Lab 2 Joe’s Java Case Preparation Questions PDF

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Joe’s Java Case PreparationQuestions The immediate issue of this case is that the profits are no longer growing for Joe’s coffee shop since the financial performance was not well due to low number of sales of the coffee and low customer base. Three interesting insights from Joe’s Income Statements a...

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Joe’s Java Case Preparation Questions 1. The immediate issue of this case is that the profits are no longer growing for Joe’s coffee shop since the financial performance was not well due to low number of sales of the coffee and low customer base. 2. Three interesting insights from Joe’s Income Statements are: 

The revenue was growing until 2018 and it was steady for the last two years (2018 – 2019).

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The total expenses were increasing until the year 2018. It decreased the following year in 2019 by $1,190.

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The net income started to fluctuate from 2015 with a pattern of increasing and then decreasing the following years.

3. Few of the models/concepts/theories that apply to analyze/explain the problem and/or develop a solution are: 

The Diamond-E model will help to understand and identify Joe’s Java complications and constraints, as well the factors affecting the external environment to help propose a good solution for the issue.

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The Porters five forces model can be applied to understand and analyze the coffee industry’s profitability to make sure if all companies in the industry is struggling with low profitability or it’s just an individual company.

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The business situation framework may be used to analyze the internal and external factors that may be causing a decrease in profitability for Joe’s Java. Such as, the customer, competition, company and product.

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The Ansoff matrix may be used for a recommendation of expanding company and other expansion options.

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The Porters generic strategy can be used to analyze insights on competitive position strategies Joe’s Java can take and what will be needed to pursue and implement them.

4. The underlying issue for this case is that the low profitability for Joe’s Java is caused by low revenue earned due to low sales. There are low customer purchases and low customer base since they are satisfied by the product offering in the shop. Joe’s Java has very limited coffee flavours to offer to the customers, not including the favourite flavours (espresso and cappuccino). This was not satisfying the customer demand causing them to shop at other companies with resulting with low sales and decrease in revenue. 5. The outcomes/objectives that Joe is trying to achieve with his decision are to increase the profitability to his shop, increase his customer base, have minimal expenses and have subsequent growth in his company in the future years. 6. The alternatives given in this case are to either continue the operations of the shop in the same way without any profitable growth, sell his business, or adjust his product offering to include fancier coffees and/or baked goods. 7. Some assumptions that I am making is that there is enough area in coffee shop for customers to sit and enjoy their coffee. Also, the residents of the neighbourhood are doing well financially and are able to afford small luxuries, such as coffee and baked goods. Analysis: Alternatives

Diversify the product offerings

Sell his business

Continue the operations of the shop (status quo)

Decision Criteria Minimal expense

Subsequent growth in the future

This should increase the customer purchases since there are more options for them.

This will be a little expensive. Approximately cost $10,000.

This should result with growth in the future due higher profitability.

This will not increase the customer base since there will not be a coffee shop anymore.

This will be minimal expense.

There won’t be growth in future.

This will not increase in customer base since the product offering

This will be minimal expensive initially. However, it can

There won’t be growth in future since the customer demands are

Increase in the profitability

Increase in customer base

This should increase the sales since customers will be indulging in and purchasing more goods. This will not increase his profitability. He will only receive the present-day value of his shop. This will not increase the profitability. It may decrease the revenue

even further does not satisfy lead to not satisfied causing all customers bankruptcy. from the menu. bankruptcy. desires. 8. I recommend the first solution of increasing the product offering and diversifying his menu to have variety of flavour of coffees, beverages, and baked goods. This should result with higher customer base and an increase in revenue since the menu will satisfy customer demands and draw the customers back to Joe’s Java. It will also provide a competitive advantage against Starbucks since the product offering will be similar and there will be a friendly atmosphere at Joe’s Java to enjoy their coffee and snack and hang out with friends. The worst outcome would be that this would not draw more customers and the customers will continue to shop at Starbucks, resulting with low profitability at Joe’s Java. However, this is very unlikely since the customers enjoy supporting local business and enjoy the interaction with owner and staff at Joe’s Java. 9. Something that could go wrong making my solution difficult to implement or not satisfactory would be that Joe doesn’t have enough money to invest in new coffee machines with different flavours or purchase bake goods and snack and train his employees. In this situation, I would not purchase everything at once and invest in things gradually. For example, I will only purchase espresso and cappuccino machine initially and with higher revenue, I would move on to invest in other products. Such as, baked good, snacks, etc. Also, if there is no money for investment, I would try to take a small loan. 10. In short term, Joe should diversify his beverage menu by purchasing the popular coffee flavour machines and training his employees on how to operate them. This would lead to higher sales. In long term, Joe should purchase and start offering baked goods and snacks that would go along with the coffee and other beverages. Also, expand his coffee shop by opening in different locations due to high customer demand. 11. My recommendation should improve Joe’s financial performance since it should generate sales increasing the profitability of the company. I would expect the customer base to increase, as well, there to be a larger and more diversified menu. My recommendation may result with high profitability, allowing him to expand his coffee shop in different locations due to high customer demand....