Little Red Roaster (LRR) coffee outlets - Case Study Example

? The Little Red Roster Case Analysis and Reporting number(s) Management 1P96 Section number created Word Count Executive Summary This report is a critical analysis of Little Red Roaster (LRR) coffee outlets. It analyzes the nature of the business activities, environment, sales and marketing strategies, competition, decision-making and future plans of action. In so doing, it will analyze the nature of specific competitors in similar business and their survival and marketing plan. After that, this report will also give recommendations to LRR on some of the potentially viable strategies it can employ to expand both sales and profit margin. The recommendations will be arrived at after a thorough strength, opportunity weaknesses and threat analysis to be in a position to expand the business without risking the standards of its services. Main SWOT analysis points related to the above issue have to do with internal management and external factors. This report will therefore bring to the surface the weaknesses that prevent quick growth of the business due to managerial poor approach. It will also identify and discuss on those threats that arise from the external environment and thus outside control of the business. While doing so, this case report will also identify the strengths the business has achieved out of its current operating strategies and the opportunities available. Upon a critical analysis of the problem, it emerges that LRR faces more business development challenges in terms of expanding than mismanagement. The business is challenged with how best it can expand its current operating capacity to tap the improperly tapped coffee beverage market. The report analysis will also therefore endeavor to analyze the seemingly big problems related to room for expansion, outside catering and delivery of products. After identifying all these factors, this case analysis and report will review the alternatives available for a new course of action. In so doing, the case report will also discuss and elaborate on the reasons for adoption of such criteria. The adoption of any criterion will be based on the overall financial position of the Little Red Roast and the interplay of other external variables like availability of space and ready and reliable market. Alternatives are usually not necessarily the only choices to choose from by a business. Therefore the report will only identify the options and present them to the management for final decision-making. Recommendation for LRR will be based on the overall analysis and available options for the business. Rationale for such recommendation will be based on other aspects like the consequences of each one of them. Every new venture comes with its own unpredictable risks. This case report will therefore also do a forecast of possible risks that come with the available options. It will be up to the management to decide which option will be in the best interest for the business given the prevailing circumstances and condition. Finally, this case report will come up with an action plan with critical Steps, potential problem identified above and a contingency plan for each step in the action plan. This will be tabulated for ease of analysis and better understanding of the scenario. It is of vital importance to note that all these are aimed at helping LRR expand its coffee business in the most profitable manner that is both customer friendly and management friendly. Situational Analysis LRR is a chain of small retail coffee shops that offer a variety of light foods and beverages. The business outlet started as a retail business in 1995. It is located in various places such as Byron, Covent Garden Market, London Central Library, and London Provincial Courthouse. It also operates in Springbuck, St. Thomas-Elgin General Hospital, The renaissance and Wortley village. The business offers coffees, tea, gourmet beverages, breakfast, light lunches and snacks. The company has been in business for eight years (seventeen years by now) and continues to offer very good services and food products. LRR has expanded from retail to currently wholesale outlet. However, it still maintains its retail business since it also contributes immensely to its sales. LRR’s primary customers were catering customers. Retail customers were working class women mainly between the ages of 26 years to 45 years of age around Covent Garden Estate. Wholesale customers were Novacks, and UPI’s Enviro-Station. Others were David’s Bistro and Cafe One restaurants in London. Additionally, LRR also had John Labatt Center as its biggest wholesale customer. LRR’s competitive advantage is its staff- customer relations. This is because it offers a personalized service and encourages cordial relationships with customers. It has not employed highly televised or broadcast marketing yet it has continued to stay in business. The current financial situation of the company is not very bad. The ratios indicate that it has liquidity current ratio of 1.51 and passed an acid test with a 0.87. The decision the company is facing has to do with expanding of catering operations and wholesale. A SWOT Analysis of LRR reveals that the business has strong interpersonal relations with its customers. It offers them personalized services. It also maintains a cordial relationship with them. The business offers an uncompromised quality of deliveries. This is the business’ strength coupled with varying pricing system depending on the time of the year. More product choices offered and a strong word of mouth has also strengthened the coffee shop. Nevertheless, the coffee shop’s weakness in the market comes out as being managerial oriented. It appears that family interests were clouding business decisions. Gordon-Green was expecting her first child, something that disturbed her in terms of what would be best for the business and for the family. Inventory management was also a big challenge for Gordon. Another weakness in management was the way Gordon treated her employees who were the main strength in the business. The company experienced declining sales during this time. Opportunity available was the growing market that still remained untapped. In fact, LRR had the best opportunity to expand its shops and tap this market at its disposal. The only threats to the LRR were Hasbeans, Sebatini’s, Tim Hortons and Katzenjammer located at LRR’s marketing zones. These coffee marketers operated a wide market including oversees. Nevertheless, LRR’s strategy maintained customer loyalty and the company forged on. Problem The major problems the business faces have to do with expansion, competition and human resource management. All these problems are somehow interconnected in such a manner dealing with one alone does not conclusively solve the whole problem. The management has to assess the issue of expanding the business. The proposed re-designing of the business interior design by knocking down some walls may increases space yes. The only problem is that the overall space increment is still very little for the growing market. Besides, a delivery truck would cost the business $13,995, something that may not be viable in the short run. The business is therefore left with the option of contracting for reliable and flexible deliveries. D&C and FLD companies were possible options for the business. It therefore became an issue of decision-making. Another major problem was the reliance of the company on its employees’ relationship with customers to maintain customers. At instances when they were not well motivated by Gordon-Green, there was a nosedive in sales. They probably did not feel appreciated, or their roles recognized or even that the nature of the work and terms of employment were not in harmony. The significance of this problem is that it puts the business at risk and operating with uncertainties. This is especially so since human behavior is always unpredictable. The business may not be in a position to identify how its employees related with its customers since there was very little investment in advertising. The overall effect is that the management is able to have control of the business performance to acceptable degrees given other variables outside its control. The company should consider other options of customer service and retention other than those that are predominantly employee based. Alternative Identification In order to solve the current problem that LRR faces, the management should explore options of collaborating with a delivery company like D&C to increase output per day and catering deliveries. With the experience that D&C has in deliveries, it may turn out to be the ultimate solution in the short run when LRR has so many clients on the rise yet delivery remains a problem. This can take form of a short period contract. Within this period, both stakeholders should agree that it is an assessment period within which to observe the probability of committing to each other for long should they be satisfied with results in the short run observation period. The issue with human relations also ought to be addressed since it affects sales. Decision Criteria In deciding to work with D&C on a short contract, both parties get time assess whether things are running within their expectations. With regard to management, LRR should understand that if it is not going to spend so much in adverts but rather rely on its employees to market itself through word-of-mouth relations, then it must plan an effective strategy. Employees’ role in sustaining customers should be appreciated and developed through fully paid leaves, team building activities and other attractive packages like salary reviews (Schermerhorn, 2010). This will motivate employees to do their best always. Management should have a clearly established professional channel of dealing with employees. This will avoid cases where management may get personal with employees. Besides, the business can set long-term goals of expanding its fixed assets. This can be buying of new buildings or ground apartments as along term goal when it has an improved profit margin and sales. With proper bookkeeping, LRR may also have the option of approaching a financial institution for a development loan and invest it through renting of spaces and setting up other shops for catering and wholesale Analysis of Alternatives Critical………………. Mission Track 1 Non Critical………………… Mission Track 2 Risk Total LCC Measures of effectiveness Measures of effectiveness shortrun longrun Short run Long run Alt 1 (baseline) Yes yes no No Alt 2 Yes yes No no Alt 3 No yes No yes Alt 4 No yes Yes no The alternatives include the business position as it is as the baseline. Alternative 2 is working with D&C Company. In the event that the business takes this approach, the critical objectives may be achieved in the short run. This includes an assessment of outcomes by working together. In the long run, the achievements will be positive since proceeding in the long run means that the short run results were positive. On non-critical aspects of the business like interpersonal relations have nothing to do with the business and thus remain negative contributors to the success. Alternative 3 is employee motivation. The business will achieve great success both in the short run and in the long run if it motivates its employees well. Other non-work related aspects like interpersonal relations may not matter in the short run when there is motivation but creep in eventually in the long run to affect how the business will operate. LRR is actually dependent on this aspect of employees cordial relationships since there is little advertising and marketing through broadcast media. On the other hand, alternative 4 presents a major challenge on how it is to be approached. This involves the business approaching a financial institution for development loan. The amount to be granted depends on the overall financial position of the business and its growth rate as will be determined by such an institution. In the short run, such an option may still not be the best alternative. This is because there is still poor inventory for such a financial institution to assess the performance of the business from. There are also still other aspects of adjustments to new catering orders before the business establishes its liquidity. Besides, there are also still prospects of mergers with delivery companies to meet customer demands and increasing needs in the short run. However, the long run will present a period of relative stability and improved financial position. The business may take this alternative then. Other aspects that may be non-critical like the number of new staff to employ will not affect the operations of the business both in the short run and in the long run. Recommendations, Reactions and Results From the information in the case study, it would only be in the best interest for LRR to consider making plans of having an increased broadcast advert alongside the word-of-mouth strategy it employs. It should also seriously consider collaborating with D&C for deliveries as the best possible alternatives. The worst possible alternative would be to ignore addressing issues to do with its employees’ motivation without a counter strategy for marketing. The most likely scenario will be to working with FLD Company so that the family business remains in total control of the relevant stakeholders. Action Plan For Service and Deliveries WHAT WHERE WHEN WHO HOW HOW MUCH Wholesale UPI morning Delivery company Packed delivery $6.50 per pound Sales Customer Business hours staff Served $2.00 Catering Novacks On order Delivery company Packed $6.50 per pound Since the business deals exclusive in coffee and light foods, the action plan focuses on just how best the business can maximize profits. It divides roles for each employee in such a way that at any particular time, all services are fully functional. The big problem is delivery of catering services. Nevertheless, contracting a delivery company offers a solution so that there is smooth flow of all business activities. Some of the problems that could occur could be if the delivery company has been contracted by more than one business, then it may cause delays if it does not have a fixed schedule of when it operates between one point and another. In other instances, there may be other unexpected occurrences like temporary roadblocks. In such instances, there should be quick communication with the clients so that they are made aware of possible delays as an alternative route is being taken. This may be costly for the business in the short run but helps to retain its market. Reference Schermerhorn, J.R., (2010). Management. New Jersey: Wiley. Read More