Transcribed Image Text: people who did call were regular Eric customers who had some sort of crisis when he
was already busy. While these people agreed that Wendy's work was of the same quality
as Eric's they preferred Eric's "quality-care" image and they liked the fact that they had
an ongoing relationship with him.
Sometimes Wendy did get more work than she could handle. This happened during April
and May, when seasonal businesses were preparing for summer openings and owners
of summer rush occurred in September and October, as many of these places were being
closed for the winter; those customers often wanted help backing up computer files or
packing up computer equipment so they could take it with them. During these months,
Wendy was able to gross about $150 to $200 a day.
Towards the end of her discouraging first year in business, Wendy Woo is thinking about
quitting. While she hates to think about leaving Petoskey, she can't see any way of making
a living there with independent technology services business. Eric seems to dominate the
market, expect in the rush seasons and for people who need emergency help. And the
resort market is not growing very rapidly, so there is little hope of a big influx of new
businesses and homeowners to spur demand.
1. Evaluate Wendy Woo's strategy planning for her new business.
2. Why isn't she able to reach her objective of $70,000?
3. What should Wendy do now? Explain.
Transcribed Image Text: CASE NUMBER 4:
HOMETOWN TECH
Eric prides himself on quality work and been able to build up to good business with repeat
customers. Specializing in services to residential, small business, and professional
Wendy Woo is getting desperate about her new business. She's not sure she can make
offices, Eric has built a strong costumer franchise. For 20 years, Eric major source of new
a go of it-and she really wants to stay in her hometown of Petoskey; Michigan, a beautiful
business has been satisfied customers who tell friends or coworkers about his quality
summer resort area along the eastern shore of Lake Michigan. The area's permanent
service. He is highly regarded as a capable person who always treats clients fairly and
population of 10,000 more than triples in the summer months and doubles at times during
honestly. For examples, seasonal residents often give Eric the keys to their vacation
the winter skiing and snow-moiling season.
homes so that he can do upgrades or maintenance while they are away for months at a
Wendy spent four years in the Navy after college graduation, returning home in June
time. Eric's customers are so loyal, in fact that fix-A-Bug- a national computer service
2011. When she couldn't find a good job In the Petoskey area, she decided to go into
franchise-found it impossible to compete with him. Even price-cutting was not an effective
business for herself and set up Hometown Tech Wendy's plan was to work by herself and
weapon against Eric.
basically serve as a "for hire" computer consultant and troubleshooting for her customer.
From having worked with Eric, Wendy thought that she knew the computer service
She that many of the upscale summer residents relied on a home computer to keep in
business as well as he did; in fact, she had sometimes been able solve technical problems
touch with business dealing and friend at home, and it seemed that someone was always
that left him stumped. Wendy was anxious to reach her $70,000-per-year sales objectives
asking her for computer advice. She was optimistic that she could keep busy with a variety
because she thought this would provide her with a comfortable living in Petoskey. While
of on-site service-setting up a customer's new computer, creating a wireless network,
aware of opportunities to do computer consulting for large business, Wendy felt that the
correcting problems created by virus, and the like.
sales opportunities for her service were limited because many firms had their own
Wendy thought that her saving would allow her to start the business without borrowing
computer specialists or even IT departments. As Wendy saw it, her only attractive
any money. Her estimates of required expenditures were $7,000 for a used SUV; $1,125
opportunity was direct competitive with Eric.
for tools, diagnostic equipment, and reference book; $1,700 for a laptop computer,
To get started, Wendy spent $1,400 to advertise her business in the local newspaper and
software, and accessories: $350 for an initial supply of fitting and cables; and $500 for
on an Internet website. With this money she brought two large announcement ads and
insurance and other incidental expenses. This total $10,675 still left Wendy with about
52 weeks of daily ads in the classified section, listed under "Miscellaneous Residential
$5,000 in savings to cover living expenses while getting started.
and Business Service." The website simply listed business in the Petoskey area and gave
Wendy chose the technology services business because of her previous work
a telephone number, e-mail address, and brief description. She also listed her business
experience. She worked at the computer "help deck" in college and spent her last year
under "Computer Service" at Craigslist for Northern Michigan-updating this notice and
in the Navy troubleshooting computer network problems. In addition, from the time Wendy
information once a month. She also built small website with just a basic home page, a
was 16 years old until she finished college, she had also worked during the summer for
page with her picture and experience, and a third page that list services she offers. She
Eric Steele. Eric operates only successful computer Services Company in Petoskey.
has thought about creating a Facebook page and blog, but hasn't done that yet. She put
(There was one other local computer store that also did some on-location service work
magnetic sign boards on her SUV and waited to take off.
when the costumer bought equipment in the store, but that store recently went out of
Wendy had a few customers, but much of the time she wasn't busy and she was able to
business.)
gross only about $200 a week. Of course, she had expected much more. Many of the