Reading Beans

Strategic Management

Reading Beans
Bookstore Cafe

Reading Beans

Company Overview

As our world becomes more complex, crowded and antagonistic, it becomes important for us as a nation, of people with diverse interests and backgrounds, to gather, recognize our common humanity and communicate with one another. We need a place where we can be relaxed and reflect on our past and strategize for our future. Reading Beans, Bookstore Cafe, is that place! We take our inspiration from the American culture of bookstore cafes. We aim to be a place for Lahores youth to meet and exchange books and ideas. We proudly carry books by local poets, authors and host open and featured readings and shows by local artists. We're also interested in encouraging younger readers and writers and plan to host events for children. Traditionally Lahore has been rich in art and literature. We look forward to developing a schedule of events and a network of services that will add new dimension to the city's arts and literary scene. Reading Beans is not another bookstore in town. It is also a library, a place for focus group discussions, a hub for social interaction, an internet caf and also a coffee house. This bookstore cum coffee house is a relatively new concept in Pakistan and we are in dire need of such outlets where we can go to unwind ourselves with a great cup of coffee and an interesting book. One reason why our libraries are found deserted is because students find it monotonous and dry. This new bookstore will bring in a fresh air for people of varied interests and will help them rekindle their passion for reading and also improve their public and social skills. Reading Beans Bookstore Cafe in Defense, Z block, Lahore is the first step in a network of cafes in Lahore which will bring new definitions to our idea of community. Rather than simply catering to the taste buds of people, we will seek to utilize and define avenues by which every individual will benefit. Through completely new concepts and designs in customer services we will seek to address the growing need of public enlightenment in

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Lahore and eventually Pakistan. Reading Beans Bookstore Cafe aims to encourage the youth of Pakistan to take up reading besides giving them quality and hygienic food variety to eat.

Company Vision
To introduce a new concept of bookstore cafes in Pakistan, promoting education in a unique way.

Mission Statement
Reading Beans - Bookstore Caf is a relatively new concept in the market but it plans to expand nationwide through completely new concepts and designs in customer services. We will seek to address the growing need of public enlightenment. We aim to encourage the youth of Pakistan to take up reading besides giving them quality and hygienic food to eat. Our employees are like family and we will give the same warm welcome to anyone who steps into our premises. Through excellent customer service, repeated sales and quality food we aim to be a favorite place for everyone in town.

Reading Beans EXTERNAL ASSESSMENT

The industry is segmented into general, college, and specialty bookstores. General bookstores account for over 60 percent of sales and college bookstores for 30 percent. General bookstores sell mostly "trade" books (fiction, nonfiction, adult, childrens). Whereas college bookstores, mostly textbooks; and specialty bookstores, mostly religious books. Bookstores may also sell music, DVDs, magazines, and gifts. Bookstore retailing includes national and regional chains and independent local bookstores. The dominant chains have superstores that can exceed 20,000 square feet, and usually anchor large strip malls in high traffic areas. The big players in the industry are Readings and Variety bookstore.

Industrial Organizational View

Based on Michael Porters I/O View, the industry has been chosen with careful consideration as 20% of the profitability will be determined by external factors owing to the industry it is operating in. the bookshop industry in Pakistan lacks innovation and expertise to able to compete on a global level. The libraries are monotonous and deserted thus Reading Beans aims to provide an experienced based differentiation to get a competitive advantage in the industry. The key external factors thus are listed below.

PESTEL Framework
The key external factors that influence the Reading Beans are as follows; Political Political factors are not going to influence the business as such this is because it is not a government owned or subsidies business. However, changes in tax rates, patent laws, and lobbying activities along with electricity shortages, fuel cuts and terrorist threats can affect the operations of the business. Economic There is a general rise in affordability of the consumers who are now more willing to pay a premium price to get a positive customer experience. The consumption patterns of the target market have changed as to include a higher proportion being spent on socializing activities

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thus the coffee shop will be a good investment. However, the rising inflation rates, taxes and unemployment pose significant threat to the new business of bookstore caf. Social The market mostly caters to the youth and that is also the target market of our business. The market is segmented into students, socialites and people who work within the vicinity. Consumers in this market are motivated toward going to the same cafes to eat and they do not try new places until it is something that is totally innovative. It is seen among youngsters not only in this particular marketplace but also throughout Lahore that they are dissatisfied with the degree of social and intellectual interaction among people of similar interests. There are many places where they can go and eat but somehow libraries are deserted because they find them dull and boring. They want a place where they can work on their projects, write papers, consult popular literature and not get distracted by heavy music or loud chatters. They would not have to leave their work to eat because they are being offered healthy snacks in the same place where they get a comfortable environment to work. Technological Standards set in the American bookstore cafes in terms of the technological advancements are challenging for a country as technologically laggard as Pakistan. We will need PDAs to connect the retail outlet with the inventory house and Automatic Identification Systems to aid efficient inventory control. Efficient database will have to be created to facilitate direct marketing and security systems will have to be installed to prevent shoplifting. Environmental One of our strategic goals is to create an increased awareness of environmental protection amongst the youth of the country. Reading Beans will have to invest in public relations activities and environmentally friendly process and product designs to maintain its corporate social responsibility and to promote its mission and vision. However, a lack of awareness in this regard is a challenge Reading Beans will have to face. Legal The North American Industry Classification System (NAICS) is the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting,

Reading Beans
analyzing, and publishing statistical data. Our NAIC code is 451211 and conformance to these standards is going to be mandatory. We will further operate under ethical working practices conforming to the working hours, minimum wages and employee discrimination

laws. We will have an equal ratio of male and females in the workforce. This equality will be established throughout the recruitment process.

Marketplace Analysis
Reading Beans will be operating in Defence, Lahore. It will be located in phase II, DHA, near Lalik chowk. The marketplace is the hub for social interaction as there are many popular outlets for youth to interact. These places include Hot Spot, Hobnob, Gelato and Jamin n java. There is also a bookstore called, English bookstore in the vicinity. It is basically a fast growing marketplace but there is no place where intellectuals can go and work. College students who want to work on their group assignments and projects find cafes to distracting and libraries too restricting. There has to be a place where they can indulge in group discussions and also fancy a cup of coffee or something to eat. Mostly people from 15 onwards are usually found in this marketplace and both genders equally find this vicinity attractive. It is seen that new places do not work very well in this marketplace as the consumers are really loyal to the old outlets. Our business would be a risk as it is a new thing in the market as well as the industry. Either it could be a success or the plan could backfire. However, the trends and marketplace analysis decide in the favor of the success of this business because people are in dire need of such outlets in Lahore.

Competitive Analysis; Five Forces Model

Competitive Rivalry Our potential consumers are the youth and basically anyone who fancies a good book with a rejuvenating cup of tea or coffee. Our direct competitors will be Readings and Variety bookstores in Gulberg, Lahore. Indirect competitors would be any bookstore in town. The direct competitors Readings and Variety do have a caf in their premises but it has not earned the reputation of a bookstore caf as they do not operate simultaneously. The bookstore is separate and the caf is separate. It is more like a bookstore that also has a

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canteen. Reading Beans is offering a bookstore and a caf that co-exist which is not being offered by anyone in the market yet. The pricing of the books and eatables would be

reasonable as the target market is youth and students and they usually have a limited budget. Our pricing strategy would be a penetration pricing as we are new entrants in the market so the prices will be kept low by minimizing costs. There is no business in town that provides exactly the same products and services as Reading Beans. Variety and Readings have a separate bookstore and separately operating cafeteria. Potential Entry of New Competitors One of the risks Reading Beans faces is the amalgamation of cafeteria and bookstore by the rivals. However, it will incur fixed costs and may result in short term losses because Reading Beans will be benefiting from economies of scale, reputation of a pioneering firm, large capital requirements and technological knowhow of Reading Beans trained personnel. Despite that Reading Beans will have to monitor the potential entry of new competitors. Potential Development of Substitute Products In this case substitute products could be normal cafes located in the same vicinity and libraries including the DHA library, LUMS library and the most risky substitute which is the internet. If Reading Beans fails to deliver the premium customer service along with exceptional consumer experience, consumers may just switch to the internet. Bargaining Power of Suppliers Large retail chains like Reading Beans are more able to get good bargain deals with their suppliers as they have control which they can exert as compared to small chains. The suppliers also have an incentive as they face competition from overseas suppliers. Thus because of this the power to influence the profit margins has reduced and retailers including Reading Beans may face a reduction in profit margins. Bargaining Power of Consumers Bargaining power of consumers is higher as they can easily switch to rivals especially the internet. However, Reading Beans will provide diversified food and non food services to

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increase the product availability for such customers. This results in higher sales and profits for the company.

External Factor Evaluation (EFE) Matrix

Weighted Score 0.4

Opportunities 1. Innovation with creativity at Reading beans 2. Changing trends from Monotonous and deserted libraries 3. A huge untapped market segment 4. Changing consumption patterns of Target Market Segment 5. Youth as a huge opportunity 6. Changing technological patterns and its use among the people we are catering to provides us an opportunity to grow further on technological basis and install latest Hi-Tech equipments to support our databases. Threats 1. Development of substitute products from DHA Library, LUMS Library, Variety and Readings can backfire our whole project. 2. Local cafs can always introduce the library concept where they have more recognition among the youth. 3. Changes in tax rates, patent laws, and lobbying activities along with electricity shortages, fuel cuts and terrorist threats can affect the operations of the business. 4. The rising inflation rates, taxes and unemployment pose significant threat to the new business of bookstore caf. 5. Low level of interest among the youth related to libraries can have a drastic impact on the perception of Reading beans. 6. The existing cafs have good terms with their suppliers and better bargaining power is another major threat for Reading Beans. Total

Weights 0.1

Ratings 4

0.06 0.1 0.04 0.06

3 4 2 2

0.18 0.4 0.08 0.12

0.1

0.3

0.1

0.4

0.1

0.3

0.08

0.16

0.06

0.06

0.1

0.3

0.1 1

0.2 2.9

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In the external factor evaluation matrix, Reading Beans is analyzed on the basis of the Opportunities and Threats it is facing. Weights and Ratings are allotted to the respective opportunities and threats according to their level of importance. Thus a weighted score is calculated by multiplying the weights and ratings. The total weighted score comes out to be 2.9 which is above the mean level of 2.5. This shows that Reading Beans is effectively utilizing its opportunities and minimizing the threats it is facing. Moreover it has a chance to improve further with tapping to their opportunities in a much better way.

Competitive Profile Matrix

Variety Books Reading Books

Other Places Score 0.6 0.6 0.15 0.6 0.15 0.2 0.2 0.05 0.1 2.65 Rating 3 4 4 4 4 2 4 2 1 Score 0.6 0.6 0.1 0.8 0.05 0.2 0.2 0.1 0.1 2.75

Critical success factors Price Competitiveness Availability of snacks Product Quality Hot Kitchen Customer Loyalty Financial position Customer Experience Organization Structure Expansion Total

Weight 0.2 0.2 0.1 0.1 0.2 0.1 0.2 0.1 0.1 1.00

Rating 3 2 4 4 4 4 2 3 4

Score 0.8 0.15 0.2 0.2 0.2 0.3 0.4 0.15 0.4 2.8

Rating 3 2 3 2 2 2 2 1 1

The CPM matrix shows that Reading Beans should have the most competitive pricing and must provide excellent customer experience in order for other places to tap all the sales which include nearby cafes like Gloria Jeans, Hotspot, Hobnob etc.

Reading Beans INTERNAL ASSESMENT

Evaluation for external factors is imperative but not sufficient. Thus internal factors hold equal relevance and importance in determining the success or failure of an organization. Firms need to conduct and internal audit to direct their resources and core competencies towards the most successful strategy formulation.

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The Resource Based View (RBV)

The RBV perspective stipulates that internal factors are more important to attain a competitive advantage in the industry the business operates in. the internal resources which are most important to achieve this success and exploit the opportunities are the physical resources, human resources and organizational resources. The resource thus should be valuable. This can be explained by the empirical indicators which state that resources should be rare, hard to imitate and not easily substitutable. Reading Beans concept is unique and bookstore industry until now has not experienced such a breakthrough which incorporates the lifestyles of its target market.

Customer Analysis
The market mostly caters to the youth and that is also the target market of our business. The market is segmented into students, socialites and people who work within the vicinity. Consumers in this market are motivated toward going to the same cafes to eat and they do not try new places until it is something that is totally innovative. It is seen among youngsters not only in this particular marketplace but also throughout Lahore that they are dissatisfied with the degree of social and intellectual interaction among people of similar interests. There are many places where they can go and eat but somehow libraries are deserted because they find them dull and boring. They want a place where they can work on their projects, write papers, consult popular literature and not get distracted by heavy music or loud chatters. They would not have to leave their work to eat because they are being offered healthy snacks in the same place where they get a comfortable environment to work.

Reading Beans
Cultural Analysis

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The Johnson Scholes model of cultural web depicts the importance of organizations culture in successful implementation of strategies. Every organization has a certain pattern of work environment, which is termed as paradigm and includes the following components; Paradigm: The core vision of Reading Beans which makes up its values is the community partnership. Its organizational framework has inculcated the core values to the entire organization from suppliers to employees and customers. Routines and Rituals: A big emphasis is being placed on extensive research into the quality and integrity of our products. They will constantly be tested for our own high standards of freshness and purity. Food costs and inventory control will be handled by our computer system and checked daily by management. New books would be regularly added to our collection and the stock would b Food will be made mostly to order and stored in large coolers in the basement. The key food suppliers for the business will range from the local grocery stores to wholesale markets. Also, the hard-to-find-in-local-market products and ingredients are imported directly from countries they most and best available in. We will ensure that our business selects the supplier that provides us a store credit, has exceptional delivery times, and has the best overall prices kept in check. Ceremonial: Weekly and monthly events that will be held will include: Book launches-Ocassional Poetry readings/performances on stage(music)- weekly Painting competitions Talks by literary figures 1 special meal at dinner everyday Documentaries

Reading Beans
Symbols:

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Apart from the logo and the slogan, the high quality of customer service and the concept of offering a caf in a bookstore is a symbol of its concern for community and customer tastes. It is a producer of high quality goods and pioneer, which is a symbol of its superiority Power structures: This is the board which has the greatest amount of influence on decisions, operations, and strategic direction. Also, the customers also have an impact on their decision making. Control systems: The control systems and measurements monitor the most important aspects and activities of the organization. The North American Industry Classification System (NAICS) is an example. Also, food standards will constantly be tested for our own high standards of freshness and purity. Food costs and inventory control will be handled by our computer system and checked daily by management. New books would be regularly added to our collection and the stock would be kept in check. Stories: The buzz marketing will be a successful story created by Reading Beans. The stories include press releases and informal conversations between employees.

MANAGEMENT
In order to carry out an internal audit it is integral to understand the organizational structure of Reading Beans. The Management is described as below

Organization
The form of business for Reading Beans would be general partnership where all the five partners would contribute money, labor, and/or skill to the business. Each partner would have equal rights to the profit/loss and the management of the business. Risk involved in the business would also be shared by the partners.

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Being a general partnership no lengthy procedures of filing the papers with the government would be needed; the partners would only have to draft a general partnership agreement. Furthermore each partner would have unlimited liability. Partners would have more legal and financial liability in case of liquidation, if the business fails.

Organizational Chart:

General Manager

HR manager

Operations Manager

Marketing Manager

Finance Manager

Bookstore Supervisor

Cafe Supervisor

Event Manager

Accountant

Management Team:
The partners of the business would be the board of directors as well. The primary responsibility of the board of directors would be to protect the assets and ensure that the business receives a decent return on investment. Since it would be an SME, the founders of the company would also be its key managers. President Duties and responsibilities 1. Develop a strategic plan to advance the company's mission and objectives and to promote revenue, profitability, and growth as an organization. 2. Oversee company operations to insure production efficiency, quality, service, and cost-effective management of resources.

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3. Plan, develop, and implement strategies for generating resources and/or revenues for the company. 4. Identify acquisition and merger opportunities and direct implementation activities. 5. Approve company operational procedures, policies, and standards. 6. Review activity reports and financial statements to determine progress and status in attaining objectives and revise objectives and plans in accordance with current conditions. 7. Evaluate performance of executives for compliance with established policies and objectives of the company and contributions in attaining objectives. 8. Promote the company through written articles and personal appearances at conferences and on radio and TV. 9. Represent the company at legislative sessions, committee meetings, and at formal functions. 10. Promote the company to local, regional, national, and international constituencies Vice President 1. Direct and coordinate company financial planning and budget management functions. 2. Recommend benchmarks for measuring the financial and operating performance of divisions and departments. 3. Monitor and analyze monthly operating results against budget. 4. Direct and coordinate debt financing and debt service payments with external agencies. 5. Oversee daily operations of the finance department. 6. Manage the preparation of the official annual report of actual revenues, transfers, and expenses. 7. Manage the preparation of financial outlooks and financial forecasts. 8. Prepare financial analysis for contract negotiations and product investment decisions. 9. Ensure compliance with local, state, and federal budgetary reporting requirements. 10. Work with department managers and corporate staff to develop five year and ten year business plans for the company. 11. Establish and implement short- and long-range departmental goals, objectives, policies, and operating procedures.

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12. Design, establish, and maintain an organizational structure and staffing to effectively accomplish the department's goals and objectives. 13. Serve on planning and policy-making committees. 14. Serve as primary legislative liaison relative to company financial issues. 15. Oversee financial management of foreign operations to include developing financial and budget policies and procedures. 16. Direct financial audits and provide recommendations for procedural improvements. 17. Other duties as assigned. HR manager
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Recruitment Hiring Training Coaching Organizational Development Salary and Benefits Policy Recommendation Team Building Leadership Employee Relations

Marketing manager Marketing Managers work within the Marketing Department of a company. They are responsible for establish and developing distribution networks for the companys product lines. Marketing managers are responsible for quality services provided to all customers by marketing staffs. Marketing managers initiate market research studies or surveys and is responsible for analyzing and advising toward new and better products, packaging and delivery of products. Marketing Managers direct and evaluate ongoing marketing strategies, which allow for sales departments to provide better and more saleable products.

Reading Beans
Finance manager

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A finance manager is an individual who is responsible for all financial related matters in an organization. Aside from that he is also the one who prepares all the administrative staffs salary. He also ensures that all clerical activities in the organization are well to date. The finance manager takes pre-requisites records of all materials relating to finance with proper care. He oversees the promotional activities of staff. The finance manager ensures that workers who are due for training receive it. Operations manager
1. 2.

Ensuring a products quality during the production process. One of the major responsibilities of an operations manager is to maintain the smooth operation in the workplace. Operations manager should inspect the workplace to check if there are problems in the workplace to avoid further accidents.

3.

Managing the equipments and machineries for technical problems must be done by an operations manager. To maintain an employees productivity is also the duty of an operations manager.

4.

Future Addition to the team We plan to add assistant managers under each key manager when our business grows.

Reading Beans
Internal Factor Evaluation (IFE)

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Strengths 1. 2. 3. Market leader in a bookstore Caf. Technologically equipped Huge Database of books which no other book store

Weights 0.1 0.08 0.08 0.1 0.04 0.02 0.06 0.04

Ratings 4 3 3 4 2 1 2 3

Weighted Score 0.4 0.24 0.24 0.4 0.08 0.02 0.12 0.12

has in town 4. 5. 6. 7. 8. No direct Competition Research and Development Exceptional Inventory control Systems A complete hierarchical organizational structure. Our Product quality and Prices.

9.

Ambiance and Environment that enhances the

intellectual abilities.

0.06

0.12

Weakness 1. 2. Lack proper suppliers Bargaining power of customers for a newly formed 0.08 0.1 0.04 0.1 0.1 1 2 2 1 2 2 0.16 0.2 0.04 0.2 0.2 2.54

caf would be higher 3. 4. 5. Lack structural support High Costs of entering the market HR Skills and training.

Total

In this Internal Factor Evaluation Matrix; internal strengths and weakness of Reading Beans have been compared. In this matrix Strengths and Weaknesses of the company have been allotted weights and ratings and a weighted score has been calculated in the end. Weights and ratings are allotted on the basis of the order of importance. Thus 4 represent higher importance and 1 low importance. Moreover weaknesses have been allotted ratings of 1 and

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2, where 2 represents major weakness and 1 minor. A total weighted average score of 2.54 is calculated which is slightly above the mean weighted score. Thus shows that Reading Beans is strong enough to cover its weaknesses and effectively utilizing its strengths. Though there can be more improvement in overcoming its weaknesses. Value Chain Analysis In order to gain significant insight into the activities Reading Beans uses to create value for its customers. This further scrutinizes any progress that has been made by the company to achieve its strategic aims and objectives. Primary activities that are carried out to physically create the product include inbound logistics, operations management, outbound logistics, marketing and sales and services. Reading Beans tries to achieve considerable success in these activities through its cost cutting and IT facilitation structures which have enable it to make subtatnital profit. Whereas the support activities it has greatly invested in are the infrastructure, procurement, human resource management, technology development and supply chain management. Based on the above framework, the following strategies will be formulated;

Pricing Strategy
The pricing strategy used is penetration pricing as it is a new business and to enter a new market, it has to lower its prices to attract potential customers. Readings, a direct competitor has reasonable low-cost pricing strategy as well whereas Variety bookstore has a somewhat higher pricing than others. But Readings is in Gulberg and it does not even have enough room to cater to large number of customers so a new place with more facilities such as ours would be a breath of fresh air for customers in need and they will gladly accept our price.

Distribution Strategy
The marketing of Reading Beans follows the traditional channels of distribution. Enhance customer relationships and overall experience within the premises. Inform patrons of specials and discounts in a very specific, opt-in manner with location focused mobile marketing. Meal specials and frequent customer loyalty programs Information about new menu items and seasonal/holiday changes

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Happy hour specials Discounts for return visits Information about upcoming entertainment/events at venue Customer opinion surveys on food, service, ambience

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Social venues are the perfect opportunity to distribute a marketing message across a captive, hip, and viral base of consumers.

Advertising and Promotion

Reading Beans is an innovative idea; even though this works as a competitive advantage for us but since its a new idea our target market needs to be informed about the company through various attentions grabbing means. We have used to major forms of advertising namely television commercial and billboards. The actors used for our TVC are basically young college and university going people and this portrays our target market. Since we are targeting the youth the channels used to air our TVC should be in accordance with it hence we chose AAG, GEO, HUM and Oxygen as the Pakistani youth majorly watches these channels. The time to air the commercial would best be from six to nine pm as the youth spends these hours as their free hours. The commercial would also play at other times but less frequently. Furthermore our ad is attention grabbing due to the vibrant voice over and the unique concept that shows the current dilemma faced by the Pakistani youth when choosing a place to read/ study outside their homes. We chose billboards as the second form of advertising as billboards attract attention quickly of any passerby and furthermore it would be available around the clock hence reminding the target market repeatedly of our service. The major point we had to focus on was deciding on the locations to place these billboards on. Since the students we are targeting belong to higher income group families, we would be placing the billboards in locations like DHA and Gulberg.

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Sales Strategy

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Our sales promotion would include student discounts; we would offer a 20 percent discount to student of LSE LUMS and FAST. We would also have a special point system for our frequent customers on which they would get discounts on books and a free snack after every few points. A quarterly membership for Rs 5000 would also be offered and it would entitle them to 25% discount on purchases. Direct Mail Our direct mail category would be a vital one as we value customer satisfaction very highly. We would have subscription packages available through mail and via the internet. The packages would be monthly renewable and would inform customers about the latest offerings including new menu items, new books and CDs as well as about latest events being held at Reading Beans. Public Relations Public relation is a form of promotion which aims at creating a favorable public image. This we have done by bringing in a unique idea which is one of its kinds in Pakistan. Our uniqueness is a major factor which would attract consumers and thus create a favorable image in their mind. The uniqueness of our caf would earn press coverage itself and magazines would be shown listing it in the latest place to hang out in. Furthermore we also plan to invite local poets and writers for discussions occasionally which would further create a more favorable image in the mind of our target market. Communication Model AIDA Attention InterestDesireAction Attention For a new product or service like ours the foremost goal of the company should be to attract the attention of the consumers. This we would be doing through the promotion mix mentioned above.

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Interest

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Once the attention of the target market is attained the next step would be to hold or maintain the interest of the consumers to continue visiting Reading Beans. This would be done by telling about the different benefits offered such as our events, which are: Desire The third stage focuses on how we can make Reading Beans desirable in the eye of the consumers this would be done mainly by our customer service department. Action The last stage is the purchase action; as long as we are able to communicate our strategy to the target market purchases would be made. Book launches-Occasional Poetry readings/performances on stage(music)- weekly Painting competitions Talks by literary figures 1 special meal at dinner everyday Documentaries

Operations
Facilities & Offices The lounge is a 6000 Square foot space. It was formerly a restaurant and needs minor structural modifications. The licenses and codes' issues are all in order. New equipment and furnishings will be purchased and installed by the general contractor. Hours of Operation The restaurant will be open 7 days a week. Service will begin at 10:00 AM and end at 10:00 PM. Employee Training & Education Employees will be trained not only in their specific operational duties but in the philosophy and applications of our concept. They will receive extensive information from the chef and be

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kept informed of the latest information on healthy eating. Wait staff will be qualified and always be under the supervision of a manager. Systems & Controls A big emphasis is being placed on extensive research into the quality and integrity of our

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products. They will constantly be tested for our own high standards of freshness and purity. Food costs and inventory control will be handled by our computer system and checked daily by management. New books would be regularly added to our collection and the stock would be kept in check. Food Production Most food will be prepared on the premises. The kitchen will be designed for high standards of sanitary efficiency and cleaned daily. Food will be made mostly to order and stored in large coolers in the basement. The key food suppliers for the business will range from the local grocery stores to wholesale markets. Also, the hard-to-find-in-local-market products and ingredients are imported directly from countries they most and best available in. We will ensure that our business selects the supplier that provides us a store credit, has exceptional delivery times, and has the best overall prices. We will get the book store supplies from Office Max or Staples. The rest of the kitchen and book store supplies (pots, pans, cooking utensils, books, book racks, latest multimedia systems, and HD monitors) will be bought from locally authorized agencies. We will provide ongoing training programs to assist with customer service and quality control. The training will include preparation of menu items, quality and food portion control, beverage and inventory management, using the software, cleanliness, and organization and sanitation standards, managing book racks, basic accounting, marketing and public relations. The business will need to get all the kitchen hardware as well as book store appliances needed to run the caf cum bookstore; this includes stoves, refrigerators, freezers, microwaves, deep fryers, sofas, book racks and many other items. Man Power Requirements A combination of highly skilled workers and skilled workers will be required along with some unskilled workers as well.

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FINANCIAL STATEMENTS
Balance Sheet for the Year Ended 31st July 2012 Year 1 Assets Cash Inventory furniture & fixture Equipment patents, copyrights other assets Total Assets Liabilities salaries payable accounts payable taxes payable rent payable current borrowings utility bills payable long term liabilities 100000 90000 90000 540,000 40000 60000 200000 1,120,000 Equity paid in capital Earnings Total Liabilities and Equity 11000000 0 12,120,000 500000 1840000 2,540,000 6000000 40000 1200000 12,120,000

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Reading Beans
PRO-FROMA INCOME STATEMENT Revenues Net Sales Cost of Goods Sold Total Cost of Goods Sold Net Profit (loss) Operating Expenses 439230 4701750 Year 1 5140980

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Salaries and wages Advertising Depreciation Rent Utility Bills Other Total Selling Expenses

63000 100000 80000 944463 68000 20000 1275463

Earnings before Interest & Tax Tax Net income

3426287 873967 2552320

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Cash Flows Statement Year 1 Cash inflows Collection from books Collection from caf Total cash inflows Cash outflows Salaries Advertising Utility bills Total cash outflows Difference of total inflows to Total outflows Less minimum cash balance Excess / shortage of cash

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3,511,401 1629579.12 5,140,980

63000 100000 68000 231000 4,909,980

500000 4,409,980

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Ratio Analysis:
Liquidity Ratios Current Ratio Quick Ratio Leverage Ratios Debt to Asset Ratio Debt to Equity Ratio Long-Term Debt to Equity Ratio Activity Ratios Inventory Turnover Total Asset Turnover Profitablity Ratios Gross Profit Margin Net Profit Margin Return on Assets Return on Equity 0.914563 0.496466 0.210587 0.232029 2.794011 0.424173 0.018182 0.092409 0.101818 2.543478 0.543478

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Liquidity Ratios: The liquidity ratios we are going to use are current ratio and quick ratio. The Liquidity ratios show the position of the company to meet its short-term obligations. When it comes to current ratio, it shows that how many current assets are there to support the current liabilities of the firm. By looking at Reading Beans current ratio of 2.54 shows that the company is currently in good financial health. For every one dollar liability we have 2 dollar worth of assets. The company is capable of paying off its liabilities. We have a quick ratio of 0.54 which means that the companys ability to pay off its short term obligations with its most liquid assets is not very good because the inventories are more. Ideally the quick ratio should be more than 1. Leverage Ratios Debt to Asset ratio is 0.09 which means a majority of assets of Reading Beans are financed through equity. A value of more than 1 show that they are financed more by debt. Reading

Reading Beans

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Beans has a debt to equity ratio of 0.10, which means that the company is not aggressively financing its growth with debt. Reading Beans long term debt to equity is 0.01 which means that as far as the companys growth is concerned almost none of it is financed through debt. Activity Ratios Inventory turnover shows how many times Reading Beans inventory is sold and replaced over a period. Inventory turnover shows that whether the firm holds excessive stocks of inventories and whether a firm is slowly selling its inventories compared to the industry average. Our inventory turnover is 2.71 and since we do not have an industry average we can only assume that our inventory turnover ratio is good. Total asset turnover is 0.42. This ratio shows the amount of sales generated from each dollar of assets. Profitability Ratios: Our gross profit margin is 0.91. Gross profit margin shows a firms financial health by revealing the portion of money left over from revenues after accounting for the cost of goods sold. Our net profit margin is 0.49, the net profit margin measures how much out of every dollar of sales a company actually keeps in earnings. Return on assets is 0.21. Return of assets as to how efficient management is at using its assets to generate earnings. Return on Equity is 0.23. Return on Equity measures a corporations profitability be revealing how much profit a company generates with the money share holders have invested.

Reading Beans
SWOT MATRIX
STRENGTHS 1. Market leader in a bookstore Caf. 2. Technologically equipped 3. Huge Database of books which no other book store has in town 4. No direct Competition 5. Research and Development 6. Exceptional Inventory control Systems 7. A complete hierarchical organizational structure. 8. Our Product quality and Prices. 9. Ambiance and Environment that enhances the intellectual abilities. SO strategies Reading beans is a market leader in a huge untapped market segment which will be used as a competitive advantage and be used as a huge barrier for blocking new entrants from entering the market. (S1, O3). Reading beans is the first of its kind bookstore that is technologically equipped, therefore it can provide internet surfing and a virtual database of books in the store so that customers can read online reviews and dont have to waste time in searching manually. (S2,O6).

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WEAKNESSES 1. Lack of proper suppliers 2. Bargaining power of customers for a newly formed caf would be higher 3. Lack structural support 4. High Costs of entering the market 5. HR Skills and training.

OPPORTUNITIES 1. Innovation with creativity at Reading beans 2. Changing trends from Monotonous and deserted libraries 3. A huge untapped market segment 4. Changing consumption patterns of Target Market Segment 5. Youth as a huge opportunity 6. Changing technological patterns and its use among the people we are catering to provides us an opportunity to grow further on technological basis and install latest Hi-Tech equipments to support our databases. THREATS 1. Development of substitute products from DHA Library, LUMS Library, Variety and Readings can backfire our whole project. 2. Local cafs can always introduce the library concept where they have more recognition among the youth. 3. Changes in tax rates, patent laws, and lobbying activities

WO strategies Reading Beans should invest in Intensive HR skills and training because the bigger the effort the more difficult it would be for competitors to adopt the same levels of innovation with creativity. (W5,O1). Although the bargaining power of customers would be high initially high but Reading beans can advertise to increase its bargaining power as the trends are changing from monotonous and deserted libraries that are better technologically equipped.(W2,O4)

ST strategies As Reading Beans is a market leader in a bookstore caf it needs to use the market skimming technique to reap as much profits as it can before the competitors jump in. (S1,T1) The strength of good research and development and technology can be used to attract the youth and overcome the image and expectations that the youth have of the traditional

WT strategies Lack of proper suppliers and building strong relationships with the suppliers is where Reading Beans lacks enormously and needs to improve its backward integration policies. (W1,T6). Extremely good HR skills and training can provide a turning point or the one of a kind experience to improve the level

Reading Beans
along with electricity shortages, fuel cuts and terrorist threats can affect the operations of the business. 4. The rising inflation rates, taxes and unemployment pose significant threat to the new business of bookstore caf. 5. Low level of interest among the youth related to libraries can have a drastic impact on the perception of Reading beans. 6. The existing cafs have good terms with their suppliers and better bargaining power is another major threat for Reading Beans. libraries. (S5,T5)

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of interest among the youth related to the overall perception of libraries.(W5,T5)

IE MATRIX
IFE Total Weighted Score = 2.54 EFE Total Weighted Score = 2.9
IFE total weighted average Strong (3 to 4.0) High (3 to 3.99) Weighted (2 to 2.99) Low (1 to 1.99) Reading Beans Average (2 to 2.99) Weak (1 to 1.99)

EFE total weighted average

Recommended Strategies: Reading Beans lies in the fifth quadrant of Internal-External (IE) Matrix. The strategies which are recommended in this quadrant are: Market Penetration Product Development

Reading Beans
SPACE MATRIX
+6 FS
CONSERVATIVE AGGRESSIVE

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(0.5,0.25)

CA -6

+6 IS

DEFENSIVE

-6 ES

COMPETITIVE

Internal Strategic Position Financial Strengths Ratings ROE Leverage Inventory Turnover Cash Inflow Competitive Advantage Market share Customer loyalty Technological knowhow Control over suppliers and distributors 4 4 3 5 Rating -2 -4 -1 -5

External Strategic Position Environmental Ratings Stability Rate of Inflation -4 Barrier to entry -3 Competitive pressure -4 Price elasticity of -3 demand Industry Strength Rating Growth potential Profit potential Financial stability Ease of entry 4 5 4 3

Reading Beans
Directorial Vector Co-ordinates X-Axis: CA+IS = -3+4=1/2=0.5 Y-Axis: FS+ES =4-3.5=0.5/2=0.25

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Recommended Strategies: Backward, Forward, Horizontal Integration Market Penetration Market Development Product Development Diversification ( Related & Unrelated)

GRAND STRATEGY MATRIX

Rapid Market Growth

Weak Competitive Position

Strong Competitive position

READING BEANS

Slow Market Growth

Recommended Strategies Related/Unrelated Diversification Joint Ventures

Reading Beans
Quantitative Strategic Planning Matrix

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