The Talabat Company as a Small Enterprise

Overview of the Company Talabat

Talabat is an online application for ordering food, grocery, and other products in Qatar; it was created in 2004 in Kuwait. Since then, it has continued to develop rapidly and strives to reach as many customers as possible (About us, no date, para. 1-2). In fact, it is one of the largest retailers in its field, which operates not only within Qatar and the Arab Emirates but also in six other countries through GCC. (Singh, 2021, para. 5). The principal actors include the government through its regulatory agencies and mobile application developers. These are entities that play diverse yet important roles in the progress of the business. Indeed, the Qatari market is promising for online food distributors due to its dynamism and changing social roles. Thus, Talabat has realized this opportunity and is putting everything in place to grab it.

Actors

Through its various regulatory bodies, Qatar’s government is a critical player in the online food distribution industry in the country. The government provides the necessary regulatory framework that guides businesses and their operations. The business’s success depends on how an organization’s employees conceptualize and are prepared to implement it. Therefore, the organization’s employees play a crucial role in executing the business’ ideas and integrating them with customers. On their part, the customers dictate the market through their tastes and preferences. This makes them the most critical players in the industry since, without them, a business cannot operate. Another key player is the competitor, who keeps a company on its toes. Restaurant and bar owners provide the much-needed partnership with the business, which contributes to boosting its reach.

Key Events

Some of the activities to be performed by the company include the development of a mobile app, mobilization of funds, and recruitment of employees. Developing a mobile app will be the first step in the implementation stage. All these are expected to be implemented within one year. Since the business is primarily mobile-based, the development of a mobile app is the most critical part of this. All the activities will be broken down and performed in a span of 12 months. The final item, which is to recruit employees, is expected to take place in 3 months.

As technology continues to reshape the modes of doing business, organizations are also required to update their systems as well. Otherwise, they will be left vulnerable to competition and operational inefficiencies. Talabat operates on smartphone technology, but it must always stay aware of any changes or improvements on the same. The company must be aware that there are portions of its target market that lack access to speedy internet connectivity. This means that they cannot request food at a time when they need it. These are important issues that Talabat must look into and consider addressing soon. In addition, not all citizens of Qatar can effectively operate smartphones and request food (Islam, 2017) ). Talabat must realize that there are older citizens who do not have family members around to cook for them but are in need of their services. This segment of the market might not be tech-savvy.

It is every business’s wish to remain as free as possible from any litigation processes. Being dragged into court every now and then injures a company’s reputation. However, every organization that is involved in the provision of goods and services is often vulnerable to litigation. The food industry is one of the most sensitive ones since poor handling of the product can result in contamination. Victims of contaminated foods from Talabat will most likely rush to the courts to find justice. On the other hand, Talabat can operate more effectively in Qatar if it partners with a local enterprise. Procedures for such partnerships depend on the contract law provisions of the country.

Climate change and environmental concerns are significant issues of concern that have, in recent times, defined how businesses operate. A food distribution organization such as Talabat will find it more convenient and cheaper to use renewable and recyclable materials for packaging. Although this helps in conserving the environment, most consumers opt for freshly produced packages. They tend to trust foods packaged in nonrecyclable products. This hampers the company’s efforts to conserve the environment. On the other hand, a growing list of consumers is becoming conscious of foods produced under sustainable conditions and through ethical means. Moreover, the distance that it takes from the time food is produced up to the time it arrives on a consumer’s plate adds to carbon footprints.

Potential Problem and One Area of Improvement

One of the potential problems that the company may face is a negative quality of service and a lack of satisfaction with customer needs. Thus, the best and most significant areas of improvement are based on interaction, contact, and feedback from customers. Nevertheless, despite the dynamics of the company’s growth and development among the residents of Qatar, the firm should also pay special attention to the quality, but not the quantity of service. Indeed, the corporation has an excellent, convenient application to use, and, at the same time, it delivers products quickly. However, it also needs to focus on its clients, opinions, and reviews if the company strives to become the best in the industry. Customers are the primary source of income for any business. Accordingly, if an enterprise ignores negative buyer reviews, it does not use the opportunity to become better. Without feedback, a brand “breaks away from reality” and loses an idea of the actual state of affairs in the market.

SWOT Analysis

Strengths

1. Talabat has experienced personnel who produce quality products. People are familiar with the unique cuisine and tastes offered by Talabat up to the point that they consider exploring other options a waste of time.
2. The organization has a fast delivery.
3. The company has a strong brand name that spreads across the region.
4. Talabat sells its foods to its target customers at a cheaper rate.

Weakness

1. The main challenges for the business are limited capital and costly food.
2. The company suffers from a high turnover rate, a common phenomenon in the industry.
3. Some people do not trust online foods. Some feel that they cannot ascertain the quality and hygiene of such foods.

Opportunities

1. Chances in using food trucks to distribute food.
2. Talabat can explore the opportunity of partnering with other business entities, such as bars and clubs.
3. The company also has an opportunity to improve its customer service to draw more customers to it. An opportunity was also presented by the COVID-19 pandemic that encouraged many people to embrace online food delivery.

Threats

1. There are several food outlets within Qatar that offer food at lower prices than Talabat.
2. Food distribution in Qatar and other major towns is often affected by the restrictions imposed by cities and local authorities that prevent trucks from entering some zones.
3. There is also the threat of food contamination, something that might be out of the control of the company.
4. Moreover, the hard economic times that have been witnessed in recent times have affected the way people spend money. Expensive foods tend to be avoided by most people.

PESTEL Analysis (Macro-level environment)

PESTEL analysis involves scrutinizing the external factors that impact the business. Hence, they are worthy of consideration as they all combine to define how the company operates. Current and future legislation pertaining to how food is packed, labeled, distributed, and handled has significant impacts on how Talabat operates in Qatar. The laws of this country require online food distribution companies to meet the set requirements without compromising on any. It should also be noted that Talabat has a presence in other Middle East regions other than Qatar. These countries have operational inconsistencies that sometimes prove challenging to maintain. In addition, lobbyists such as advocates for traditional food often influence government decisions regarding legislation on online food delivery businesses, which tend to overlap their interests. Indeed, working around government regulations is time-consuming and costly. All these political factors can either enhance or hinder the success of Talabat’s business prospects as an online food delivery company. The sourcing of different materials and ingredients depends on Qatar’s trade with foreign countries and organizations. The food distribution industry is often considered a nonnecessity and is usually struck by cyclical economic trends that impact such sectors. Global economic events such as the recession and the COVID-19 pandemic injured this sector, especially during lockdowns. In addition, food distribution directly relies on the prices of other products, such as fuel. An increase in global fuel prices proportionally escalates the costs of food ingredients, which, in turn, raises food prices. This might discourage consumers from opting for online food distribution ventures in favor of physical restaurants. Against this backdrop, economic factors play an essential role in determining the organization’s business operations. It is an external environmental component that should not be overlooked. With the rapid rise in lifestyle diseases primarily blamed on poor food choices, consumers are increasingly becoming conscious of what they eat. Businesswise, for Talabat to stay ahead of the competition, it must source ingredients and foods from cheaper vendors. Unfortunately, most cheap foods are produced using inorganic fertilizers, herbicides, and pesticides. Incidentally, these are dangerous chemicals that pose serious risks to consumers’ health. Since the rather expensive organically produced foods are becoming the preferred choices of most consumers, Talabat is also forced to adapt to this trend. This implies that it has to spend much more on ingredients if it wants to retain its customers. On the other hand, the online food distribution industry is also experiencing a boost with the changing family setups. Today, women are no longer confined to the kitchen to cook for their families. This leaves family members seeking alternative food sources, which Talabat leverages.

Porter’s Five Forces (Competitive Environment)

Firstly, Talabat is the industry leader in 7 countries, covering approximately 70-80% of the market share; the chance of new participants appearing is minimal. Based on this data, the company should focus on expanding and scaling the business, enveloping a significant market, and “moving” existing opponents. Secondly, there is a risk of replacing the application and shifting the popularity of the Talabat service to another alternative option. Nowadays, Internet users have a relatively wide range of possibilities. Hence, nothing stops a person from switching from one app to another, comparing prices, brands, portion sizes, and product quality. Therefore, Talabat needs to create a personal intimacy with shoppers, focusing on a loyalty program, promotions, and unique features. Thirdly, the power of customers ranges from medium to high range; it is one of the aspects that depend on the variety of goods, discounts, promotions, and other equally essential possibilities for a buyer. Accordingly, in this case, Talabat’s customer base is entirely dependent on its initiative to create an exceptional offer and maintain power as the critical player in the market. Fourthly, the supplier’s market strength factor can also alter from the medium to high range, as in the case of the previous section. The cost of goods, the number of products, and the assortment depend on suppliers — all of this directly affects the profit. For example, a supplier may raise prices, ship raw materials of insufficient quality, disrupt deadlines, or refuse to cooperate. Any of these situations will negatively affect the company’s profits. Based on these circumstances, Talabat should identify the leading suppliers, recognize a specific category of products for which one should give greater preference, and review and control prices in time. Fifty, as for the competitive rivalry, in this case, Talabat is forced to work in Qatar together with Seamless, Lieferando, Foodpanda, OrderUp, and many other organizations. The intensity of competitive rivalry is increasing every time, especially after the COVID-19 outbreak. For instance, Talabat should begin to understand the gaps in the customer experience and try to overcome them by building unique offers and improving consumer service.

Firm’s Resources

The resources owned by a firm play a key role in helping it achieve its business objectives. Employees are the number one resources that the company has. They are the firm’s goodwill ambassadors and implementors of its vision. The second most important resource is the mobile application based on the online food delivery concept. Indeed, this business entirely operates on this platform, which must be regularly maintained for any updates. In addition, the food is delivered to customers through such resources as delivery trucks, motorcycles, and bicycles, making them significant to the business. It is also important to note that the business’s success depends on its visibility and publicity, which can be achieved through its website and social media pages. This implies that these are also essential resources that the business leverages.

Firm’s Capabilities

From the SWOT analysis performed above, it has emerged that online food delivery is a relatively low-cost business. However, the prevailing business environment in Qatar is very stiff. Not only are the food ingredients very expensive, there are many competitors in the market. This makes implies that Talabat must offer its products at very competitive prices if it has to stay in the game. As a result, the profit margins for the business are drastically reduced. However, the company has several opportunities that it can exploit to offset these hurdles. There is still a huge market segment in the country that is yet to be reached by online food delivery services. In addition, there is an opportunity to further build its brand and give itself a strong market position.

Firm’s Competencies

The company’s key competencies as a whole are the broadest range of products, high speed of delivery, and convenience of ordering. Due to aggregators consolidating the menus of different establishments, the content of dishes available to order has expanded. In addition to burgers, pasta, and poke, any restaurant food can be brought to the customer’s house in containers. Even for conservatives who prefer to cook at home, retail offered an affordable option for online food shopping – convenient delivery of products from specific Qatar stores.

VRIO Analysis

VRIO analysis helps explore all that a firm possesses, and it considers it a resource that can be exploited to produce finished products. For Talabat to attain a competitive advantage, its resource capability should be valuable, rare, and inimitable. In addition, Talabat should be adequately organized to own these qualities irrespective of their cost. However, other than value and organization, Talabat does not pride itself on being rare and inimitable, as hundreds of enterprises have since copied its business concept. Unlike in the past, many business enterprises have joined the online food distribution industry, rendering it no longer inimitable and rare.

Firm’s Value Chain

The company obtains produced foods from different retailers and prepares them before packaging. The food is packaged in such a way that it reduces its chances of spoiling and turning into waste faster. The safety of the packing materials used matters a lot as they can either contribute to the spoiling of food or add value to it. While transporting and distributing the food to customers in far-flung, the food is placed inside portable freezers to ensure that the food remains fresh throughout the whole process of transportation. The company’s primary focus area is eating healthy, which is displayed in its packaging and conserving the environment. Thus, the foods are packaged in easily disposable materials that do not have any harmful effects on the environment and can be reused. Consumers are advised to contribute to taking care of their settings.

Firm’s Performance

Although Talabat has not yet fully entrenched its roots in Qatar, there are high prospects that it will do better in the coming years if its impressive performance across the region is anything to go by. In March this year, the company announced food and groceries distribution of up to 60 percent during the last year. Within the same period, the company also expanded its customer base by 30 percent. Within the Middle East, up to 2 million new customers downloaded the company’s app. Indeed, this is an impressive performance that points to better prospects for the company. It is projected that if the same trend continues, the company will succeed in penetrating the Qatari online food distribution market.

Competitors

The main competitors of Talabat include Foodak, Snoonu, Wishbox, Rafeeq, Carriage, Entertainer, Akly, and Fingertips (Darlene, 2020, para. 1-10). Each of these companies delivers food and groceries to your home, and, accordingly, each claims to be a leader in the field.

Trends

Over the past 3-5 years, there has been a notable trend in food delivery to the house, especially ready-made. Thus, food delivery has become an everyday time-saving tool. Meals ordered at home from restaurants free one from going to the store and cooking, allowing people to devote more time to personal affairs, family, entertainment, and work. The food-tech market is most sensitive to general cultural shifts in consumers’ minds and the development of technology. The principles of behavior of the population are changing, and with them, the formats of ordering and delivering food are changing. If it all started with the delivery of pizza and burgers for parties, now people use this option for everyday family dinners, ordering those dishes that are considered conditionally healthier, homemade – salads and soups. Today, time is most valued all over the world, and restaurants, shops, and deliveries are adjusting to this, including Talabat. In America, food has long been easier to buy than cook yourself. In Japan, people work so much that they don’t have time to sit like the French for two or three hours in a restaurant. In particular, it was COVID-19 that “forced” people to self-isolate and use the possibilities of “remote” purchases.

Competitive Advantage

SWOT analysis and Porter’s Five Forces demonstrated that Talabat’s main advantage lies in Qatar’s brand awareness and universal recognition. Many people in Qatar do not have enough time to go to the store, and home delivery via online ordering is a great way to save time, get fresh food, and create food stocks without going outside. Most people are familiar with the Talabat brand, which is in demand and popular among people who prefer home delivery.

Diagnosis

Most of the problems that afflict the online food distribution business are mainly attributed to food safety and a competitive operating environment. Today, the influx of Genetically Modified Foods (GMOs) has really affected the quality of food being produced as well as quality. A country such as Qatar imports most of its food. Thus, the company does not have a hand in determining the quality of the food products it purchases. Moreover, the changes in the environment have been witnessed over the past few decades in exuberating the rate at which food is becoming contaminated. The increase in global temperatures is making it conducive for some microorganisms to thrive. These are responsible for contaminating food at a faster rate. Having to dispose of contaminated foods or putting in additional measures to prevent the same increases the costs of operations for the company.

Solution

Organic foods can be an effective way for the company to ensure that it meets the set safety standards on quality. In addition, in order to stay competitive and reduce the problems associated with online food distribution, the company must devise ways of effectively delivering their food to customers while reducing operational costs (Elsmore, 2017, p. 13-28). This can be significantly achieved using modern technology, for example. In Qatar, for instance, the company can use tracking equipment to enable it effectively respond to its customers’ food demand as well as make rapid changes for its programmed delivery. On the other hand, operational costs can be minimized by reducing waste and streamlining operations by drilling down purchasing and supply chain logistics.

Implementation

While the activities will be spread within one year, there are others that will happen simultaneously. This includes the recruitment and training of employees. As the employees will be recruited for the job, they will also be trained on how to use the mobile application. At the start of the business, the business directors will personally contribute their savings to finance the business. This is because the company does not have adequate cash that it can rely on. It is expected that the company will be able to stand on its own after three years.

Reference List

About us (no date). Web.

Darlene (2020) 10 Food delivery apps in Qatar for when you don’t want to cook or eat out.

Elsmore, P. (2017) Organisational culture: Organisational change? London: Routledge.

Gulf News Report (2022) Talabat UAE reports its 2021 business results with over 60 per cent increase in orders.

Islam, A., (2017) ‘SWOT Mix and PESTEL Analysis: Effective tools of risk management of leasing companies’ The Millennium University Journal, 2(1), pp. 1-18.

Markalexander (2020) Talabat recaps how Qatar used their app during 2020.

Singh, A. (2021) Talabat, everything you need to know about the MENA’s food delivery giant.