The Broadway Café Case Study

August 1, 2010

Information Systems for Decision-Making - CIS500

Final Project Part 1&2 - The Broadway Café

Introduction

The Broadway Café is a family inherited coffee shop located in Jacksonville, FL. The business specializes in coffees, teas, a full service bakery, and homemade sandwiches, soups, and salads. It was once a hotspot for many years but for the past five years the business has been declining. Although Mr. Russell had conducted a good business in his time, it appears as though new and improves methods needed to be in place to keep the business thriving. Mr. Russell had acquired a wealth of knowledge about the coffee business and unfortunately before he passed way he was unable to share the information with us (his heir/successor).

His system for record keeping consisted of a note pad that tracked inventory along with payroll and coupons. His advertising plan was by word-of-mouth only and since he had an exceptional memory, he never recorded any family recipes or made a client list. In order to bring the Café into the 21 Century, quite a few changes need to be made. The business needs to gain a competitive advantage though technology, deploy a wireless network for customers.

Competitive Advantage

A competitive advantage is product or service that an organization's customers place a greater value on than similar offerings from a competitor...These advantages are usually temporary because they are often duplicated by a competitor which in turn creates a perpetual cycle of improvement strategies (Baltzan & Phillips, 2007).

Business that are developing strategies for improvements, must review their options before making quick snap decisions (Baltzan & Phillips, 2007). Techniques to consider would be environmental scanning, first-movers advantage, and Michael Porter's Five Forces Model (Baltzan & Phillips, 2007).

Currently the Broadway Café is the only coffee shop in the area. Recently employees have heard rumors that a Starbucks plans to move in the area. In order to improve business and create a competitive advantage we first must research the competition through environment scanning (Baltzan & Phillips, 2007). Environmental scanning is the acquisition and analysis of events and trends in the environment external to an organization (Baltzan & Phillips). After reviewing the website of 2 competitors, Starbucks.com (2007) and Panera.com (2007), it appears as though these businesses are technologically advanced. Therefore the first step this Café needs to make is to install computer to provide accurate record keeping and store information. We need to develop a plan for employees that creates an environment of respect and dignity which also leads by example and gives back to the community (Starbucks, 2007). We need to develop a menu, create weekly and holiday specials, and offer samples of baked goods or small coffees with a purchase to stimulate customer loyalty (Panera Bread, 2007). Offering the customer a reason to come back with free samples is good business a practice (Panera Bread, 2007).

Scanning the environment to determine that market provides us with a wealth of information. With this information we are able to develop Michael Porter's Five Forces Model to establish a competitive plan.

The Broadway Cafés buyer power would be considered high since its business has been declining over the past 5 years. If another coffee shop does move into the area it will create an even more competition while driving buyer's power higher for customers. To reduce buyer power the Café must make its self more attractive for customers to buy from it instead of its competition (Baltzan & Phillips, 2007). One of the best ways to increase customer loyalty is to offer customers rewards (Baltzan & Phillips, 2007). The Café is considering mincing what its competitors are doing by offering customer free samples and coupons for retuning customers.

At this point the Cafés supplier's power is low because there are a variety of vendors that it uses to purchase supplies from to run the business. The Café will always constantly search for the finest quality at its lowest cost. One source that will be constantly used to obtain supplies from vendors would be the internet based service for the business-to-business marketplace (Baltzan & Phillips, 2007). The B2B is where buyers and sellers come together for private exchanges and well as reverse auctions (Baltzan & Phillips, 2007).

The threat of substitute products or services is high in the coffee shop business because of the various competitors. The Café can reduce its threat of substitution by implementing switching costs. Switching costs are cost that can make customers reluctant to switch to another product or service (Baltzan & Phillips, 2007). The Café can implement switching costs by providing all customers with a savings card that calculates point towards a free purchase that can be redeemed at anytime.

The threat of new entrants is high since pretty much everyone sells coffee nowadays (Baltzan & Phillips, 2007). Every restaurant and fast food chain that has a breakfast menu serves coffee. The market is flooded to merchants ready to meet the demands of customers. The pressure falls more on existing businesses to staying a float and meeting the demands of the customer since new businesses are entering with fresh eyes and first to market ideas to boost sales.

Rivalry among existing competitors is considered to be high when competition is fierce in a marketplace and low when competition is complacent (Baltzan & Phillips, 2007). In the coffee industry rivalry among existing competition is high. As stated earlier everyone sells coffee. Therefore everyone is trying to impact business by developing a first-mover advantage (which occurs when a business can significantly impact its market share by being first to market with a competitive