Kem Chicks, located in the Kemang area, is a top-notch gourmet lifestyle supermarket that caters to customers from upper and middle cosmopolitan backgrounds. They excel in providing customers with high-quality products, a pleasant atmosphere, and well-informed displays of specialty foods and products. The problem at hand is figuring out how Kem Chicks can expand their supermarket through their own investment without compromising the quality of their products and while maintaining their growing operations.
Statement of Objectives
Long-term:
- To maintain and develop a competitive position in the growing industry
- To formulate a strategy to gain economies of scale for existing supermarkets
- To occupy more than 1% of the supermarket space in Jakarta, Indonesia
- To increase public awareness of Kems goal to be the “Meat People”
- To become the market leader in the national market
Short-term:
- To provide excellent service
- To improve services
- To establish a good rapport with the employees
To meet the needs of customers by constantly seeking and acting on their opinions regarding innovation, product quality, choice, store facilities, and service, the organization strives to provide goods or services that are cheap and affordable to consumers or the public. The organization has valuable human assets and good personnel management. It also responds and caters to the needs of the immediate community and offers first quality meat products, which has established it as a leading organization.
The text highlights the importance of maintaining a harmonious relationship between employers and employees, as shown by Bob Sadino’s flexibility. It also mentions the lack of marketing strategies, Bob Sadino’s unwillingness to know important financial details, weak long-term strategic planning, difficulty with over-the-counter communication, lack of internal control, and absence of specific job designations. Additionally, it identifies opportunities such as the acquisition of rival firms, diversification and expansion of the business, as well as positive customer word-of-mouth.
The following factors contribute to the increased risks in capital expansion: the declining price of oil, changes in customers’ preferences, increasing bargaining positions of consumers, rising competition, increasing interest rates, natural calamities, and government regulations, rules, and policies. Given these circumstances, the best option for Kem Chicks to expand is by engaging in franchising. Alternative courses of action include product distribution, product licensing, or entering into a franchising agreement called Entire Business Format franchising.
Product distribution is the simplest form of franchising arrangement offered by Kem Chicks as the franchisor to the franchisee. It allows the franchisee to market Kem Chicks’ products within a designated market area without making significant changes. In return, the franchisee pays a fee to Kem Chicks. However, this option has both advantages and disadvantages.
Increased sales volume of the parent company does not support the overall development of KemChicks’ internal management. Additionally, a product licensing arrangement would grant the franchisee significant control over Kem Chicks’ operations in a specific distribution area while ensuring the maintenance of product and service quality standards. Kem Chicks would closely monitor and regulate the manufacturing and selling process, including setting specifications.
In return, the franchisee would pay a royalty and other fees but can have advantages such as improving quality control policies and the right to manufacture or modify Kem Chicks in a certain area of distribution. However, there is no assurance of success and the franchisor may pre-empt all important positions in the organization, leading to KemChics potentially losing control over the management of the business. Thus, they can enter into a franchising agreement called Entire Business Format franchising where the franchisee would imitate what the franchisor is.
The franchisee would be given the opportunity to produce and sell the product, use the franchisor’s name, logo, and other visuals, as well as access their management system and architectural design. They will also receive supervision, a reporting system, and management consultation. Kem Chicks will require initial fees, ongoing royalty fees based on sales, a management fee, training and consultation fees, as well as a fee for the design and reporting system. The advantage is that Kem Chicks will have complete control over the business.
Possibly allows the franchisee to develop and promote human resources, enter the industry without know-how and experience, and offers them the opportunity for success while minimizing risks. It also provides security in protecting the rights and property of the company. Mistakes made by one franchisee can negatively impact the company’s image. With the industry reaching its peak growth phase, Kem Chicks faces intense competition and limited options for land and location.
Furthermore, ignoring any of the key success factors is unwise due to the shopper’s increasing bargaining power. The profitability of investing in a new outlet relies heavily on sales and cost levels, making each factor crucial for success. Consequently, we have determined that the optimal solution is to engage in entire business format franchising, specifically the franchise model offered by Kem Chicks. This type of franchising ensures that the franchisee operates identically to the franchisor, as Kem Chicks provides the entire franchise.
Kem Chicks will receive various forms of income, including management fees, training fees, reporting system fees, and others from the franchisee. Kem Chicks will keep their expertise and specialty private, as they are the sole provider of information and support to the franchisee upon payment. X. Implementation Program To implement the recommendation, Kem Chicks should follow a process similar to real franchise operations: 1.
The franchise relationship is based on a contract that includes all agreed-upon terms. The Kem Chicks must first create a successful business format, known by a brand name such as a trademark, service mark, or trade name. They must then provide training to the franchisee before the business opens, ensuring they are equipped to effectively run the business. Kem Chicks also need to assist with the opening process.
After the business has opened, the franchisor must maintain a continuous relationship with the franchisee to offer support in managing the business. Additionally, the franchisor grants permission for the franchisee to operate using their branding and business systems while providing guidance and supervision. This allows the franchisee to benefit from the positive reputation associated with being part of a franchise. Lastly, it is mandatory for the franchisee to make a substantial capital investment from their own resources.
XI. Proposed Business Policies Management:
Generate periodic computer reports for management information, such as reports showing the sales income, cash balance, sale of shopping vouchers, and issue of gift coupons and refunds to customers. Franchisees must pay an initial fee and a percentage of sales. There should be a monthly regular meeting of the management and an annual regular meeting with the franchisees to provide update reports for the business. Marketing: Advertise the supermarket through local newspapers, brochures, billboards, and posters. Advertise through local radio ads and offer discount coupons.
Can offer weekly sales discount Operations: Open 12-hours a day from Mondays to Sundays Tight security Inventory Control Acceptance of goods To enhance accountability, the staff responsible should be required to inspect and count goods/food items upon delivery against the quantity specified in the delivery note, cross-referencing the relevant purchase orders if any, and to certify acceptance. There should be a procedure for staff to record defective or short delivered goods or food items and to follow up promptly with the supply department or the supplier direct.
It is necessary to conduct checks on the types and quality of food or goods that will be replenished by the concession counter staff before they are sold. Specifically, random supervisory checks should be carried out on high-value food or goods to ensure their quality and quantity. To have a record of orders and deliveries, a standard requisition form should be used, preferably in an electronic format. This facilitates electronic data interchange between the operator and the supplier, or the sending of electronic faxes.
The form should contain details regarding the required goods/food items, including their description, quantity, and place of origin. Additionally, it should provide information about the agreed price, delivery address, expected date of delivery, the name of the requester, and any necessary approval authority.
For phone orders, written confirmation is necessary. Any changes to the initial order must be approved by the appropriate authorities. If an extension in lead time is required, justification must be provided and approved by senior staff.
In general, over-deliveries or short-deliveries should not be accepted unless they are justified and authorized. It is important to evaluate suppliers’ performance in stock delivery.
Finance:
Conduct inventory and generate daily and periodical sales and receipt reports. Handle cash in a way that prevents manipulation following the recommended control measures:
- The guidelines should establish the maximum amount of cash flow per day, banking frequency, and the requirement for daily cash position reports for each store.
- Define procedures for handling bank notes, including testing them using a money tester by a sales assistant and by a store supervisor.
- If needed, install CCTV with tape recording facilities to monitor cash handling at cashier counters.
- Assign a responsible staff member to reconcile electronic sales records against the cash in hand at the end of each day and conduct spot checks on other operational activities randomly on a daily basis.
- Ensure that staff responsible for cash collection security requirements comply with supervisory and audit checks.
Handle credit card information appropriately.
Staff members have the opportunity to attend briefings, which aim to enhance their understanding of illegal activities and the potential disciplinary outcomes associated with such actions. It is crucial for staff to receive clear directives on how to manage credit card transactions, including the act of signing payment slips as a means of assuming accountability for these transactions. To mitigate the possibility of data breaches, it is vital to establish robust security protocols, which may involve storing credit card payment slips in a limited-access location.
Staff should be aware of the various channels available for reporting approaches by criminal syndicates and suspected corrupt practices. The internal audit should cover sales and accounting operations, while employees in the human resources department work in two shifting schedules. It is advisable to offer training to these employees. Additionally, a bereavement leave of up to three days will be provided for attending to personal matters in the event of a death within the immediate family.
The company defines immediate family as spouse, parents, grandparents, sons, daughters, sisters, brothers, stepparents, stepbrothers and stepsisters, mother-in-law and father-in-law. Compensation will be provided for work time lost up to one day for relatives outside the immediate family definition. An unpaid leave of absence up to two weeks may be granted in relation to the death of a relative or close friend. Prior approval from the employee’s supervisor and management is required for such absences.
All employees are expected to follow the proper attire dress code.
Supervisors are responsible for counseling employees who do not meet the requirements for appropriate business attire and may ask them to leave and change. The supervisor is accountable for ensuring that their team members maintain a professional appearance.
Employer Name provides Equal Employment Opportunity to qualified individuals, regardless of race, color, religion, age, sex, marital status, national origin, ancestry, physical or mental disability, sexual orientation, genetic information, or any other legally protected class. This is in accordance with all applicable laws.
In the event of bad weather,
The company remains open during bad weather, except when extreme conditions or government decisions force the office to close. If operations stop after a shift has started, hourly employees will be compensated for the time worked, with at least two hours of pay guaranteed. Employees are prohibited from taking on additional work outside their regular hours. The use of company resources such as supplies, equipment, telephone services, materials, and personnel is not allowed. Management addresses unresolved matters, complaints, and inquiries through the Open Door Policy.
Openly discussing these matters is advantageous for everyone involved. There may be times when employees need to work additional hours beyond their usual schedule. Overtime pay will be provided at a rate of 1.5 times the regular hourly wage for any hours worked over 40 in a week. However, overtime calculations will not include paid but unworked hours such as personal time off, jury duty, bereavement pay, etc., except for holiday pay. The management’s goal is to promote fairness and equality in distributing overtime.
The employee selection criteria encompass job experience, work capabilities, seniority, productivity, and job performance. It should be emphasized that the availability of overtime work is not guaranteed and should not be considered a reliable source of financial stability. Any unauthorized overtime will lead to disciplinary consequences. The company strictly prohibits workplace threats and violence. Individuals who engage in making threats, displaying threatening behavior, or perpetrating acts of violence on company premises will be immediately removed from the site until an investigation is concluded.
XII. Management Lessons Learned from the case: The case highlights the importance of pursuing growth in every established company. It emphasizes that significant accomplishments often originate from humble beginnings, as demonstrated by Kem Chicks’ initial earnings and successful business expansion led by Bob. The case also underscores the significance of monitoring both internal and external happenings in our company. Recognizing that competition exists in almost all industries, it is crucial to compete effectively with competitors. Additionally, considering Jakarta’s growing population, there is an increased demand to cater to.
We must not allow our rivals to profit while we stay stagnant, reminiscent of the past. It is essential to acknowledge the significance of a bookkeeper in managing the crucial financial aspect of a business. Accountants play a vital role in contemporary organizations. Although it is feasible for a company to achieve success with inadequate systems, as seen with Kem Chicks, we recognize that this cannot be sustained indefinitely.
Every organization must be well-structured, with the appropriate personnel in each position and the necessary skills and abilities. It is crucial to continuously evaluate and enhance employees’ potential. Our workers are essential for our capacity, and it is our duty to care for them as they do for us, similar to how Bob valued his employees. Additionally, the group has acquired knowledge about franchising and its associated investment risks.
It is crucial to not only concentrate on the growth of our company but also take into account its potential impact. We need to be cautious about preserving the quality of our product and the motivation of our employees. Merely duplicating the company name across various platforms is insufficient; we must also guarantee that the company’s reputation remains unharmed and avoids damage. To genuinely cherish our company, we must attend to every aspect of it, including its expansion, administration, and possible hurdles it might encounter. Life does not depend on luck but on the decisions we make.
