Business Plan for Writers Block Cafe - Case Study Example

Name University Course Tutor Date Table of Contents Table of Contents 2 Executive Summary 3 Company’s Corporate and Marketing Objectives 4 Situation Analysis 4 Customer analysis 11 Service Product Analysis 12 Current Pricing Strategies 13 Promotional Strategies 13 Management of supply and demand 13 Customer Quality, Satisfaction and Perceived Values 14 Internal Marketing 14 Marketing Strategy 15 References 15 Executive Summary This paper aims at providing a business plan for Writer’s Block Café which is a coffee shop with its location in the La Trober Uni, melbourne, bundoora campus. This has the implication that the café sales coffee beverage, baked items alongside other forms of fast snakes, with students and staff of the university being the main target of customers. The consumption of coffee in Australia has been on an upward trend with several shops also offering such light meals as soups, breakfast, and sandwiches. Ideally, the industry can be said to have a near-perfect competitive market considering that it has several competitors, numerous consumers, alongside low entry and exit costs. Indeed, besides the small coffee shops the industry has giant entrants on the international scale with Serious Coffee, Blenz— Starbucks, Second Cup, and Tim Hortons being outstanding examples. Notably, coffee shops are characteristic of affordable products that are acceptable to an immense deal of consumer segments: specialty coffee and house blends, light meals, hot and cold signature drinks, and baked goods. The situation of the industry thus offers outstanding opportunities for success of the business though there are also perceived risks of the business which ought to be taken into consideration. There is no guarantee that the business will be a success. Indeed, it can be perceived that the campus will not have sufficient population to make a profit sustainable business. Indeed, since the targeted population is mainly students and staff, there could be a case in which only the staff members make potential buyers. This has the implication that there could be a high risk of low demand thus remote chances of making more profits than the opportunity costs. Company’s Corporate and Marketing Objectives Attain the position of the selected best café in the area according to the local restaurant guide Turning in profits, starting with the first month of business Maintaining a 65% gross margin The Writer’s Block Café will make its best effort in the creation of a unique place supporting socialization of customers. The Cafe will be aiming at establishing a relaxing and comfortable environment in which customers can enjoy the best pastries, espresso or the best brewed coffee in town. Ideally, the Cafe has an objective of helping its customers to relive stress via the provision of peace of mind via convenient location, high quality products, great ambience and friendly customer service. Ideally, the cafe is aiming at investing its profits in order to achieve employee satisfaction still with stable returns to share holders. Situation Analysis SLEPT analysis refers to an exploration of the influences of Social, Legal, Economic, Political, and Technological forces on a business. This analysis is of much essence as it enables business leaders to have information on the progress of their competitors. Business analysts have observed that the SLEPT forces keep on changing thus their effect of business varies with time (Anonymous, 2000). Ideally, social forces refer to behavioral patterns, lifestyles, and tastes. These forces have a principal component in the change of consumer behavior which arises from styles and fashion changes. Consumer behavior is also significantly impacted by a population’s age structure as the preferences of individuals tend to exhibit an immense deal of variation on grounds of age (Andrew, 2000). It is thus worth noting that a good understanding of social forces provides business leaders with an ideal platform for future market analysis. Legal forces refer to the constitutional requirements surrounding a business most of which are determined by government policies (Davis, 2001). The contemporary world is characteristic of a situation in which laws are constantly being updated in such areas as safety and employment law, consumer protection legislation, and environment legislation. It is advisable for businesses to face these changes with a pro-active approach and stay ahead of them instead of hurriedly changing processes and products in a reactive way (Williams, 2001). There is a close relationship between economic changes and social changes. Over the past years, it has been observed that the economy has been going via repeated fluctuations resulting from general slumps and booms in economic activity (Dheensa, 2012). Ideally, economic booms are associated with an immense deal of benefits to almost all business with economic slumps coming alongside an array of losses. In addition, businesses are also impacted by such other economic changes as wage rates, inflation rates, and interest rates. In these cases, businesses suffer significantly as a result of increases in prices. In times of favourable economic conditions, there is a high likelihood of business expansion with several businesses exhibiting the tendency to take risks; such times are characteristic of rising demand and low rates of interest (Fägerskiöld, 2005). SLEPT forces that affect businesses are also inclusive of political changes which refer to influence of government policies. For instance, the recent years have seen European countries face an immense deal of political changes as EU members have been adopting regulations and directives formed by the European Union and then adapted as UK law (Gray, 1999). Notably, there is a close relationship between legal and political changes with the two categories impacting business in almost a like manner (Gore, 2011). Post-millennium world has also seen technological changes take a centre scene in business. This has been more significant with respect to modern communication technologies. The development of electronic communications and databases has resulted to the capability of sharing vast quantities of information. Consequently, there is rapid distribution of information in contemporary companies thus an immense deal of cost reductions alongside enhancement in service delivery (Nazroo, 2003). Modern companies ought to be aware of latest technological advancements in order to stay at par with the wave of change. Industry Situation The consumption of coffee in Australia has been on an upward trend with several shops also offering such light meals as soups, breakfast, and sandwiches. Ideally, the industry can be said to have a near-perfect competitive market considering that it has several competitors, numerous consumers, alongside low entry and exit costs (McDonnell, 2004). Indeed, besides the small coffee shops the industry has giant entrants on the international scale with Serious Coffee, Blenz— Starbucks, Second Cup, and Tim Hortons being outstanding examples. Notably, coffee shops are characteristic of affordable products that are acceptable to an immense deal of consumer segments: specialty coffee and house blends, light meals, hot and cold signature drinks, and baked goods (Nanthagopan, 2014). All the fore-mentioned products ought to be offered by coffee shops in any competitive market. Ideally, Cost Structure Entrepreneurs with an aim of establishing coffee shops in Australia ought to make a consideration of sunk costs, entry costs, opportunity costs, variable costs, and fixed costs. Ideally, entry costs refer to costs that are used up in the initiation stage of the business. For instance, in order to secure a location one ought to pay insurance, deposits, property taxes, alongside an array of other costs (Office for National Statistics, 2015). The coffee shop industry is characteristic of a high frequency of customers implying that it has high fixed costs for establishment of the business. There are other entrant cots which are inclusive of electricity, gas, water, furniture, and equipment. In addition, the operation of coffee shops has legal requirements which are inclusive of legal procedures and contracts calling for the services of licensed administrators. These are inclusive of business lawyers and real estate agents associated with high costs in terms of time and money. The industry also requires the entrepreneur to invest time while looking for wholesale suppliers including coffee distributors and bakery vendors with the capability of making expansive suppliers of baked goods and beverages (Price & Buckner, 2006). Sunk costs also make part of entry costs of the business. These refer to entry costs that cannot be avoided once they have been made. Outstanding examples of sunk costs are deposits locked in rent, renovations, long-term contracts, service fees, equipment, alongside other permanent investments. Fixed costs refer to costs of inputs whose value does not vary with the rate of production. These are inclusive of property taxes, rent, and costs of utilities (Brooker, 1999). Notably, there cases in which costs of equipment and wages can be categorized as both fixed and variable costs. This has the implication that these costs can sometimes vary with the rate of production of the investment. Business analysts term variable costs as the costs of entry associated with inputs that change value with the production rate of the business. Consequently demand of products has an immense deal of influence on variable costs associated with a business. The higher the frequency of customers in the business premises, the higher the variable costs of operating the business. Costs of such inputs are inclusive of such ingredients as baked goods, coffee beans, and dairy products; alongside such packaging, materials as receipt paper, containers, and recyclable utensils (Deal and Pete, 2001). There are also cases in which maintenance costs and labour costs of operating a business can be variable; for instance, in times of high demand, an employee who has completed his/her shift can be deployed for extra time on extra costs. Entrepreneurs venturing in this business are always advised to take advantage of high-fixed cost structure. This is because in such a case, the business is not negatively impacted by fluctuations in the market which would otherwise alter the production rate of the business (Fattah, 2000). Competitors The coffee shop business is operated in an environment that is surrounded by an immense deal of competition. This has the implication of an immense deal of challenge on the pricing strategies employed by the business leaders. It is worth noting that competition has significant effect on prices of commodities thus affecting demand. When a business increases the prices of its products, there is a possibility that close competitors will take advantage of this trend by lowering prices of like goods (Hanson, 2000). As a result, an array of customers will shift to providers who offer their goods and services at lower prices. This has the implication that, businesses with higher prices will face low demand hence reduced profitability. Consequently, at times, competition may be so stiff that the business cannot offer products and services at prices that are profit sustainable. Internal Environment ` The internal environment of the business refers to the strengths and weaknesses of the business that are not dependant on external forces. These are also inclusive of threats and opportunities associated of the business and are not determined by external forces (Nick, 2000). The internal environment of the business is the primary determinant of these strengths, weaknesses, opportunities, and threats (Kelly, 2000). This has the implication that this category of factors draws influence only from within the business organization. Therefore, the business management team has the capability of controlling or at least having some influence on these factors. It is thus believed that, the way in which the management team administers and integrates factors within the business environment has great influence of the rate of production. Thus the internal environment of Writer’s Block Café can be defined by its core competence (Murph, 2000). Ideally, the company’s core competency lies in its capability of effectively leveraging its cornerstone product differentiation plan via the provision of a premium product mix of snacks and beverages of high quality. Writer’s Block Café’s brand equity is based on the sale of the most outstanding quality of coffee, alongside other products offered by the café. Ideally, customers are provided with a unique experience of Writer’s Block Café resulting from clean premises and good customer service which is a reflection of the culture of the customer base of the café. Writer’s Block Café also has core competence in the value-based approach of its human resource; this approach has resulted to extremely strong internal relationships which are the principal business movers within Writer’s Block Café (Andrew, 2010). The café finds an immense deal of strength in the provision of products of the best quality. Ideally, Writer’s Block Café has been treating the quality of its products with the highest level of importance in order to avoid a breach of standards of its products. This is to ensure that Writer’s Block Café offers products of the best quality even in cases of high volume of production. In addition, Writer’s Block Café has great strength in the aesthetic appeal of its stores and location. This strength has the capability of targeting a high traffic of customers, thus high profitability of the café. Ideally, the business premises visually appeal to customers with a unique design that reflect the friendly internal environment of Writer’s Block Café (Davis, 2011). The café has also got an immense deal of strength in its human resource management. Ideally, Writer’s Block Café boasts of highly knowledgeable employees who offer customer friendly services. This has been as a result of outstanding management of human capital by the top administration of the business. The café is also characteristic of goodwill among its product consumers as a result of initiatives that reflect significant social responsibility. Writer’s Block Café has emerged to be friendly to the community in which it operates with such practices as recycling and reduction of wastes. Internal weaknesses are also significant determinants of the internal environment of Writer’s Block Café. One of the weaknesses associated with the café is the provision of expensive products. There have been cases of consumers who have had to look for other alternatives as a result of expensive products offered by Writer’s Block Café. The premium prices are particularly a significant weakness considering that the café operates within a university thus most of its customers are not financially stable. The internal environment of Writer’s Block Café is also significantly impacted by opportunities and threats. Despite the probability of the owner gaining valuable experiences from immersion in the industry, it is rare for average costs to fall with cumulative production in the course of time in the coffee shop industry. With respect to opportunities, opportunity costs refer to the net revenue as a result of the most outstanding alternative course of action. In events that the owner fails to establish the coffee shop and does his/her investment in a different field, opportunity cost refers to the value of returns (this is the opportunity cost associated with the coffee shop). This has the implication that prior to the establishment of this business venture, the owner ought to have reasonable confidence in the generation of higher profits than the opportunity cost. Customer analysis There is increased traffic in the area in which the business is invested, with population increase on course. Notably, the master planned audience has the capability of attracting a middle socio-economic class thus potential for high demand. Most of customers of the café are passing shoppers coming from various age groups who enjoy a fine coffee alongside various other snacks. Ideally, the coffee has enabled young people to enjoy coffee alongside other provided snacks. It is worth noting that most of the customers of the café are social drinkers with the second lot of most frequent customers being individuals who after their daily fix. These customers are after a friendly, relaxing, and convenient environment with the objective of recharging their batteries or socializing over coffee, baked items, alongside other snacks. Ideally, Writer’s Block Café is capable of offering healthy snacks which fresh and offers perfect alternative to fast food options (Nazroo, 2003). Like in any other coffee shop, the service is characteristic of significant perceived risk. There is no guarantee that the business will be a success. Indeed, it can be perceived that the campus will not have sufficient population to make a profit sustainable business. Indeed, since the targeted population is mainly students and staff, there could be a case in which only the staff members make potential buyers. This has the implication that there could be a high risk of low demand thus remote chances of making more profits than the opportunity costs. This risky situation could, however, be alleviated via a strategy of the café to lower the prices of its products in order to attract more customers from the lower socio-economic class of students. With respect to level of customer-provider interaction, the business will require to have customer experience in order to create a customer-service interaction with the capability of achieving the business objectives of Writer’s Block Café. Service Product Analysis The business is characteristic of physical evidence of service which has significant influence on employees of Writer’s Block Café and the product consumers. This will refer to the perception created on consumers by the environment of the café and quality of products and services. The way in which customers will respond to the physical evidence of service provided by Writer’s Block Café will have great influence on the volume of sales and the profits realized by the business This has the implication that the business has the capability of using the physical evidence as a competitive advantage in the industry. This is because if customers develop a positive perception of the café’s products and services, product consumers prefer Writer’s Block Café other shops and indeed opt for fast snacks instead of alternatives found in fast foods. Ideally, there are many cases in the service industry where outlets have made a great step ahead as a result of the competitive advantage gained as a result of physical evidence. This is because in the service industry, consumers tend to be attracted by a friendly environment which has the capability of providing them with the intended form of relaxation. This takes into consideration the fact that most buyers in this industry are passing buyers who are after relaxation after a long days work. Current Pricing Strategies The current pricing strategies of the café are dependent on competition and alternatives of other foods. This has the implication that, while setting prices for products and services, the café puts into consideration the prices with which similar businesses provide their goods and services, and the available alternatives which can make customers not to purchase the fast snacks and beverages provided by Writer’s Block Café. Promotional Strategies Social media is highly used as a promotional strategy for Writer’s Block Café. This is because the greatest portion of the business target customers is daily internet users who spend quite significant time on social media on a daily basis. The café posts promotional information on social network platforms especially twitter and facebook. Indeed, it is reported that the page managed by the café on facebook has great following in the campus which forms the main customer base for Writer’s Block Café. Management of supply and demand Ideally, sales forecasts and demand estimation are the ideal tools used for the management of demand and supply in Writer’s Block Café. It is observed that these tools are controlled by a number of socio-economic factors which impact business in various ways. For instance, the numbers of sales alongside other indicators of income have capability of predicting the future trend of the business. A hint of how the future of the business will be like enables business leaders to control the quantity of ingredients to be purchased from suppliers in line with the expected volume of sales. On the other hand, demand is managed via an analysis of such socio-economic factors as price of commodities. This has the implication that the business can adjust demand for its products by either increasing or reducing prices for its commodities. Customer Quality, Satisfaction and Perceived Values The café has been ensuring that it makes use of measures with the capability of upholding the standards with which services are provided to customers. The achievement of this is subject to such methods as serving coffee using procedures and equipment that match the standards expected by customers. The business landscape and physical appearance is also attractive to students creating a satisfactory perception among the product consumers. The service providers in the café are time conscious thus adding to the satisfaction created by the business. This has the implication that orders are delivered as per request with no delays. Internal Marketing Level of customer orientation is the main focus of customer orientation in the café. This forms customer-sales relations methodology thus enables the staff of the café do their level best to satisfy the long-term needs of customers, majority of whom are students. Ideally, junior employees and the management of the café have the objective of focusing on the alignment of group and personal goals thus the satisfaction of the business’ customer base. Indeed, the management of Writer’s Block Café has given priority to customer orientation all along. It is worth noting that the business has been providing loyal customers with chance to take part in meetings which are aimed at enhancing the perception of customer’s. It has also been observed that the business has no room for ineffective employees who do not show the required enthusiasm to serve customers. Marketing Strategy Ideally, the café ought to extend its market segmentation in the future. This has the implication that subordinate staff and lecturers ought to equally be targeted by the marketing strategy used by the business. Besides increasing the volume of sales made by the business, this will also enhance the formation of positive relations in the business environment. The marketing strategy of the business is inclusive of the introduction meals that are customized yet at low prices. The café also ought to employ ideal pricing strategies that the business matches the pace of close competitors, and also to reduce the strength of alternative products. References Anonymous. "Has Viral Marketing Burned Itself Out?" Marketing Week. March 29, 2001.Bannan, Karen J. "It's Catching." Adweek. June 5, 2000. Andrew, S. (2010). The Circular Flow of Economics and Business Income: The Principles of Macroeconomics. Attond: The National University of Australia. Davis, H. (2011). The Strategically Set Study of Value Added in Economics-2011 (The SunDus Review). Task set, 3. 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Expanding ethnic Inequalities in health. Sociology of Health and Illness 20: 714-734. Nazroo, J.Y. (2003). The Structuring Of Ethnic Inequalities in Health: Economic Position, Racial Discrimination and Racism. American Journal of Public Health 93(2): 277-284. Office for National Statistics, (2015). Publications - ONS. [online] Available at: http://www.ons.gov.uk/ons/publications/ [Accessed 6 Mar. 2015]. Price, C., & Buckner, L. (2006). Addressing Women's Poverty in Southwark: Local Labour Market Initiatives. Centre for Social Inclusion. . Read More