Today, the development of the hospitality industry in Australia may face considerable problems because of the deterioration of the economic and political environment in the country. In this respect, the development of the Cha for Tea restaurant may face considerable problems, taking into account the current economic and political environment in Australia. Nevertheless, the Cha for Tea restaurant may succeed in the market on the condition of the development and implementation of a successful marketing strategy. In actuality, Asian cuisine is still popular in Australia and the restaurant can count for success.
On analysing the current economic environment in which the Cha for Tea restaurant operates, it is important to place emphasis on the fact that the current economic situation is unfavourable. First of all, the cost of goods rises substantially. In this respect, it is worth mentioning problems in China caused by natural disasters that undermine the steady supply of tea and other products for the restaurant from China. At the same time, food prices are galloping, whereas, in the nearest future, they are likely to increase even more. As a result, the supply of products is costly and, what is more important, the price of products is high. In such a situation, the Cha for Tea restaurant will have to raise its prices that make decrease the number of customers attending the restaurant on the regular basis. In this regard, the Cha for Tea restaurant was always concerned with the affordability of prices for customers but the rising food prices and difficulties with the supply of products can force the restaurant to change its traditional policies. In such a situation, the increasing costs of goods will inevitably lead to the loss of profit or its substantial reduction because the Cha for Tea restaurant will have to choose either to increase its prices that may lead to the decrease of the number of clients and profits, or to maintain current prices and loyal customers but to decrease its profits. In actuality, the Cha for Tea restaurant still has some profit margins that allows the restaurant to reduce its profits but, in a long-run perspective, the situation will deteriorate if the economic environment fails to change.
Another important economic factor that affects the current position of the Cha for Tea restaurant is the rental price. Today, Australia is the target destination for many foreign employees, especially from poor Asian countries but the flow of foreign workers raises the rental price in Australia consistently. Naturally, the rise of the rental price affects local businesses as well as especially hospitality businesses like the Cha for Tea restaurant. In fact, the rental price grows annually and the Cha for Tea restaurant has to pay more every year. In such a situation, the business cannot develop steadily because the company cannot forecast accurately the rental price every next year. Therefore, its business plan and business development grows dependent on the rental price. However, it is obvious that, to develop business successfully, the Cha for Tea restaurant needs a forecastable rental price. In such a way, the restaurant can develop a long-run business strategy and to plan its business development for years ahead. As a result, the restaurant could have developed steadily and successfully. In addition, the high rental price affects the pricing policy of the restaurant as well because the restaurant is likely to lose its current profits because of the rise of the rental price. To maintain profits, the Cha for Tea restaurant will be forced to raise its prices.
Finally, the customers’ spending power has dropped recently under the impact of the economic recession. In fact, customers have focused on saving since the beginning of the recession. As a result, they attempt to save money on refusal from attending the Cha for Tea restaurant. However, the restaurant can count for the maintenance of its target customer group because it offers products at affordable prices at the moment. However, if the restaurant is forced to raise its prices then its prices may become unaffordable for customers, who attempt to save their money. In such a situation, the position of the Cha for Tea restaurant may deteriorate even more.
In such a way, the current economic situation in Australia is unfavourable for the business development of the Cha for Tea restaurant. Nevertheless, the restaurant can hold its position on the condition of the maintenance of its stable pricing policies and preservation of its target customer group and loyal customers. In actuality, the restaurant is focused o the mass audience and its prices are affordable. Obviously, the economic recession will end some day and so will negative economic trends that will open new opportunities for the Cha for Tea restaurant to grow.
However, it is also necessary to take into consideration the political environment, in which the restaurant has to operate. In this regard, it is important to place emphasis on the increased regulations of business from the part of the state. Traditionally, Australian government stimulated the development of the open market economy principles to accelerate the economic development of the country. However, the recent economic recession increases the interference of the state in the economic policies and business development throughout the country affecting different industries and businesses. In this regard, fiscal policies conducted by the state are particularly important and, according to specialists (Noble, 205) fiscal policies are likely to be negative for business development because some businesses are likely to suffer the rise of the fiscal pressure. In this regard, the hospitality industry is one of the industries that may be under a threat of the rise of taxes because the hospitality industry is traditionally considered to be profitable and Australia attracts a large number of tourists that make companies operating in this industry vulnerable to the growing fiscal pressure. In addition, regulatory policies conducted by the government are still quite strict because the Cha for Tea restaurant operates in the food industry and Australia has high standards concerning the food safety. The existing regulations pose strict requirements concerning the quality of food, its safety and proper delivery to customers. In such a situation, the position of the company may deteriorate because the strict regulations limit opportunities for companies to save costs and to develop more flexible strategies of business development, whereas possible rise of taxes can put under a threat the further development of the Cha for Tea restaurant. At any rate, today, it is obvious that profits of the restaurant have dropped consistently, whereas, in the future, they are likely to drop even more.
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