Fairwood Strategy Formulation

Strategy Formulation

1. Grand Strategy (Growth Strategy)

Fairwood is seeking opportunity to grow by rebranding themselves as a vibrant, energetic and trendy restaurant, introducing new and unique menu and services to meet changing customer tastes and needs, operating food processing plant for effective cost control and maintaining consistent food quality, penetrating into Mainland China market through strategic alliance with local partners. All these strategies clearly demonstrate that Fairwood is looking for a growth to expand and capture greater market share in this competitive fast food industry.

1. Corporate-level Strategy

1. Market Penetration Strategy

In order to increase their market share in Hong Kong with current product range, Fairwood capitalizes its strong brand which has been well established in local market for more than 30 years. To attract young customer group, they altered their company logo in 2003 and decorated the restaurants into an orange-colored layout to rebrand themselves as a vibrant, trendy and coffee shop-like restaurant. Also, Fairwood cooperated with some local celebrities such as Chapman To (杜汶澤), Mag Lam (林欣彤) and Wong Cho Lam (王祖藍) as spokespersons who represent youngster group in Hong Kong.

In addition, to make their pricing strategy more competitive, a new central food processing plant located in Tai Po come into operation in 2009 for effective cost control and food quality consistency. In 2010, Fairwood was awarded ISO 22000 & HACCP (Hazard Analysis and Critical Control Points) Certificate to reflect their ability to apply the international standards of food safety. All these are key factors for capturing greater market share.

1. Product Development Strategy

Other than some traditional food, Fairwood keeps introducing new products to meet the taste and need of different customers. For example, they introduced veggie menu for vegetarians, “No MSG” series for healthy-diet customers. Some menus are designed for particular festivals like basin dishes and suckling pig for Chinese New Year festival and catering service for Christmas party..

1. Market Development Strategy

As per Fairwood 2015 interim report, Fairwood had a total of 119 and 11 stores in Hong Kong and China respectively as of 30 September 2015. Fairwood developed their China market by opening their restaurant in Beijing in 1992 by forming a joint venture with a PRC company.

In 2000, a backend production support department was set up in Shenzhen to enhance their operation efficiency in China market.

1. Diversification Strategy

• Apart from their existing fast food business in “Fairwood” brand, Fairwood also engaged in other different specialty restaurants specialized in different cuisines and distinctive brand names. Besides, Fairwood also engaged in other business with no relationship with existing fast food business.

Related Diversification

• Apart from fast food stores, Fairwood also operates 3 specialty restaurants in Hong Kong in name of (1) Kenting Tea House (墾丁茶房) specialized in Taiwanese cuisine with western and international influence; (2) Leaf Restaurant (一葉家) specialized in Taiwanese cuisine with Ganso cooking style and (3) Buddies Café (友天地), specializing in siu mei, classic HK dishes and Cantonese stir-fry.

Conglomerate Diversification

As per Fairwood 2015 Interim Report, a 6-month revenue of HKD 3,734 thousands, out of total revenue of HKD 1,176,124 thousands (or equivalent to 0.32% of revenue) was contributed from leasing of investment property..