Boosting Joe's Coffee Shop Profits: Strategies for Success

School

Wilfrid Laurier University *

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Course

111

Subject

Management

Date

Apr 3, 2024

Type

Pages

Uploaded by DukeEmuMaster79

Ammar Atif 1. What is the immediate issue of the case? Joe is not seeing an increase in profits made although his business remains profitable. How can we help Joe in seeing an increase of profits made? 2. Look at Exhibit 1 of the case and identify three interesting insights about Joe’s that are relevant to the problem or the solution. Spends almost 90% of revenue on total expenses. Since 2013 profits have remained steady but not increasing. Compared to his industry, Joe has more direct expenses, but less marginal expenses, like advertising, and other expenses. 3. What are the models/concepts/theories that apply to analyze/explain the problem and/or develop a solution. SWOT analysis Strengths: - Good connection with loyal customers - Low inventory costs - Nice setting for the coffee shop Weaknesses: - No espresso or cappuccino sold - No baked goods sold - Lack of better customer service - Losing customers to nearby businesses (Starbucks & Bakery) Opportunities: - Espresso machines - Baked goods - Variety of flavours (Coffee) Threats: - Loss of regular customers - Bakery - Starbucks 4. What is the underlying issue? The number of customers coming into the shop and they’re spending costs. 5. What are the outcomes/objectives Joe is trying to achieve with his decision. Are there any good solutions that will satisfy the following objectives? Joe is trying to achieve an increase in his profits and customers although, his current decision making will not make it possible to see that growth but instead remain steady for now but see a decline in the future if he doesn’t make changes. For starters, the best solution to the problems we’ve talked about is expanding his menu.

Ammar Atif 6. What are the alternatives in this case? Are there any alternatives you can think of? Better advertising to reduce the cost of current advertising. If Joe is spending a hefty amount to advertise his shop and not seeing the results he wants to see, we need to see and reevaluate how he is approaching this. There are definitely better and cheaper methods to advertise. One example could be a poster right outside the store, introducing new items to the menu. 7. What assumptions, if any, are you making? - Joe is spending an unnecessary amount on the advertising approach and it’s not working. - His employees aren’t well trained in customer service 8. What solution do you recommend? What are the best, worst and expected outcomes of your recommendation? The solution I’d recommend is expansion to the menu. This includes buying an espresso machine, training the employees how to use it as well as delivering better customer service and adding baked goods to the menu. The best outcome from this is bringing in new customers and giving them a variety of choices since expansion was done to the menu. The worst outcome is if we don’t see an improvement in Joe’s profit from the expansion. The expected outcome is adhering to the customers needs and wants which is the most important thing Joe can do right now. 9. What could go wrong that would make your solution difficult to implement or not satisfactory? What would you do in that situation? If the quality and taste of the espresso is not up to the customers standards, the solution becomes more difficult to implement. In this situation if I knew how to make the quality of the drink perfect, I’d train the employees correctly in using the machine correctly. 10. What steps should Joe take immediately, in the short term and in the longer term to implement your recommendation? Immediately buy the espresso machine, get used to using it and find baked goods that customers would like and finally in the long term have a large variety of items that new customers would possibly enjoy. 11. How will your recommendation affect Joe’s financial performance? What items would you expect to change (and in what direction) as the result of implementing your solution? What other effects might your recommendation have on Joe’s Java? I think it will improve his financial performance. It would increase total revenues after the espresso machine has been bought and implemented into the menu. The increase in customers will create a better name for the business through all the popularity. Hopefully the end result we see here is better customer satisfaction and a big increase in Joe’s profits, slowly but surely.

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