Saturday, 20 December 2014

What have I learned this week : GLORIA JEANS COFFEE


What have I learned this week?

Today, I would like to share about our case study discussion in tutorial class for the past few weeks.
The cases study that has been discussed is GLORIA JEANS COFFEE. 

It was in the year 1979, Ed and Gloria Jean Kvetko first started Gloria Jean’s Coffee (GJC) in Chicago, the USA. A total of 25 years and 316 outlets worldwide later, Diedrich Coffee, the owner of GJC decided to sell the GJC franchise. Many offers were made, but the deal went to Saleh, GJC’s Master Franchisee in Australia. For a cool $16 million, Saleh managed to own the rights to all GJC worldwide minus 146 outlets in the USA and Puerto Rico. Where Dierich Coffee owns the rights to operate free of franchise royalty. In 2010, Dierich sold all of its rights and remaining 102 franchised outlets across 24 states in the USA to Saleh for additional $3.1 million, making Saleh as the owner of GJC franchise worldwide. GJC was ranks third globally among premium coffee brands.

Hence, madam was asked us to evaluate the food beverage industry in Malaysia and analyses their Porters 5 forces model.

Threat of new entrants
The level of threat of new entrant is high. It is very difficult to new entrant to enter into the industry; this is because there are a barrier for entering the industry which is money currency and also the government policy.

From the Gloria jean’s supplier perspective, it was in the high level. This is because the coffee suppliers have been globally supplied. The example of supplier are from Brazil and  Mexico. And the coffee shop not only has a supply from a coffee but then they also will need a supply from other items such as creamer, sugar, cup, and many more.

The level demand is high. This is because the demanded of coffee is wide and globally today. All stage of age has done liked to drink a coffee. Even it is cold or hot, it also can be ice cream and ice blended of coffee flavor. The focus of target usually student, graduates, masters student, corporate man, business man. Kippies are one with the target market of the buyer.

The level substitutes are high or moderate. There are not many substitutes that we can find for Gloria jean’s coffee and the substitute that we can find for the Gloria jean’s coffee are juices, ice cream, and soft drink.

The level of competitor for Gloria jean’s coffee is high. This is because the industry comes out with many brand of coffee, so the buyer does have many of choice. The competitors for Gloria Jeans Coffee are Starbuck, Old Town Coffee, San Francisso Coffee and also Kopitiams.  

In Malaysia, GJC has a low rate of number of outlets compared to other competitor.  So they may have a chance to open up other outlets. Franchising permits the company to grow with capital invested by individual franchise owner. In today marketplace, the window of opportunity for a new business closes concept very quickly. Franchising permits multiple units to be opened simultaneously, GJC need to open more outlets to gaining a foothold over their competitors. As additional locations are opened, name recognition increases. GJC need to increase their customer awareness towards their product. Customer usually feel more secured frequenting a business they recognize by name.

But it is good for GJC when they have their outlets in TESCO. TESCO has been offering excellent premises to GJC in all upcoming stores. This occasion will help GJC a lot in terms of they will gain an attention from the customers who did not buying their product. TESCO are one of the biggest Mall in Malaysia and have a lot of customer. From that, GJC can provide their product to that group of customer.   

But there are some few advantages and disadvantages of franchising. To help us determine if any franchising opportunity is right, we need to know the pros and cons of franchising.

As for the advantages, franchise business may have customer base and established brand which means the biggest advantages of buying an established franchise is the strength of the brand and loyalty of customer. Setting up a franchise also will have marketing support. Franchise will have support form national campaign and the material as well as prepared for a local campaign. The also will have a business support and the got network for that. Some of the expensive or better franchise is offering training in franchise operations which include a management and technical training. 

At the same time, franchising also has great disadvantages such as royalty payments. For as long as we are a franchisee, we will have to pay some percentages of the monthly gross back to the franchisor. It will reduce our profit total sum up.  The reputation of your franchise is only good as that of the franchisor, so any difficulties that the franchisor encounters will have a direct impact on you. Opening a franchise rather than starting our own business offers no guarantee of success. We still need to be a sharp business person to make it work.

That’s all. Wassalam.

currently I'm keeping an eye on one person, but I'm not a nutty as a fruitcake. saranghae.

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