This consultancy report has been written especially for U Café, an internet and karaoke bar founded by two friends who have no previous experience in running a similar type of business and has in turn approached me to give them the necessary advice as to how to run it profitably. I have reason to believe that my knowledge in the fundamentals of management as an M Com student would undoubtedly prove to be handy in giving the right type of mentoring for the two partners. The areas I have highlighted as the most important ones for the two partners to have a fair idea of going about with their new venture are the specific general management theories which their new business could make use of. Apart from understanding the theories well enough I have taken the privilege to enhance their knowledge about the external environment, ethics and corporate social responsibility, the internal environment, organizational culture and strategy and structure. I have selected these six items from the list of eleven items that are part of our course and has given due importance to these main items after making sure that these six items would undoubtedly help the two partners in getting along with their business. In due course of time these selected items contained in this report would give them the idea about how to plan in advance and formulate the right strategy for their business such that they always keep on having a definite edge over their competitors in this area.
The idea of starting a combined internet café and a karaoke bar in the midst of the local community is without doubt a unique move. As there is no other competitors offering similar service the concept of an internet café cum karaoke bar and naming it aptly as ‘U Café’ is indeed novel. There is thus strong reason to believe that the ‘U Café’ would reap the benefits of a new concept among the customers of the local community. However, it is also seen that the two partners of ‘U Café’ are not quite well versed in the art of contemporary management and due to the confusion prevailing in their minds as to how to manage the whole business they have approached me for giving them the necessary consultancy and guidance. The following has been noted during the course of investigation of the whole business of ‘U Café’ and the same is being forwarded to the two partners so that they can make use of the report to manage their day to day operations as well draw out a long term objective of the internet café cum karaoke bar.
General Management Theories applicable to ‘U Café’
As the two young partners are not quite well versed in the art of management it is quite imperative for this report to lay out the initial idea about managing a small business. For this the business owners should have some idea about the contemporary management theories which would best help them make the right management move in the right way. It was Frederick Taylor who laid the foundation of management through the introduction of his scientific management. He regarded the concept of management as one of timed observation and choosing of only one best way for getting the maximum results out of the workers. In fact, he was of the opinion that the employees of an organization should follow the ‘one best practice’ as dictated by the management and shouldn’t allow the workers to take any deviation from it whatsoever. He showed the way for the work to be divided amongst the management and the workers with the management performing the task of planning and instruction while the workers performing the labor. It was his idea to simplify complex tasks by breaking it down into a number of subtasks and allowing each group of workers to perform the same continuously and productively. For the partners of the ‘U Café’ there is a lesson here that it would be better if it initially planned to set its tasks for groups and see that they follow it promptly. When the business starts on its feet then other management theories can be introduced. Among one such theory is the classical organization theory. Belonging to the classical theories are the two towering theorists and these are Max Weber with his bureaucratic theory and Henri Fayol with his administrative theory. Max Weber’s bureaucratic theory has a set of principles and these are quite relevant for ‘U Café’ and these are fixed and official jurisdiction areas, a hierarchic structure of higher and lower management cadres which are written down in records with official activities given the maximum priority and excellent training of personnel. In case of Henri Fayol’s administrative theory the idea is to focus on the management level of things and these are through five principle roles including forecasting and planning, organizing, commanding, coordinating and to control. In this theory the organization should be able to plan and forecast its activities well in advance and then act accordingly. ‘U Café’ can likewise make use of these principles in its run uphill once its initial stages are set. For this it has to have a mission and vision statement that should be SMART (specific, measurable, attainable, realistic and timely). Once this mission statement is in place then the owners and the managers can look forward to achieving the objectives.
The next theory is the behavioral theory by Elton Mayo which states that work satisfaction is the basis of good performance. They in fact depend to a greater deal on working conditions and attitudes within an organization. Here, free flow of communication, positive responses from management and excellent working environment. This can be achieved by ‘U Café’ if it allowed some flexibility to the hierarchic order and attended to the feedbacks received from the supply chain. This would mean right from the stage where it got its supplies, uninterrupted broad band connection, transporting of supplies including kitchen supplies and CDs to that of the ultimate satisfaction of its customers. It would be better for U Café to think in terms of behavioral theory for it has good plans to employ one or more experienced computer technician or audio visual specialists as well as experienced bar staff. A strong work force who thinks that the workplace is the best place apart from their own home will be more efficient in their work than otherwise. However, while taking a final decision the owners must do so by taking into account all aspects of the current situation at U Café as the situational or contingency theory suggests. This means their prime focus while making decisions is to ascertain the situation in hand and whether there is need for autocratic style or participative style or facilitative or bit of one and another. The chaos theory of management is not applicable to U Café at this moment for it has to grow or expand into a larger chain of network for more complexity. However, the team building theory is quite practicable for the internet café cum karaoke bar for this theory emphasizes quality and best practices and steady continuous improvement of all resources of the business. This therefore means that the best way to achieve this is by relying of good and efficient team work like bar section, internet section, kitchen section for snacks, serving section and accounting section. The quality factor is rather very important for U Café as anything amiss may spell disaster for it both in the short and long run. A little bit of quality theory as expounded by Edward Deming can make shape the business even better. As the Japanese have showed over time how their focus on quality has made their products achieve worldwide reputation.
The two partners can also make note of the management ideas postulated by Douglas McGregor in his ‘Theory X’ and ‘Theory Y’. This is based on the human behavior aspect and states that a business is carried on by the belief of its owners. Theory X gives a negative view of human behavior as it assumes that workers are quite immature, irresponsible and need someone or the other to guide them as well as control them. Theory Y is the opposite of Theory X and states that people workers by their very nature wants self fulfillment and hence they aim for self respect, self development and make conscious efforts over their work. Thus, it needs a motivated well rewarded workforce to do a job properly and efficiently.
The External Environment
Although the internal environment of a business can be a significant contributory factor to its future profitability and growth one should not underestimate the impact of external environment as this can pave way for changes in the way the business is managed. The external environment influences the business in several ways ranging from economic factors, socio political forces, ecological forces, competitors, customers and labor unions. In the case of U Café it is greatly influenced by external factors although not all of them. The external factors that would influence it would be as hereunder:
(i) Economic Conditions
The economic condition of the country is of foremost important among all other external factors affecting a business. This is mainly because the business would find fewer customers coming to purchase its goods or services during times of recession. In case of U Café the chances of fewer customers coming to its shop is more as the customers would have less money to spend during recessionary periods. The existing customers would prefer a quick internet browsing rather than spend hours over such things like chat or other messaging. The same is with the case with the karaoke bar where this would again lead to thinning of crowd. The sale of snacks and beverages would undoubtedly see a decline. The reverse is the case when there is a boom time.
(ii) Socio Cultural Environment
The socio cultural environment refers to the society’s attitudes and cultural values and has to be taken into consideration when the organization engages in commercial activities. This means that the business ought to conduct its operation keeping in mind the social and cultural aspects and beliefs of the people of the community where it is situated. In case of U Café it should respect the customs and culture of the people living within the local community. During a careful analysis of the situation U Café is well positioned to offer its free services to customers as it is situated in a free democratic society with a broad minded ethnic minority community. Yet, it can give itself a new look with decorative features during times of festivity of any national or local festivity irrespective of cultural groups. In this way it can foster good relationship with its customers as they come from all walks of life and can enhance the goodwill of the internet and karaoke bar.
(iii) Technological Environment
The technological environment is an important external factor to be studied keenly by any business. Any changes in the technological front can swing the demand of the organization’s goods and services. In case there has been a technological improvement or breakthroughs in the product then the business may see a rush of customers while the reverse is true if the competitors gain an edge over it with a novel idea or superior service. U Café should be well aware of the developments occurring around it and see whether the competition has made any significant changes too. The easy availability of internet over the mobile as well as free services offered at the premises of established food chain restaurants can be a threat to its business.
All business small or large has to face up to the competition from other businesses. This can be anything from the uniqueness of services, new product line, a new idea or lower price or high quality of its products and services. In case of U Café it has to make sure that its owners are well aware of the latest developments in the market and must introduce newer techniques and creative ideas to give the business an edge over the competition.
Other external factors like the political environment or labor unionism wouldn’t affect U Café as it is a small business and unions are formed in organization where there is large number of workforce. In case of political conditions too U Café is hardly affected. This is because the country is a democracy and any change in the government wouldn’t lead to any drastic changes in law or licensing procedures of such business.
Ethics and Corporate Social Responsibility
Ethics and corporate social responsibility stems out of the need to project the image of the organization in the minds of the customers to gain their confidence. This not only means that the business is putting out its right image, but must go a long way in fulfilling the needs of its valued customer on a continuous basis. In order to gain respect and confidence of the customers the business must go the extra mile to understand the consumer’s demands and their business practice must be in aligned with the ethical code of conducts as stated by the leaders.
In order to implement standards into an organization or small business, the first and foremost point is to recognize the fact that ethics is a continuous process. Then there must be an ethic program in place preferably written down and this should accomplish the best work place behavior. The next step in ethical standards is to avoid any unethical behaviors in the first place at the workplace and make ethical decisions made known to all as and where it is deemed appropriate. Then there should be integration of ethical practice and management practice of the organization. The value of forgiveness must be adorned by the owners and see that small mistakes or unintentional ones are allowed to go free while giving proper training to the workers.
Here, in the case of U Café the karaoke bar must motivate people keeping to its ethical standards for singing and dancing sessions. In fact, the people from the public who have some inclinations of dancing or singing or both should be able to do so with a good degree of comfortableness. Under no circumstances should the owners of U Café allow unethical standards to seep in knowingly or unknowingly like crude half naked dances, bullying, and rowdiness of behavior especially to the weaker sex. Similar too is the case with the adjoining internet café where apart from keeping to the ethical standards of the café like maintaining silence, allowing only good behaviors, correctly following the standards of the internet café from the general public point of view, properly following the intellectual property laws and installing non pirated software for games and other entertainments.
The Internal Environment
The internal environment of an organization comprises of its resource strengths, behaviors, capabilities and core competencies. In fact, it is through this knowledge of the resource based internal environment that the strategies of an organization are formulated. The organization’s resources are the physical resources and the human resources put to use in an efficient manner to create goods or services. In case of U Café the physical resources are the space where the internet cum karaoke bar is situated, the finance, the computers and the cable connection, the bar with its furnishing and the workers. These are the tangible resources of an organization and the intangible ones are those that are equally important yet cannot be immediately perceived but contribute significantly to the growth of the business. For the U Café this is in the form of goodwill that it would generate in the long run, the uniqueness of its location and the special appeal it would have on the local population. Apart from this are its skilled and experienced computer technicians or audio visual specialists as well as highly skilled and energetic bar employees and servers who display an unusual knack of greeting and satisfying customers. These are the inherent strengths of the business and these must be utilized properly in order to get the maximum gain in the long run. Here, the organizational behavior has to be molded in such a way due to the result of influences and forces operating within the internal environment that it gives added value to the end customers.
In its combined form the U Café would begin to prove quite a crowd puller given its situation where it achieves synergistic advantage. This means that its parts including the internet services, gaming section, bar, kitchen, karaoke performances and servers would exhibit greater performance as a whole. In other words, the sum of its parts would be seen as greater than the whole. Here again, the owners on their part should be able to project the two in one concept, namely the internet and the karaoke bar as something quite different from the competitors to have an edge in the market. The U Café could initiate functional strategies which include strategic marketing like sending mail to regular customers, strategic financial management, strategic operation, strategic human resources management and strategic information management. These internal functions could make it a hot spot for customers who would think it as an experience in itself due to the near perfection which all these functions unite to bring in the best results.
The culture of an organization is defined as a system exhibited by the business over a course of time which sets for itself certain values, beliefs and assumption among its employees and the leaders and helps an independent observer identify the same as the character of the organization. The organization in fact makes all the stakeholders aware of its distinct traits such that they can identify the organization from a crowd of others. U Café too should in due course of time with its proper conduct and exemplary service and above all its highly enthusiastic and motivated workforce exhibit a positive culture for the future growth and profitability of the business. This should be ingrained in every function which the internet and the karaoke bar involves in and the owners, managers and the employees should think and work as if it is there work life. It is seen that organizations exhibit negative, mildly negative, mildly positive and very positive behaviors that becomes their culture through which they are identified with. Hence, it is very important for U Café too pave way for good positive culture by accepting feedbacks both from the different functional areas of the internet and the karaoke bar as well as from its valued customers in order to make it distinct in style and excellent and unique service qualities. If the work culture of U Café is a work life experience then the employee on their part would undoubtedly show remarkable confidence and raise their own level of productivity. Culture as part of the organization would sooner or later define what a competent employee is (Leme, 2009). It has been noted that the staff as well as the outsiders perceive the culture of a business in the way the employees behave among one another, coordination levels between different functional area, respect for customers, leaders perception of the right ethical standards and giving incentives to the employees. Apart from this the culture is seen even in the settings of the business, the overall notion among the public, arrangements of the furniture, general hygiene, waste management and environment protection.
Strategy and Structure
Forming a good strategy is the prerequisite of all business. Due to nature of competition and the price wars as well as need to be a distinctive business in itself the owners must have a good strategy in place. This only would give the business like the U Café a competitive advantage over its rivals. The internet café must have certain aspects that give it a different look in the minds of the people and the fusion between the internet and karaoke bar must be so made that the customers are equally comfortable at both these places. Again, if need be they can also have their own quiet corner too. This means that to a large extent the U Café’s strategy is also bound by the environment which again means that the structure shapes the strategy. For instance, the environment should show inclination for the fusion between the internet café and the karaoke bar otherwise the strategic option may misfire. Therefore, keeping in tune with the right approach, the structural conditions, resources and capabilities and the mind-set of the owners the business like the U Café can succeed. Here, in this instance the U Café has the source of $50,000 each by the partners, the expertise from the experienced bar staff and the internet and experienced computer technicians and audio visual specialists who have the capability of bringing out a viable competitive position that should form the strategy of the business. In fact, it is generally seen that the structure should always reflect a good strategy.
Leme Tereza Fleury Maria (2009). Organizational Culture and the Renewal of
Competences. Interaction between Culture and Organizational Competence.
Brazilian Administrative Review – BAR.