Assalamualaikum..
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.
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.
Supplier
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.
Buyer
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.
Substitute
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.
Competitors
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.
