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The Pudong. Coffee Shop. By Chasedream. Case analysis. Advice &strategy. Case overview. Forecast &valuation. Quality Control. content. By Chasedream. ●One of the 4 cities where coffee consumption is highly concentrated in ● open and changeable culture. - PowerPoint PPT Presentation
Citation preview
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Case overview
Case analysis
Forecast &valuation
content
Advice&strategy
Quality
Control
By Chasedream
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By Chasedream
Coffee shop
● in Pudong New Area
●Close to Century Park , several office buildings and a private business school
Case overview Introduction
Pudong●Emerged as China’s financial and commercial hub
● Rapid development
Shanghai
●One of the 4 cities where coffee consumption is highly concentrated in
● open and changeable culture
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Strengths
Opportunity
Weakness
Threats
1. Good Location2. Goodwill 3. Excellent Customer Service4. Knowing well about western culture5. Environmental friendly
1. Limited business experience2. Similar product3. High rental4. A loan to purchase new furniture and equipment5. Unskilled staff6. Inaccessible to customers’ complaints
1. Huge population with a low base2. Rapid growth 3. Shanghai’s development
1. Chinese traditional culture of drinking tea2. Competitors as the Italian-style restaurant and the ice cream café.3. Potential competitor like Starbucks and McCafe4. Financing methods limited
By Chasedream
Case analysis
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Profitability drops!
Gearing and liquidity also deteriorate!!
By Chasedream
Case analysis-Problem
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Deduct cost
Year 2009
Case analysis-Problem Solution
Increase revenue
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Improve purchasing frequency
Increase revenueIncrease retail1.
Hold parties2.
Others3.Pull single consumption
Case analysis-Problem Solution
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Improve purchasing frequency
Pull single consumption
1. Discount
2. Coupon
3. Membership system
1. Free Wi-Fi
2. DIY Service
3. Free food salon on trial
Case analysis-Problem Solution
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Supporting Data
Why Wi-Fi?
-Low cost but high return
-More café in industry provide it free
Why DIY?
-A new way of leisure
-Personalization
-Still profitable
Case analysis-Problem Solution
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PositionPromotion
Product
Package
Price
Place
6P Strategy
By Chasedream
Overall advice & strategy
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Position-Multi-cultural atmospherePrice -DiscountPlace - sell the self-made cakes in other coffee shops
Promotion -Coupons
-Free food salon on trial
-Membership policy
Add Your Add Your TitleTitle
Product -Providing diversified food
-Offering free Wi-Fi
Package -Take-away service
-Delivery service
By Chasedream
Overall advice & strategy
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Quality Control -- SERVQUAL
Tangibles Reliability Responsiveness Assurance Empathy
◆Modern coffee machine
◆Waiters’ uniform
◆Magazine available in waiting time
◆Punctual service time
◆Courteous and approachable staff
◆Individual care for specific requirement
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Pudong coffee shop
Dimension Weight Perceptions Expectations Gap
────────────────────────────────────────────────────────────────────
Tangibles
Reliability
Responsiveness
Assurance
Empathy
────────────────────────────────────────────────────────────────────
Weighted averages
Quality Management & Customer CareSERVQUAL control
SERVQUAOL Control
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forecasting & Scenario planning
Scenario PlanningScenario PlanningForecastingForecasting
Best, worst Risk Control Flexibility
Decision making
By Chasedream
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Summarised income Statement 2010 2009
Revenue (beverages/drinks) 524528 485000
Revenue (food sales ) 481268 445000
Total revenue (food and beverages) 1005795 930000
Cost of sales (458640) (420000)
Gross profit 547155 510000
Less Operating expenses: Depreciation of tangible assets (82000) (82000)
Wages and remuneration (135200) (130000)
Rental (200000) (200000)
Utilities (lighting and heating etc.) (49920) (48000)
Garbage collection (10400) (10000)
Advertising and promotions (31200) (30000)
Total operating expenses (508720) (500000)
Operating profit for year 38435 10000
Interest payable on loans (18370) (23710)
Profit (loss) for year 20065 (13710)
Summarised Balance Sheet (unaudited) 2010 2009
Goodwill 400000 400000
Furniture and fittings (net) 164000 246000
Inventories 48048 44000
Cash at bank 233431 198000
Total assets 845479 888000
Owner’s equity 438655 418590
Bank loan payable 180780 262410
Trade payables 226044 207000
Total liabilities and owner’s equity 845479 888000
Summarised cash Flow statement (unaudited) 2010 2009
Operating cash flow Operating profit (loss) for year 38435 10000
Add: depreciation 82000 82000
120435 92000
Changes in working capital: Less: Increase in inventories (4048) (6000)
Add: Increase in trade payables 19044 16000
135431 102000
Investing activities: Nil Nil
Financing activities: Repayment of loan including interest -100,000 -100,000
Overall cash flow (deficit) for year 35,431 2,000
Add: Opening bank balance 198,000 196,000
Equals: Closing bank balance 233,431 198,000
The coffee shop will witness improvement in The coffee shop will witness improvement in 2010. Both profitability and gearing recover.2010. Both profitability and gearing recover.
Forecast:
comparison of two years
ForecastingForecasting
Best, worst
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At break-even point, Total contribution = Fixed cost
2009 2010(forecast)
Customers per year 930,000/50 = 18,600 1,005,795/50*(1+3%) = 19530
Contribution per customer
(930,000-420,000)/18600= ￥ 27.41
(1,005,795-441,000)/19530= ￥ 28.92
BEP= fixed cost/contribution per customer
(500,000+23,710)/27.41= 19,100
(508,720+18,370)/28.92= 18,225.8
Forecast: break-even point
ForecastingForecasting
Best, worst
19100>18225.8
20116>1881418600<19100
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Ivory tower change: When change imposed from the top down, manager may out of touch with the operational reality
Obstacles: New initiatives may suffer from the resistance force of current process.
Possible unintended consequences caused by the changing program
---challenge the paradigm represented by Starbucks---breaking the routine is very useful---foster the culture of changing and facing challenge bravely---communications and monitoring are vital---the existing culture must be got across---all the staff have to be engaged in the changing process
How to solve?
Scenario PlanningScenario PlanningForecastingForecasting
Best, worst Risk Control Flexibility
Decision making
By Chasedream
Forecast:
Staff motivation disrupted: Working hours and intensity may increase
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Net asset valuation:Net asset=Total assets-Total liabilities=owner’s equity= ￥ 418,590
DCF-Discounted Cash FlowAssumption: constant profit
since 2010( ￥ 37,705)
Discounted rate:R=7%
NPV of future cash flow=37,705*(1+r)/r= ￥ 576,348
Valuation: Net asset or DCF
By Chasedream
Assume the loss he suffered in 2009 is an accident, which will probably not happen in the future again. And the loss in 2009 make it unstable to assure the cash flow. So we use The figure of 2009 for net asset valuation since it’s relatively actual and reliable.
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Tips: Social Responsibility
Representing good social
responsibility
Increasing awareness of environmental protection
among white-collars and students
Gain popularity and more customers
Shop owner’s eco-awareness
Recycled paper made menu;Non-smoking
The shop can also use plates and cups and even VIP cards made of eco-friendly materials!
By Chasedream
