According to Peter & Poulter (2006), Soft System methodology breaks down the components into smaller and smaller parts, to holistically evaluate each component and how they interrelate to come up with amicable solutions. Soft System methodology normally aims to address problems in organizational system since the human behavior is highly unpredictable. The uncertainty nature and behavior of employees raises the multiplicity of organizational and management problems creating many undeterminable variables. It is against this background that we will use soft system methodology solve its problems.
Cannon (2002) states that information flow in any organizational system is very fundamental in ensuring strategies, ideas and decisions are well communicated to achieve the organizational objectives. The Bookshop has information flow challenges among its members, an impediment to maintaining high standards of service. Additionally, the staffs argue and fail to agree on the direction the business and strategies the business should adopt to face off competition provide excellent customer service and impact of internet to their business. Another problem that may affect the business is competitors such as Amazon, who may affect the nature of their business in future. They do not have mechanisms that will ensure competitors do not have significant impact on their business.
The Rich Picture will be used to illustrate the interaction of different entities in the book shop and how they influence each other. Consequently, the rich picture of the book shop shows areas where of concern that should be addressed to ensure there is sustainable high performance. Various issues were identified in the book shop to arrive at the rich picture. Issues and concerns that were identified include;
Issues of Concern
Checkland (2011) asserts that when solving organizational problems, it is imperative to use root definition and one should avoid modeling some real-world versions without using the model. In every sense, people always try to solve problems logically, logical thinking, without evaluating all variables that interrelate. Therefore, Peter & Poulter (2006) suggest that cognitive psychology should be used in root definition of the book shop since the employees are part of the whole problem function. Under Root definition, CATWOE is used to analyze how the employee problems and failing to make decisions affects different elements in the bookshop. Interviews and evaluation of different elements will be undertaken to fully understand issues that are affecting the book shop. Selected employees were interviewed to learn about the structures, processes, systems and perceptions linked with the bookshop case study. Informal and structured questions were presented to the employees. Below is description of different elements and how they are affected after conducting interviews with employees, the owner and customers.
CATWOE Conceptual framework of bookshop
Bookshop Customers–Customers are at the receiving end of all decisions that the bookshop management makes. Decisions made can impact them positively or negatively, therefore, it is essential to take their views and suggestions regarding the book shop operations. Consequently, lack of employee consensus on important decisions may lead to poor service quality, reduced profit margins, delayed service and rise in customer complaints.
Employees– The employees have special interests in different matters thus failing to make the decision. Basing on cognitive psychology, people have different interests, opinions and thinking and, therefore, when undertaking cognitive mapping it is fundamental to include their interests, opinion to come up with a conclusive decision.
Transformation Process-It requires analyzing all the changes the system or process brings in the bookshop and it should take a holistic approach to ensure impacts on all elements are covered (Menno and Wiele, 2004). Customer service and information flow processes are the most affected.
World view– This was done to formulate a general picture of the problem situation and impacts on the bookshop.
Business Owner-Interview with bookshop owner also gives insights to problems affecting information flow and decision making in the bookshop.
Environmental Constraints– It is also important to analyze the environmental situation of the bookshop. It may include, competition, limited financial resources and limitations of project scope to agree on implement the website (Owen, Mundy & Guild, 2009).
Customer need satisfied
Conceptual Model of the Bookshop from Employees point of view
Problems facing the book shop have been evaluated holistically using discursive and construction process by the use of conceptual model in the root definition. CATWOE is instrumental in understanding how different elements hinder information flow in the bookshop. It looks beyond the employee problem and takes a deep analysis of customers, transformation process, world view, business owner and environmental constraints and how it affects book shop operations (Checkland, 2011). The following are proposed actions that will improve informational flow and decision making at the bookshop. The proposed causes of action are deemed systematically desirable and culturally feasible for the bookshop.
Collaborative decision making will involve integration and representation of the employees multiple interests and objectives. Collaborative decision making will entail taking into consideration the employees’ contributions and aggregation of individual decisions. The decisions will be then be synthesized quantitatively and qualitatively in line with CATWOE model of analysis so that employees can understand why the decision has been reached upon. As an aspect of Soft systems, facilitation and structuring will ensure that all variables are analyzed holistically. Additionally, it ensures that cognitive and personal biases are eliminated among the employees.
Groups and its dynamics is complex to manage due to special interests vested by different parties. In consensus decision making, the majority will approve a given course of action without citing losers or winners. This will enable the bookshop staff to agree on important aspects of improving their business operation. If the minority group of employees still opposes the decision, then the objectionable features will be deliberated until an amicable solution is reached.
The company website is an important tool for competitive advantage. Creation of the company website will ensure that customers can access the company and provide feedback in regard of collectibles and antiques. Additionally, the company website will be used for marketing purposes and creating awareness and visibility for the bookshop.
Internet access presents the company with many new business opportunities. The advancements and growth in mobile technology and internet have facilitated e-commerce. Therefore, the bookshop can use this opportunity to sell its antiques and collectibles online. It will be an additional source of revenue to the bookshop.
Additionally, internet access ensures that the company improves its communication capabilities with customers and suppliers. The aforementioned is necessitated by e-mail communication with suppliers and customers. Communication is an important aspect in any organization for it to flourish. Breakdown in communication, for example, with suppliers of antiques and collectibles may translate to lack of stock (Menno and Wiele, 2004).
Although the above have been identified as feasible and implementable, employee’s suggestion of the need to increase the premises may be unfeasible for now. It requires high amount of capital to set up a new premise that is not available. Additionally, the location of the bookshop is easily accessible and the area has a high number of customers.
The case study on the bookshop highlights various problems that may be affecting the bookshop. The bookshop is a small scale business currently meeting the needs of its customers. In order to improve and maintain its customers, it should implement the internet idea proposed by the employees. Internet access will present the bookshop with many business opportunities such as improving its communication and information system. As such, the bookshop will be able to maintain its competitive advantage over its competitors by strengthening links with its customers and suppliers. By using Soft System Methodology, human, organizational and technical aspects were considered. A soft System Methodology outcome ensures there is an active participation and decision benefit for all stakeholders (Ingram, 2000). It allows the owner of the bookshop to think objectively, understand, map complex issues and solve problems. The proposed solutions will be vital in solving defects in the underlying work processes and systems in the bookshop.
Cafe Aroma, is our innovative business that will deal in Gronzy, Chechen. Our business will deal with mobile coffee kiosk in Gronzy, Chechen. Our business is unique to Gronzy since it provides an element of convenience to customers. Market analysis for Café Aroma looks into location analysis, market trends in Chechen republic and competitive analysis. The target market identified will be approached through strategic promotional campaigns on social media platforms, community support programs and personal selling. Additionally, financial analysis indicates the business will have a payback period of 3 years and profit and loss account analysis shows strong profits. A detailed report of other key elements is discussed as below in the business plan.
Cafe Aroma, is our innovative business that will deal in Gronzy, Chechen. Our business will deal with mobile coffee kiosk in Gronzy, Chechen. Our business is unique to Gronzy since it provides an element of convenience to customers. Additionally, we will provide a variety of coffee choices and specialty coffee such as Caffee latte, Espresso, Americano and Cappuccino among other espresso products (Morrison, 2007). Our unique point of selling will be include; selling halal coffee since Chechen is predominantly a Muslim region. We believe our product will be received with great enthusiasm because its takes into consideration customer preferences and requirements. Furthermore, Aroma Café’s broad ranges of coffee and espresso products are made with high quality coffee beans. Besides coffee, our customers will enjoy our variety of pastries and doughnuts to drink with the coffee.
Aims and Objectives
Aroma Café’ objectives for the first year of operations are:
Café Aroma will employ a minimum of 4 employees to a maximum of 10 depending on the volume of the business. The employees selected should be able to perform barista and pastry chef duties. This is to minimize on labor costs instead of employing extra chefs. Therefore, there will be 3 barristers and 1 dishwashing staff. In some cases, casual laborers’ will be utilized when work projections are expected to be high. They will be paid on a pro-rata basis at a minimum wage of 5965 rubles ($ 101.41) per month basing on Russian wage standards.
Recruitment and Selection
Job selection will entail interviews and role plays to be able to get highly qualified personnel. Role plays are important selection tool since we will be able to understand their strengths and weakness and if they will be able to work under pressure. Candidates will be chosen based on their merit as per pre-defined set of standards. The selected candidates should posses a minimum of 1 year experience in a similar position in a busy environment and should hold a driving license. We cannot compromise on the quality of the employed staff since the success of the business is pegged on outstanding customer service, quality coffee products and quick order delivery (Cassavoy, 2012). Background checks will be conducted for designated positions. Recruitments will be conducted through referrals, social media and advertisements in the Chechnya Today and on Grozny Radio. Shift schedules will be organized by Head Barista in a way that it offers reliable labor cost control. A brief overview of the barista roles and responsibilities are indicated in the table below.
|Position||Full Management||Pay Range||Roles and responsibility|
|Barista||3||$200-$250/per month||Preparation and service of Coffee.Educating customers in regard to our premium coffee, freshness and blends.Preparation of pastries.|
|Dish Washer||1(Part-time)||$150-$200/per month||Ensure cleanliness in the kitchen.Wash all dirty utensils.Assist in personal selling when not busy.|
|Sales and Marketing||2 (personal selling)||$5/per hour||Creating awareness of our business in places where we stop.Reinforcing our brand by providing information about our service.Creating interest and luring potential customers to our business.Getting customer feedback so that we can identify areas of improvement.|
Table 2: Café Aroma expected staffing levels and responsibilities
Grozny has been selected as the perfect place to run our business. Grozny is the capital city of Chechen Republic and has had industrial development over the past years after heavy wars. Grozny has plenty of businesses, industries, hotels, football stadiums and most government offices. Grozny has the highest employment rates (80%) in Chechen Republic and, therefore, people have high disposable income to afford our unique range of products (TheNew Frontier, 2012). Grozny has a population of approximately 270,000 people creating a substantial market for our business. Besides the aforementioned, Grozny was also chosen for the following reasons:
According to Euromonitor (2014), there are various eating trends among Chechen people. They include; increase in health-conscious restaurant consumers, demand for coffee variety, need for convenience of food and beverage. Emerging trends will be incorporated to meet consumer needs and benefit from their shopping patterns. There has been a growth in take-away drinks/ coffee from coffee shops (Kakhelina, 2012). It also allows the customer to drink high-quality coffee that could take more if the customer sat in a coffee shop. Implementing a ‘drive thru service’, it will be able to increase its bottom line and make customers feel at ease.
Another significant trend has been an increase in convenience foods necessitated by the Russian on-the-run mentality (Brando, 2013). For example, in Gronzy, rise in convenience foods have been facilitated by more women working, rise of single parent families and increase in disposable income among students and teenagers (Stoeberl & Fitzer, 2009). Therefore, convenience coffee shops require easy to clean-up, minimal waste and easy to prepare for any age group since they are eaten on-the-go. Additionally health and wellness remain integral in influencing consumption trends (Gray, 2008). In Gronzy, people have different health concerns, for example diabetics, are not allowed to take coffee with lots of sugars. Therefore, Aroma Café will ensure that it provides candarel tablets (sweeteners with no calories).
Competitors’ analysis is important since it enables an organization to strategically position themselves over their rivals. According to Taylor & Jiji (2015), undertaking competitor analysis will enable Aroma Café to strategically align its marketing and business strategies for competitive advantage. We only have one direct competitor who produces similar services but Aroma Café has strategies and unique selling point to fight off competition. It is through close analysis of competitors that it will enable Aroma Café discover its strengths, weaknesses and capabilities and align its business strategy in order to have a clear market position over its competitors (Sharon, 2005).
There are also indirect competitors who may affect our business and includes coffee houses and restaurants in Grozny. Although we do not anticipate them to significantly affect our target market, they offer a minimal threat to the success of our business since they do not effectively cater for convenience and time conscious customers.
Established local café such as Halim Coffee house pose as the main toughest competitors. Local café in Grozny have coffee knowledgeable and loyal customers and sale coffee of good quality (Kpmg, 2011). The local café’s are strategically located and as such they pose a threat to our business. With all such attributes, Aroma Café will have a competitive edge over the local café’s through creating quality differentials for our products, initiating Aroma Coffee loyalty programs and offering consistent menu. Participating in community development projects to receive community support and benefit for our company. Furthermore, we will have broad range of suppliers to cut down on purchasing costs and increase our bottom line. We can also benefit from supply discounts thus creating a cost leadership culture that is essential for the survival of our business.
According to Norzuwana, Zahari & Salehuddin (2013), target market is a market segment identified by an organization dynamically and distinctively approached with precise marketing strategies and activities. In order to identify its target market, target market differentiation and research was undertaken. Mobile Coffee kiosks is a niche market that has not been fully exploited by many companies in Gronzy and is still novel idea in these area. Kuratko (2013) states that companies must differentiate between present, traditionally served and new target market segments, differentiate its products to meet present market needs and expectations. Cafe Aroma brands portray a unique characteristic for the intended segments.
Cafe Aroma aims to satisfy the following markets to ensure it remains the best choice over its competitors. It will cater for a broad base of customers and has identified market segments that are profitable. Aroma Café market segmentation includes, demographic segmentation and benefits segmentation in the city of Gronzy. Gronzy is fast growing city and has a population that will support our business. Therefore, Aroma Café incorporates the needs of each target market to ensure the customer receives full benefits from our products.
Aroma Café Demographic segmentation
Demographic segmentation represents segmenting our target market on the basis of age. Aroma Café will cater for customers from the age profile of 5 years and above.
Benefits Segmentation is also a vital segment approach considered by Aroma Café. Consumers’ segmentation on the basis of various benefits they acquire from the broad range of coffee products we offer. This process necessitates full determination of key benefits consumers’ lookout from a product class, the typology of consumers who seek for the benefits and the main brand that offers each benefit (Koo & Fredrick, 2009). For example, Aroma Café will ensure that people with health-related complications such as diabetics or high blood pressure or heart diseases will receive full benefits of our product. Diabetics will be provided with candarels or sweeteners while people with heart related diseases will be given decaffeinated coffee. Additionally, our customers will also enjoy highest quality of our coffee products.
Therefore, Aroma Café appeals to broad range of customers and does not solely focus on one segment. Targeting a broad range of segment will help maintain consistent business all over the year (Euromonitor, 2014). Aroma Café target market comprises of five target groups namely; local residents of Grozny, students, tourists, business people and travelers passing through Grozny.
Café Aroma will use a promotional mix that leverages on the strengths of each other to ensure our brand resonates well with the customers. The selected methods will influence the positioning of our products to the target market and thus drive sales to increase profitability. Promotion strategies used will ensure we can penetrate our target market and get a substantial number of customers. Some the marketing methods used include;
Café Aroma will use personal selling to provide information about our products as well creating more awareness. Personal selling is an effective method to drive sales and get customer feedbacks due to close interaction with customers. Café Aroma will employ 3 sales staff who will be paid on hourly rates and will assist in marketing the business in places where our Coffee Van stops. In a move to encourage sales staff to bring more customers, they will be given commissions. For every 10 customers they bring to enjoy our high quality coffee and specialty coffee, they will receive an extra $2.
Café Aroma aims to increase brand awareness and salience through community support programs. Arrangements will be made with different colleges, universities such as Chechen State University for visits at least three in a week. We will also negotiate with respective colleges or universities so that during special games or corporate open houses we can sell our broad range of coffee. Café Aroma will contribute 10% of its total sales to support respective colleges/university programs such as stocking the library, water projects as well as solar power projects. We anticipate generating high sales since people are always supportive of companies that participate in uplifting the welfare of the community.
Additionally, we will also visit community forums, concerts and workshops to sell our coffee. This will be part of assisting the Chechen Republic government in reconstructing Grozny after several years of wars (Vladislav, 2014.). Furthermore, Café Aroma will visit sporting stadiums when we have league matches, music concerts and exhibitions to maximize on sales.
Social media platforms such as facebook, twitter, YouTube will be used to create awareness about our products and increase the visibility of our brand name. Café Aroma will also use this platform to communicate places where they will visit so that customers can be aware of when to enjoy our coffee. Additionally, a social media campaign dubbed ‘Café Aroma Heaven’ where customers will upload pictures of themselves enjoying our coffee or posting their pictures besides our coffee van. Customer with pictures that have most likes will be rewarded merchandise/ gifts at company’s discretion. It will create high level of awareness for our brand.
The following resources are integral in order for Café Aroma to carry on with its business operations.
Café Aroma is a viable business idea that has not been well exploited in Grozny although its faced with various risks. As part of any business, when the risks are not identified and well managed, they may lead to the collapse of the business. Jaksa (1997) asserts that risks prowl at any moment and, therefore, require strategic problem-solving and decision-making strategies since they are challenging to ascertain and quantify. Café Aroma recognizes all the operational and financial risks that may affect our success and has strategies to maximize on the opportunities and reduce any form of business losses.
Some of the potential problems/risks that we may encounter include; market price wars where some of our competitors may reduce prices of their menu items. Additionally, stiff competition from local coffee shops in Grozny poses a risk to the success of our business. From market analysis, we also discovered that economic uncertainty (recession) in Chechen Republic may lead to volatile market prices of coffee and can also lead to a reduction in disposable income due to unemployment or laying off staff. Decreased disposable income may mean that fewer people may buy our coffee. Operational risks may stem from inadequate equipments that may slow down coffee service and generate guest complaint. Furthermore, poor management decision in terms of wrong forecasting and underestimation of business volume can lead to complete interruptions of normal functioning of Café Aroma. Other tactical risks that may affect the success of our business include; lawsuits, new market entrants and currency instability.
Café Aroma aims to implement a winning risk management strategy to enable the business become resilient to competitive forces and risks in the market. Cafe Aroma’s winning risk management strategy majorly relies on strong internal controls and effective decision making mechanisms. An effective management of operational and financial risks system will ensure that Café Aroma brand reputation, customer tactics and strategies as well as business structures are well protected. Therefore, alternative course of action to manage the aforementioned business risks include;
From the market research conducted as indicated in the appendix are prices of our various competitors. Café Aroma will use market-based pricing system to determine the price of our coffee varieties. Selling price is determined in relation to current market prices charged by our competitors (Kotas, 2014). In the case of normal coffee and specialty coffee, an average price of the two competitors will be done to determine our market price. For example, normal coffee Americano at Halim Coffee Shop is $2.03 while at Coffetune Coffee and Tea House is at $2.02.
The rest of the coffee prices will be determined as calculate above and then an average of normal coffee will done as well as specialty coffee to determine Café Aroma average prices.
Expected Revenue per day
We expect to sell 130 normal coffees and sell 20 specialty coffee daily.
|Sources of Funds||Investment Type||Amount|
|Loan from friend||Capital Contribution||$5,000|
|Bank Loan||Loan Contribution||$20,000|
Management and development guidelines will ensure we are in line with actual realities and deliberate on any variations.
|Milestone||Start Date||End date||Budget||Manager|
|Meeting & Evaluation||05/01/2015||15/01/2015||$80||Management|
|Menu Design& Testing||24/01/2015||04/02/2015||$80||Head Barista|
|Evaluation and research||28/1/2015||04/02/2015||$80||Management|
|Business plan outlay||25/10/2015||05/02/2015||$70||Management|
|Trademarks & Patents||04/02/2015||10/02/2015||$60||Management|
|Licences and permits||10/02/2015||10/02/2015||$150||Management|
|Purchase of equipment, Coffee Van||06/10/2015||04/03/03||$28,000||Management|
|Meeting with Suppliers||10/02/2015||30/02/2015||$200||Management|
|Staff Test/Pilot project||06/03/2015||10/03/2015||$350||Management|
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Appendix 1: Sample of Coffetune Coffee and Tea House Prices
|Special Coffee||Normal Coffee|
|Cappuccino @ $3.13||Americano @ $2.02|
|Latte @ $3.22|
|Mocha @ $3.56|
|Breve @ $4.00|
Appendix 2: Sample of Halim Coffee shop prices
|Special Coffee||Normal Coffee|
|Cappuccino @$3.02||Drip coffee @ $2.03|
|Latte @ $3.25||Americano @ $2.03|
|Mocha @ $3.75|
|Breve @ $4.05|
Appendix 3: Projected of Café Aroma Coffee shop prices
|Average Coffee price||$ 3.60|