Management of Business Case Study
Case Study 1 – Harry goes it alone
Harry was really bored with his job as second chef in a top-of-the-market hotel. He was also tired of being ordered around by the manager and the head chef. He never liked taking orders and had always hoped to use his talents preparing food for customers in his own restaurant. The main problem was his lack of business experience. Harry had just been to a business conference with a friend of his and had been interested in the franchising exhibition there. One of the businesses offering to sell franchises was ‘Pizza Delight’. This firm sold a new type of pizza recipe to franchises and provided all ingredients, marketing support and help with staff training. They had already opened 100 restaurants in other countries and offered to sell new franchises for a one off payment of $100,000.
If Harry signed one of these franchising contracts then he would have to agree to:
Only buying materials from Pizza Delight,
Fitting out the restaurant in exactly the way the franchisor wanted,
An annual payment to Pizza Delight of a percentage of total turnover.
In addition, he would still need to obtain suitable premises and recruit and motivate staff. Pizza Delight claimed that their brand and products were so well known that ‘success was guaranteed’, according to their sales staff. As the product had been tested already, there would be none of the initial problems that small firms often experience and Pizza Delight would pay for national advertising campaigns. They assured Harry that no other Pizza Delight restaurant could open within 5 kilometers of one already operating. Harry was almost convinced that this was the business for him. He had inherited money from a relative. Several things still bothered him; for example, would it give him the independence he so much wanted?
Questions and Answers
1. Explain THREE potential benefits to Harry of opening a Pizza Delight restaurant. (6
Harry was really bored with his job as second chef in a top-of-the-market hotel. He was also tired of being ordered around by the manager and the head chef. He never liked taking orders and had always hoped to use his talents preparing food for customers in his own restaurant. The main problem was his lack of business experience. Harry had just been to a business conference with a friend of his and had been interested in the franchising exhibition there. One of the businesses offering to sell franchises was ‘Pizza Delight’. This firm sold a new type of pizza recipe to franchises and provided all ingredients, marketing support and help with staff training. They had already opened 100 restaurants in other countries and offered to sell new franchises for a one off payment of $100,000.
If Harry signed one of these franchising contracts then he would have to agree to:
Only buying materials from Pizza Delight,
Fitting out the restaurant in exactly the way the franchisor wanted,
An annual payment to Pizza Delight of a percentage of total turnover.
In addition, he would still need to obtain suitable premises and recruit and motivate staff. Pizza Delight claimed that their brand and products were so well known that ‘success was guaranteed’, according to their sales staff. As the product had been tested already, there would be none of the initial problems that small firms often experience and Pizza Delight would pay for national advertising campaigns. They assured Harry that no other Pizza Delight restaurant could open within 5 kilometers of one already operating. Harry was almost convinced that this was the business for him. He had inherited money from a relative. Several things still bothered him; for example, would it give him the independence he so much wanted?
Questions and Answers
1. Explain THREE potential benefits to Harry of opening a Pizza Delight restaurant. (6