital [ ] [ ] [ X ] [ ] [ ] [- -]
Ability to Raise Long Term Capital (Debt/Equity) [ ] [ ] [ ] [ X ] [ ] [ S ]
Cost of Capital [ ] [ X ] [ ] [ ] [ ] [W]
Tax Considerations [ ] [ ] [ ] [ X ] [ ] [ S ]
Relations with Owners, Investors, Stockholders [ ] [ X ] [ ] [ ] [ ] [W]
Leverage Position [ ] [ ] [ ] [ X ] [ ] [ S ]
Price-Earnings Ratio [ ] [ X ] [ ] [ ] [ ] [W]
Working Capital [ ] [ X ] [ ] [ ] [ ] [W]
Cost Control, Ability to Reduce Costs [ ] [ X ] [ ] [ ] [ ] [W]
Financial Size [ ] [ X ] [ ] [ ] [ ] [W]
Efficiency of Accounting & Information Systems [ ] [ X ] [ ] [ ] [ ] [W]
1
http://www.gurufocus.com/term/ROIC/KONA/Return-on-Invested-Capital/Kona-Grill-Inc
2
http://www.nasdaq.com/symbol/kona/guru-analysis/fool#/anchor6
Strength/Weakness
Assessment
FINANCE
TOOL 11: INTERNAL AUDIT ANALYSIS
INTERNAL STRENGTHS AND WEAKNESSES
AUDIT CHECKLIST
KeyVulnerability(1)
IndustryDeficiency(2)
IndustryEquivalent(3)
DistinctiveCompetency(4)
CoreCompetency(5)
Standard menu size
On par with industry
Newer firm, less capability
Growth relative to industry
Room for expansion
On par with industry
Fewer restaurants
Smaller sales force
Award winning dishes
On par with industry
On par with industry
Little evidence found
On par with industry
Loyalty program (Konavore)
On par, relative to size
No current L/T debt
Dec 2015, -12.84% ROIC1
Taxes have been low
Pressure from stockholders
Low debt with modest growth
Lack of important figures2
Less capital than industry
Smaller firm with less control
Smaller relative to industry
Lack of financial information
Company Analysis Project: Kona Grill, Inc. Page 40 Prepared by Daniel G. Gode
41. PRODUCTION / OPERATIONS
Raw Material Costs & Availability [ ] [ X ] [ ] [ ] [ ] [W]
Supplier Relationships [ ] [ ] [ X ] [ ] [ ] [- -]
Inventory Control Capability [ ] [ ] [ X ] [ ] [ ] [- -]
Inventory Turnover [ ] [ ] [ ] [ ] [ X ] [ S ]
Location of Facilities [ ] [ ] [ ] [ ] [ X ] [ S ]
Utilization of Facilities [ ] [ ] [ ] [ ] [ X ] [ S ]
Effect of Economies of Scale [ ] [ ] [ X ] [ ] [ ] [- -]
Use of Subcontracting & Outsourcing [ ] [ ] [ X ] [ ] [ ] [- -]
Degree of Vertical Integration (Value Added) [ ] [ ] [ X ] [ ] [ ] [- -]
Age of Facilities & Equipment [ ] [ ] [ ] [ ] [ X ] [ S ]
Effectiveness of Production Control Procedures [ ] [ ] [ ] [ ] [ X ] [ S ]
Top Management Skill, Capabilities, & Interest [ ] [ ] [ X ] [ ] [ ] [- -]
Employees’ Skill & Morale [ ] [ ] [ ] [ X ] [ ] [ S ]
Relative Labor Relations Costs [ ] [ ] [ X ] [ ] [ ] [- -]
Effectiveness of Personnel Policies [ ] [ ] [ X ] [ ] [ ] [- -]
Use of Incentives to Motivate Performance [ ] [ ] [ X ] [ ] [ ] [- -]
Ability to Level Peaks and Valleys of Employment [ ] [ ] [ X ] [ ] [ ] [- -]
Employee Turnover & Absenteeism [ ] [ ] [ ] [ X ] [ ] [ S ]
Average Experience Level of Employees [ ] [ ] [ ] [ X ] [ ] [ S ]
Presence of Specialized Skills? [ ] [ ] [ X ] [ ] [ ] [- -]
Research & Development Budget [ ] [ ] [ X ] [ ] [ ] [- -]
Patents, Trademarks, and Legal Protection [ ] [ ] [ X ] [ ] [ ] [- -]
Product Innovations Relative to the Industry [ ] [ ] [ ] [ X ] [ ] [ S ]
1
http://www.konagrill.com/more/investors/presentations
PERSONNEL
RESEARCH & DEVELOPMENT (TECHNICAL)
Assessment
Assessment
Relative to industry
No reported R&D
On par with industry
Award winning dishes
On par with industry
On par with industry
On par with industry
Less turnover in operations
Used effectively
On par with industry
On par with industry
On par with industry
Less turnover, more experience
All facilities relatively new
Award winning, strong reviews
High turnover, difficult to assess
Higher morale, modest skill
On par with industry
On par with industry
On par with industry
Higher cost/less availability
High traffic, fresh ingredients
Class A office space1
INTERNAL AUDIT ANALYSIS
(CONTINUED)
INTERNAL STRENGTHS AND WEAKNESSES
AUDIT CHECKLIST
KeyVulnerability(1)
IndustryDeficiency(2)
IndustryEquivalent(3)
DistinctiveCompetency(4)
CoreCompetency(5)
Strength/Weakness
Assessment
Company Analysis Project: Kona Grill, Inc. Page 41 Prepared by Daniel G. Gode
42. Assessment
(CONTINUED)
The internal audit analysis looked at five key functional areas of Kona Grill, and uncovered deficiencies in
marketing, finance, and production. Areas for improvement are related to a need for more suppliers and
improved supplier relations to ensure quality product availability, while being supplied at a lower cost. Target
marketing through use of social media has been adequately meeting the needs for growth, but relative to the
industry there is a need to increase our marketing channels. The key concern highlighted is the reporting of
financial data, as lack of financial information is cause for concern related not only to investor confidence, but to
also ensure we are meeting regulatory compliance.
We have been experiencing success in recent years with increased sales figures and continued expansion;
however, inconsistency related to profit margin still exists. Our internal strengths need to be nurtured, such as
having quality personnel in operations to help continue to maintain a positive brand image. Additionally, we
should continued to develop a variety of award winning dishes in order to help increase brand awareness in the
industry.
TOOL 11: INTERNAL AUDIT ANALYSIS
Company Analysis Project: Kona Grill, Inc. Page 42 Prepared by Daniel G. Gode
43. Image:http://images.wisegeek.com/computer-graphs.jpg
The purpose of this tool is to gain a general perspective of our financial health by examining common
size statements and financial ratios and benchmarking ourselves against two of our direct
competitors.
Company Analysis Project: Kona Grill, Inc. Page 43 Prepared by Daniel G. Gode
50. Intense Supervision of Labor
Assessment:
1
http://www.konagrill.com/more/investors/financial-reports
2
http://www.konagrill.com/more/investors/presentations
TOOL 13: GENERIC STRATEGY ANALYSIS
Kona Grill displays characteristics of each of these three generic strategies, however best fit is in
the differentiation strategy. Our mission statement is customer focused, with emphasis on providing an
outstanding guest experience, in any restaurant, on any given day. Currently, we do not have a strong
investment into research and development, however, we offer over 40 distinct handmade sauces, and
craft dishes from fresh high quality ingredients. Continuing to focus on menu development, along with
continuous expansion and improvements of our restaurants, we should be able to continue strengthening
our position in differentiation.
NO
Core competency or distinctive advantage in at least one functional area
Strong position in at least one segment of their defined market
YES
Focus
(Product Leadership)
CRITERIA
Overall Assessment
YES NO
Overall Assessment Overall Assessment
Sustained Capital Investment
Ready Access to Capital
Strong Process Engineering Skills
Low Cost Leadership
(Operational Excellence)
CRITERIA YES NO
Differentiation
(Customer Intimacy)
CRITERIA
Strong Marketing Capabilities
Strong Product Engineering
Corporate Creative Flair
Strong R& D
Product Designed for Ease of
Manufacture
Strong Distribution Channels
Corporate Reputation for Quality or
Technological Leadership
Long Industry Tradition or Unique
Skill Set
Strong Internal Cohesiveness
Among Departments
Subjective Measurement of
Personnel for Incentive Purposes as
Opposed to Quantitative Measures
Ability to Attract Talented Labor and
Management
Low Cost Distribution System
Tight Cost Controls
Frequent, Detailed Control
Reports
Highly Structured Organization
Structure
Incentive Based on Strict
Quantitative Targets
Company Analysis Project: Kona Grill, Inc. Page 50 Prepared by Daniel G. Gode
51. Image:http://www.mbharch.com/work/restaurants/konagrill/02.jpg
The purpose of this tool is to determine and recommend four separate strategies based off of the
strengths, weaknesses, opportunities, and threats uncovered in the previous tools.
Company Analysis Project: Kona Grill, Inc. Page 51 Prepared by Daniel G. Gode
52. S,W,O,T
03, 05
S1, S3
T2, T3
S5, S2
O1, O3
W1, W5,
W2
T1, T2, T3,
W3, W4,
W5
TOOL 14: SWOT ANALYSIS
Strengths Weaknesses Opportunities Threats
(S1) Disciplined
Franchise Model
(W1) Market Share (O1) Develop
Strategic Business
Units
(T1) Rising Energy
Costs
(S2) Guest
Satisfaction
(W2) Marketing
Capability
(O2) Consumer
Disposable Income
(T2) Minimum Wage
Regulations
(O3) International
Expansion
(T3) System/Data
Security
(S4) Increasing
Liquidity Trend
(S5) Employee
Productivity
(W4) Accounting /
Financial Efficiency
(W5) Raw Material
Costs / Availability
(O4) Technological
Innovation
(O5) Changes in
Consumer Demand
Alliance
(Opportunities &
Weaknesses)
Covert
(Threats &
Weaknesses)
Developing a strategic business unit such as merchandise line of apparel and
accessories can help marketing efforts and help us to branch out of the food
industry. Merchandise items can be sourced from international vendors, and
sold at tourist destinations, similar to many other restaurant franchises in the
industry.
Threat of rising operational costs with the increased cost of capital, while also
lacking financial information, makes it evident that implementation of a new
Enterprise Resource System or Financial Management Information System
needs to be put in place or updates are need for the existing systems. This
should have the added benefit of data security.
A variety of strengths, weaknesses, opportunities, and threats have been uncovered up until
this point for the operating environment, industry environment, and remote environment. As there
appear to be evenly distributed throughout the project this helps support my belief that we are just
entering the growth phase of our life-cycle. This analysis will formulate a recommendation based off
the previously identified SWOT, in order to pursue continued growth.
Strategy Recommendation
Strategy Recommendation
Exploitive
(Opportunities &
Strengths)
Based off the opportunity for international expansion and our disciplined
franchise model, we should continue to pursue growth by expanding
internationally by means of franchising as a method of entry into foreign
markets. Award winning dishes and sauces should be focused in areas that
have increased consumer demand for Asian/American fusion, such as tourist
destinations overseas.
Defensive
(Threats &
Strengths)
Due to the threat of proposed minimum wage increases it would be best to
continue monitoring employee productivity relative to the industry. Employee
training and development, with targeted raises beyond minimum wage rates,
will help retain quality staff and thereby ensure continued guest satisfaction.
This should have the added benefit of reducing the threat of data breaches
from disgruntled employees.
(T4) Climate Change
(T5) Patent Assertion
Entities
(S3) Superior Product (W3) Cost of Capital
Company Analysis Project: Kona Grill, Inc. Page 52 Prepared by Daniel G. Gode
