Day: April 9, 2018

Wolfgang Keller at Konigsbrau-Tak (a)

Wolfgang Keller at Konigsbrau-Tak (a)

I. Introduction & Problem Definition Konigsbrau A. G. , which was a Munich-based brewer company, has subsidiary in Ukrainian. Wolfgang Keller who is the managing director of Ukrainian subsidiary with having succeeded as a hands-on manager, worked for food manufacturing companies in the past. He generally took his success with effective solutions such as changing marketing strategy, reconfiguring the sales force, hiring a new top-management and many others. As a result of this effort, he set one’s sights on and also he expects to be promoted to the firm’s Vorstand for the future.

Dmitri Brodsky, who is the Konigsbrau-TAK’s commercial director, attended to firm 2 years earlier and his performance in this company is checked and is not admired by Keller. Ivan Zelenko, who worked for food manufacturing subsidiary with Keller in the past, is Keller’s close friend in daily life and now marketing director of Konigsbrau A. G.. In this report, the problem is Dmitri Brodsky’s performance progressively got lower and hence this situation disturbed Keller.

So, Keller, as he applied his work style into the business area effectively, needs to decide to shift in some processes or find out some alternatives so as to solve this problem. II. Analysis In order to catch objective analysis in this case study, there will be explanations of perceptions and perspectives of each person in the case, in other words trying to solve this socio-physiological issue as making empathy for each person. Before going in deep analysis, it should be mentioned about characteristics of each business man.

As can be seen from the mostly used word “suspect”, Keller is a bit suspicious person to peoples, and action-based, impatient, hands-on approaching personality he has. Conversely, Brodsky is patient, analyzer, deliberate in his behaviours. The problems generally are originated from two main issues which are being close interaction with people in social and business lives, secondly working performance based on deadlines, processes and as a consequence of all reasons absence of leadership skills for Brodsky according to Keller. Apart from these problems there is also notable relationship between with Keller and Dr.

Haussler about the working style of Keller. Initially, in accordance with the perspective of Keller, Brodsky generally doesn’t tend to and cultivate personal contact with customers, distributors and many others, for example distributors is the crucial and potential factor to increase selling of beers to pubs, hotels, and the others, but Brodsky does not concentrate on this carefully he thinks. Keller thinks salespeople should need to keep hands-on on contact with them, because of the importance of serving them as a guide for the sales force. This also causes some problem in well integration into the management team.

Keller also suspected and concerned about lack of face to face contact of Brodsky with subordinates. As he said, camaraderie is so important to develop enthusiasm and loyalty with using personal contact. Besides, Brodsky chooses to separate his private life from business life, in the business generally people prefer to talk about their families with their colleagues but Brodsky does not. For instance, after the party the distributors called Brodsky for fishing but he didn’t choose to attend them and he went his home; then distributors went to his home but they were a bit uncomfortable when Brodsky still called them in formal way at his home.

As a result of these weaknesses of Brodsky, Keller regards him as a weak line manager or leader, but on the another hand Brodsky claims that if Keller does not interfere his situations and processes he can analyze and accomplish each steps in a successful manner. Against to Keller, Brodsky feels himself as a leader, but maybe not a charismatic leader. According to “Pygmalion in Management” article, Keller should consider as people get older they become harder to influence, beliefs and abilities of self begin to harden.

Also, article stated that what managers expect from subordinates and how they treat them largely determines progress and performance. With this definition, from Brodsky’s point of view, Brodsky can find much more effective area to work and cultivate. Apart from these analyses, also over-communication between individuals brings negative feeling to Brodsky’s mind as it is supported by “Pygmalion in Management” article. If feedbacks are investigated deeply, it can be seen a bit more negative comments were given instead of giving much more encouraged and motivation-oriented definitions.

On the other hand, Haussler wrote a feedback to Keller about his performance and leadership. Haussler mentioned about his success and abilities he can fulfil. In addition to that, Haussler recommended Keller to focusing on way of work with Mr. Antonov but as it is known Keller suspected that Mr. Antonov occasionally missed attendance in daily operations. In order to support his ideas, Haussler referred consideration of Ukrainian work style difference and age difference, in other words experience difference, between him and Antonov.

This also contributes Brodsky perspective with probability of not to notice various working style among nations by Keller. III. Alternatives After all, what is need to be done is focusing on this problem? In order to handle this organizational behavior based problem, two alternatives proposed: Alternative I: In the first alternative, Keller should rearrange the Brodsky area like separating it as marketing and sales, then give the responsibilities of Marketing to Brodsky and Sales to Zelenko.

This solution will reduce Brodsky’s responsibilities by half as it mentioned, so Brodsky can follow and arrange all the things which he should handle during working times. Also, he will have much more time to interest with customers and distributors; and then Keller can reevaluate his personal contacts and hands-on connections. Besides these, Zelenko also will improve himself with taking the responsibility of Sales Directorship. As it is mentioned in the case, Zelenko has not much experince about these area, it can cause some problems; but he can also find a chance to improve his skills in this area even if he may make some faults.

For this alternative, Sterling Livingston claimed that confidence gives credibility which make goals seem achievable, so this alternative can demotivate Brodsky, and decrease his performance during his business enviroment. Alternative II: For the second alternative, Keller should help Brodsky in motivated, tolerant and multioptional manner. In the “Pygmalion in Management” article, if there is a undevelopment, underutilization, and ineffective management, there is a greatest challenge with it by using most valuable resource, young-talent.

Keller can hire two or more member contained new active and young-talent team so as to support Brodsky. One of the teammember will be a secratary and the closest person to him in order to remind all tasks, plannings and preparing a schedule for each day. Another member of the team will be active hands-on contact person who will helps to Brodsky in the active areas which communication and personal interactions are crucial. By this way, these two young-talent will also experienced under Brodsky’s professional directorship, as it is known from the case, Brodsky’s experience and maturity can balance young managers as Keller was appriciated.

Therefore, Brodsky will be more motivated and it is defined in “Pygmalion in Management” article, if the managers are motivated and confident in their selves, they will be more able to evoke productivity from subordinates. Also this action will be beneficial for Keller, he will be activate Brodsky with the approach of “Pygmalion in Management” article; and with the increase in performance of Brodsky will contribute Keller’s leadership and career which are critically followed by Vorstand. Disadvantes of this alternative can be unchanged manners of Brodsky in the business area.

IV. Recommendations and Plan of Implementation In this reorganization and improvement of case study, it is proposed two alternatives. Finally, the second alternative is chosen. As mentioned in the section above, the second alternative has more advantages because of having motivation-based, human-centered approach, hiring opportunities. If the proposed alternative was not achieved, although the first alternative does not have as much benefit as the second one, in the emergency case, it could be used for the sake of having profitable economy of company. V.

Conclusion Wolfgang Keller at Konigsbrau-TAK (A) case study is reviewed and analysed, then 2 alternatives are found up so as to analyse and reconfigure the behaviours and attractions in Konigsbrau Company. As a result, one of the alternatives is chosen to be applied in the real business area, and this solution will match with their vision and future expectations. VI. Referrences Gabarro, J. J. (2008). Wolfgang Keller at Konigsbrau-TAK (A). Harvard Business Review. Oct. Livingston, J. S. (1988). Pygmalion in Management. Harvard Business Review. Sept-Oct. 121-130.

The Life of Pi

The Life of Pi

The Importance of a Life Changing Story In the book, “Life of Pi”, I believe Martel was aiming to express the importance of understanding that life is a story. The example of the two different stories at the end is to convey how human beings have different ways of identifying the truth in a story. Pi shows us this when he says “I know what you want. You want a story that won’t surprise you. That will confirm what you already know. That won’t make you see higher or further or differently.

You want a flat story. An immobile story. You want dry, yeastless factuality”(Martel 302). Martel is trying to convey the message, how one human may understand a story can be totally different from how the other sees it. At the end of the book Martel allows the reader to choose which story they believe. If you remember at the beginning of the book Martel tells us that this story will convince you to believe in God. That is exactly what he does.

The two different accounts of the story seem to be a symbol of understanding religion. The first story, to me, gave off a vibe of faith because I wanted to believe that story actually happened. The second story was dry and seemed to be more factual than the first. These stories were a contrast between religion and atheism. Both stories contained the same facts but the first story made the reader want to believe it because it was a stunning account of events, like most religious books.

Pi hints to this logic when he asks, “So tell me, since it makes no factual difference to you and you can’t prove the question either way, which story do you prefer? Which is the better story, the story with animals or the story without animals”(Martel 317). The Japanese men state that they believe the story with the animals and PI replies, “Thank you . And so it goes with God”(Martel317). This meant that the men believed in God.

Animal Farm Presentation

Animal Farm Presentation

“What do the theme texts tell us about the corruption of power? ” Today I’m going to talk about “corruption of power”. As we know power can used for help others such as to help the social vulnerable group or the power can also used to abuse the social vulnerable group. Same power, but uses in two ways the reactions are totally different. The reason why I chose this topic is because of after watched the film “To kill a mockingbird” base on the novel by Harper Lee and read the book “Animal farm” by George Orwell.

I can feel the corruption of power in our society. So, what corruption of power? We can simply define corruption of power as use power to abuse others or make use of somebody. Too much power will leads to loss control of it, like the example from “Animal farm”. Napoleon and Snowball are the leaders of the animal farm; they both have same power to manage the farm. But Napoleon always have the different opinions with Snowball, he wanted to control the whole farm by himself, so he took away Jessie’s puppies and train them as his attendants.

He chased Snowball away form him by used puppies. After that, he has the power to control whole farm and no one can reject him. He changed the command which given by old major, he slept on the bed, he drink alcohol; kill the animal who rebel him and trade with human. He makes the animals to work harder than before and no one can against him. Due to Napoleon have too much power, he loss control of it; he can do anything what he wants to do without any restriction. It leads to a corruption of power.

Not only Napoleon but also the sheep in the farm help him to increase the power. Although the sheep did not thing, they represent the people who are naive and ignorant. Because they do what Napoleon told them to do and said what Napoleon told them to said. They were not thinking anything. This salutation makes the corruption gross intensively and easier. This story told us the reasons why totalitarian forces occur in our society. It is a kind of abuse the rights. Another example is form the film “To kill a mocking bird”.

This film was really touched me. It is a story of a white man defended a black man who accused of raping a white woman. Throughout this story, we can see the depravity of power. The story told through from the perspective of two children. If you still remember the details in the film, for instance, black citizens of the town were not allow to sit in the same area with the whites. This is one aspect that highly points out black citizens were discriminated by whites. I was impress by a scene which is Atticus defined Tom Robinson in the court.

Atticus have already given enough evidence to prove that Tom Robinson is innocence, but at the end of the trail, the jury, which is a group of whites, believes that Tom Robinson is convicted of raping. The jury has the power to judge the accused, obviously, they could determine Tom Robinson as innocence, but the weren’t, because they against black people at that time. Clearly, this is a representation of corruption of power. The jury has the absolute power and they were ignorance, base on this absolute power, nobody can reject it and it becomes a corruption.

Turn to the realistic society, not only the absolute power will leads to a corruption, but also people’s moral values weaken, this is one of the main reasons that we can not ignored. Like the sheep and boxer are good examples of the naive people in this society, moral behavior are disorder, this disorder is reflected in the politics of the corruption of power, corruption, bribery, abuse of power and so on. These are the reasons why the corruption of power grown up in our society.

Garanti Case Study

Garanti Case Study

Introduction and Problem Definition Garanti Bank (GB) which is one of the big private banks in Turkey had passed through a remarkable change operation. During this transformation, the mail goal was to redefine both culture and the organizational structure of the bank. Contrary to the culture present in Turkey at that time, Mr. Ongor and the management board accomplished creating a new culture in GB. Ongor had achieved changing the organizational structure and culture, but the only thing to do is to keep it effectively so that after his retirement GB would not go backwards to the old way of doing things.

Critical question is whether the system will maintain with remarkable change found and implemented by Akin Ongor, when he is going to leave from his position. Corporate culture, which cannot be contingent upon only one specific person, should be suggested ways of sustaining newly created culture before retirement of Mr. Ongor. Besides, it is also in demand that GB operates as a service hub to diffuse the practices, acquired during its transition, to the rest of group companies. Analysis In the beginning of GB history, the whole system depended on centralized, integrated, and more based on control structure.

To illustrate, branch members were waited for commands of the CEO and executive members, staff was blamed for their mistakes, they could not behave as an entrepreneur, and hence they were reluctant to get in complicated situations. There was high uncertainty avoidance in the organization and thus no risk taking. The first step to the change was taken with Mr. Tekin. Culture and the organizational structure of the bank, had been defined as “a traditional deposit-taking institution, hierarchical, introverted and domestically oriented”, which was started to change with new CEO Ibrahim Betil’s approach in 1986.

He tried to establish more performance-oriented, for instance pop-up visits in each department during the week. For more improvement, GB had to set a new business strategy and to be able to carry out it smoothly. According to Lewin’s force field model, effective change happens by unfreezing the current situation, moving to a desired condition and the refreezing the system so that it remains in this desired state. Unfreezing involves producing imbalance between the driving and restraining forces. This could occur by increasing the driving forces or reducing the restraining forces, r having a combination of both. In spite of the fact that there were external forces, they were not enough alone for an effective transformation like the GB case. In many organizations external driving forces are hardly felt by anyone below the top-executive level. Thus, an organization needs propulsive forces within the organization so as to foresee these external forces. These forces, which are internally originating, are difficult to apply; because they lack external legitimates, hence effective transformation occurred by leadership is necessary to justify and assist internal driving forces.

At this point role of Akin Ongor was critical in the change process as a leader in transformation of the system. Leaders during the transformation of the system could be behaved as change agents who energize,motivate and direct staff to a new set behaviors and values. Akin Ongor proved to be an effective leader during this process by developing a vision for the organization, inspiring employees to that vision, and fulfilling the change. According to John P.

Kotter, for a successive organizational transformation leaders should go after eight distinct steps in an order. Akin Ongor started the “change” process by constructing communication system along the staff and the managers. He eliminated the obstacles that buffer employees from the external environment by informing employees about competitors, changing customer trends and other driving forces. After creating urgency for change as he said “The bank needs change urgently”, he formed a strategic vision of a realistic and attractive future that keeps employees together.

He composed a vision which differentiate GB from the current situation and set goals both achievable and attractive which were supported rewards in the short term. He communicated the meaning and raised the importance of the visionary goal to employees. Creating a shared vocabulary, jargon in the business helped communicating that vision. Mr. Ongor brought his vision to life through symbols. Without leading of him, GB would decline and eventually become seriously misaligned with its environment.

He also gave importance to learning organizations like training programs on change management which were lectured by foreign professionals. Finally, by involving human resources department and employees in the process of shaping the organization’s vision, Akin Ongor created a commitment toward the vision. An organization’s culture is firmly set in a place of the employees’ minds. Higher standards in new hiring criteria like at least one foreign language prerequisite and the change in process helped to reinforce the newly set organizational culture.

The resistance of longer tenured managers by not getting on board, not taking place actively in projects, and always looking for signals from above, was overcome with the new employees. The presence of new employees, forced the existing managers to challenge themselves and to start thinking about self-improvement. Some branches were closed, this brought into that people were worried about their jobs, and they illustrated this situation as an “earthquake”. This and the presence of young entrepreneur staff make the managers worried about their jobs.

With some firings, the education level went up and average age decreased from 50 to 30. 5 years. By accelerating the turnover of senior executives and older employees who held the cultural values in place, Mr. Ongor minimized the restraining forces that are resistant to change. Recommendations and Conclusion In order to support and sustain the established culture at GB, cultural network might be directed by senior executives. They could mix into the cultural network, sharing their own stories and creating new ceremonies to display shared meaning.

An effective refreezing of changed structure could be achieved by aligning the reward system around desired performance and results. With its new business strategy GB now is a customer-oriented company and its key service attribute is quality. Employee’s attitudes and greetings towards customers could be evaluated by direct feedback from customers. Employees that got positive feedbacks than could be further evaluated on a performance basis. Overall, the top employees could be rewarded with a personal evaluation form a high level manager, with a small amount of money.

In order to diffuse the remarkable changes occurred in GB through the entire corporate group, Dogus, big congresses which employees as well as stakeholders of different companies gather together could be organized. Numerous questions and solutions of them like what was done in GB, benefits of such change and experiences gained could be shared with other corporate companies in these meetings. References Kotter, John P. (2007) Tests of a Leader. Harvard Business Review. p. 96-103

Feasibility Study: Einstein Bros Bagels Franchise

Feasibility Study: Einstein Bros Bagels Franchise

[pic] Feasibility Study: Einstein Bros Bagels Franchise Einstein Noah Restaurant Group Due Date: December 3rd, 2009 By: Erika Quinones [pic] TABLE OF CONTENTS EXECUTIVE SUMMARY…………………………… ……………………………3 BUSINESS CONCEPT……………………………………………………………. 4 MARKET FEASABILITY……………………………………………………….. 10 TECHNICAL FEASABILITY……………………………………………………12 FINANCIAL FEASABILTY…………………………………………………….. 15 Executive Summary Einstein Bros Bagels will offer various types of food and beverages specializing in breakfast and lunch.

The franchise will be conveniently located in a shopping center between University Medical Center and Texas Tech Health Science Center- Paul L. Foster School of Medicine in El Paso, TX. Therefore, it will offer an accessible location for our customers within walking distance. The bagel shop will be known for its comfortable and friendly store environment featuring sophisticated finishes and furnishings to a reasonably priced, high-quality food. Currently in the El Paso TX area there are no Einstein Brothers Bagels franchises.

The market for convenience foods is expanding rapidly in the El Paso TX area due to increase population growth and increased median family incomes. The competition is plentiful in the El Paso TX market due to increased food related franchises and restaurants opening in the area offering similar products and services. Aggressive advertising would have to be conducted to make the targeted customers aware of the business. The resources needed have been identified by the franchisor. The needed expertise and skills to make this franchise a success is provided by the franchisor.

Without adequate financing and net worth one cannot easily open a franchise for this corporation. Production is subcontracted through the corporate offices. The cost to start the franchise is expensive relative to other types of food related franchises. Because of the amount of capital infused and structure of the business venture cash flow will be available to operate the business. Initially gross margins are low but do improve with time as does the return on investment. Financing will be outsourced by a bank, forming a partnership or in the form of a private investor or investors.

This business venture is economically feasible because of the location and the products of the business make it lucrative and exclusive. The timing is also good because of the growth of the Texas Tech Health Science Center in conjunction with the growth of the adjoining University Medical Center. Business Concept Mission Statement At Einstein Noah Restaurant Group, our mission is simple: to redefine the quick casual neighborhood cafe. “From our comfortable and friendly store environments featuring sophisticated finishes and furnishings to our reasonably priced, high-quality food, we ffer places—quite simply—where people want to be. The concept of quick casual is more than a trend. In fact, the $6 billion segment is one of the fastest growing niches in the restaurant industry. This significant growth is attributed to aging baby boomers who are willing to pay a little more for quality food in a comfortable environment and a youth culture that needs a place to, well, hangout. We provide both—with class. From cozy, warmly lighted lunch cafes with comfy chairs and community tables to convenient counter-order bagel delis, ENRG offers an array of quick casual options.

Whether customers want a piled-high sandwich to go or prefer to pause over fresh salads and talk business, one of ENRG’S five brands will accommodate. It’s all about convenience that isn’t rushed, atmosphere that doesn’t go stale, and service that comes with a smile. And we do quick casual all over the nation. With a dough production facility and a coffee roasting plant, ENRG makes sure everything bagel-like—from standard hole-in-the-middles to the ingenious Bagel Dog—and not so bagel-like—from fresh salads to fudge brownies—are as easy to buy and enjoy as the daily newspaper”- Einstein Noah Restaurant Group.

Description of Business Einstein Noah Restaurant Group, Inc. is the largest owner/operator, franchisor and licensor of bagel specialty restaurants in the United States. As of December 30, 2008, it had 649 restaurants in 36 states plus the District of Columbia. As a leading fast-casual restaurant chain, their restaurants specialize in high-quality foods for breakfast, lunch and afternoon snacks in a bakery-cafe atmosphere with a neighborhood emphasis. Collectively, their concepts span the nation with Einstein Bros. restaurants in 26 states (i. e.

Texas) and in the District of Columbia, Noah’s restaurants in 3 states on the west coast and Manhattan Bagel restaurants concentrated in the Northeast. Currently, Einstein Bros. and Noah’s restaurants are predominantly company-owned or licensed, while Manhattan Bagel restaurants are predominantly franchised, with one company-owned location. Their product offerings include fresh bagels and other bakery items baked on-site, made-to-order breakfast and lunch sandwiches on a variety of bagels, breads or wraps, gourmet soups and salads, assorted pastries, premium coffees and an assortment of snacks.

Their manufacturing and commissary operations prepare and assemble consistent, high-quality ingredients that are delivered fresh to the restaurants through the network of independent distributors. The company believes in controlling the development, sourcing, manufacturing and distribution of their key products is an important element in ensuring both quality and profitability. To support this strategy, they have developed proprietary formulations, invested in processing technology and manufacturing capacity, and aligned themselves with strategic suppliers.

Licensing and franchising the brands allows them to increase their geographic footprint and brand recognition. The business also generates additional revenues without incurring significant additional expense, capital commitments and many of the other risks associated with opening new company-owned restaurants. Company History In the early years, Einstein Noah Restaurant Group operated and franchised specialty coffee cafes in the northeastern United States under the brand names of New World Coffee (New World) and Willoughby’s Coffee and Tea (Willoughby’s).

In addition to coffee, they also served fresh, high quality gourmet foods and pastries. The business strategy in those years was to be a franchisor and grow through acquisitions. With the acquisition of Manhattan Bagel Company, Inc. (Manhattan) in 1998 and Chesapeake Bagel Bakery (Chesapeake) in 1999, it became a significant franchisor of bagel restaurants and, to a lesser extent, of coffee cafes. In 2001, the business strategy evolved to include company-operated restaurants as well as franchised and licensed locations as it completed the acquisition of substantially all of the assets (the Einstein Acquisition) of Einstein/Noah Bagel Corp. ENBC) and its majority-owned subsidiary, Einstein/Noah Bagel Partners, L. P. , which operated 2 brands: Einstein Bros. Bagels (Einstein Bros. ) and Noah’s New York Bagels (Noah’s). The Einstein Acquisition in 2001 was accomplished by issuing a substantial amount of short-term debt and mandatorily redeemable preferred equity, which have since been refinanced and restructured. Forms of Ownership Einstein Noah Restaurant Group, Inc. operates under the Einstein Bros. Bagels (Einstein Bros. ), Noah’s New York Bagels (Noah’s) and Manhattan Bagel Company (Manhattan Bagel) brands.

The Company operates in three business segments: the Company-owned restaurants segment, the manufacturing and commissary segment, and the franchise and license segment. The corporate support unit consists of overhead and other activities related to the business segments, as well as interest on the debt and depreciation on the assets. The Company-owned restaurants segment includes the Einstein Bros. and Noah’s brands. The manufacturing and commissary segment produces and distributes bagel dough and other products to the restaurants, licensees and franchisees and other third parties.

The franchise and license segment earns royalties and other fees from the use of trademarks and operating systems developed for the Manhattan, Einstein Bros. and Noah’s brands. Company-owned restaurants During fiscal 2008, approximately, 91% of the total revenues were generated by restaurant sales at the Einstein Bros. and Noah’s Company-owned restaurants. Einstein Bros. offers a menu that provides food for breakfast and lunch, including fresh-baked bagels and hot breakfast sandwiches, cream cheese and other spreads, specialty coffees and teas, creative soups, salads and sandwiches, and other menu offerings.

Noah’s is a neighborhood-based, deli-inspired restaurant that serves a variety of sandwiches, fresh baked breads, home-style soups, sweets and bagels. Noah’s offers a menu for breakfast and lunch, including fresh-baked bagels and other baked goods, made-to-order deli-style sandwiches, including such favorites as pastrami, corned beef and roast beef on fresh breads and bagels baked on premises daily, soups, salads, desserts, fresh brewed coffees and other cafe beverages. Manufacturing and Commissaries

The Company operates a bagel dough manufacturing facility in Whittier, California and has a supply contract with a single supplier to produce bagel dough to the specifications. These facilities provide frozen dough and partially-baked frozen bagels for the Company-owned restaurants, franchisees and licensees. In fiscal 2008, the Company operated five United States Department of Agriculture (USDA) inspected commissaries geographically located to serve the existing Company-owned, franchise and license restaurants.

These operations primarily provide the restaurants with food products, such as sliced meats, cheeses, and pre-portioned kits that create the various salads. The Company purchase other ingredients used in the restaurants, such as meat, lettuce, tomatoes and condiments, from a group of third party suppliers. Franchise and Licensing The Company offers Einstein Bros. franchises to qualified area developers. It has a franchise base in the Manhattan Bagel brand. At the end of fiscal 2008, the Company had 71 franchised locations throughout the United States.

At the end of fiscal 2008, the Company had 152 license restaurants throughout the United States and opened 32 new license restaurants. Why open a franchise location of Einstein Bros. in El Paso, TX? The reason this business concept would bring high value to this geographic location can be based on the following factors to make this venture a success: It will target both middle class and higher income earning clients (i. e. doctors, nurses, staff administrators, faculty but not limited to the public we also serve such as family members of patients) as well as neighboring businesses such as the El Paso Health Department (i. . public health officials), it will be located in close proximity, in other words within walking distance, to Texas Tech Health Science Center- Paul L. Foster School of Medicine, University Medical Center, and the El Paso Health Department which will provide convenience for its clients in saving time for accessibility and at the same time obtaining quality products at a good price. In addition, this establishment currently doesn’t exist in the city of El Paso and the franchise would like to further expand throughout the state of Texas.

Therefore, at this time there is limited to none in regards to competition where similar products are sold, making this business venture unique in the area. Market Feasibility “We intend to enter into franchise area development agreements in geographic markets where we either currently do not have Einstein Bros. restaurants or in markets that can support both franchised and company-owned restaurants. ” – Einstein Noah Restaurant Group. Einstein Bros. franchising is currently offering Einstein Bros. franchises to qualified area developers. During 2008, it actively marketed the Einstein Bros. rand franchise rights and signed several multi-location deals. Market Growth Status of development plans or expansion: Einstein Bros is currently planning to expand their presence through a significant expansion of franchise and license restaurants throughout the country. This strategy will allow the generation of additional revenues without incurring significant additional expense, capital commitments or many of the other risks associated with opening new company-owned restaurants. They also expect to increase their geographic footprint and guest recognition of our brands.

Growth in numbers: At the end of 2008, there are 152 license restaurants throughout the United States. Einstein Noah Restaurant Group have opened 32 new license restaurants in 2008 and currently are planning to open at 30 to 35 new license restaurants in 2009. There currently have seven development agreements in place for an additional 47 restaurants locations that are expected to open on various dates through 2016. Based on this information, there is a significant increase in market growth for this franchise throughout the country as it tries to meet the demands of its clients.

Competition/Competitors “We compete against similar fast-casual and quick-casual restaurants which franchise and license their brands in the states in which we operate”– Einstein Noah Restaurant Group. This type of industry (i. e. restaurant) is highly competitive and there are many well-established competitors that vary from geographical location. While it operates in the fast-casual segment of the restaurant industry, it also consider restaurants in the fast-food and full-service segments to be competitors.

Several fast-casual and fast-food chains are focusing more on breakfast offerings and expanding their coffee offerings (i. e. McDonalds). This could further increase competition in the breakfast day part. In addition to current competitors, one or more new major competitors with substantially greater financial, marketing and operating resources could enter the market at any time and compete directly against us. Also, in virtually every major metropolitan area, like El Paso (i. e. local coffee shops), in which it operates or expects to enter, local or regional competitors might already exist.

This may make it more difficult to attract and retain clients. In addition to outside competitors, other numerous factors including changes in consumer tastes and preferences often affect restaurants. Shifts in consumer preferences away from our type of cuisine and/or the fast-casual style could have material effect results of operations. Dietary trends, such as the consumption of food low in carbohydrate content have, in the past, and may, in the future, negatively impact sales. Changes in clients spending habits and preferences could also have a material adverse effect on sales.

The results will depend on the ability to respond to changing consumer preferences and tastes. One thing to also keep in mind is that due to the recent local and state regulations mandating prominent disclosure of nutritional and calorie information may result in reduced demand for some of the products which could be viewed as containing too much fat or too many calories. Advertising Marketing is obviously a key ingredient in the business process for Einstein Bros. This franchise program typically targets very specific markets/regions and utilizes local promotional media, from print advertising to radio and billboards.

Company-owned and franchised locations are required to purchase local advertising and to contribute to the brand’s marketing fund, which provides stores with support such as in-store promotional materials. Technical Feasibility Resources The cost of a new franchise is approximately $600,000, therefore meeting the financing needs is essential to start up the business (See Finance Section). This will cover costs of equipment, leasehold improvements, furniture and fixtures, and raw materials needed to start production of the business. Locations The average Einstein Bros. estaurant is approximately 2,200 to 2,500 square feet in size with approximately 40 seats and is generally located in a neighborhood or regional shopping center. Each restaurant is designed to create a comfortable, casual environment that is consumer friendly, inviting and reflective of the brand’s personality and strong neighborhood identity. Therefore, a shopping center at the desired location in El Paso, TX has been identified to meet this request and is readily available to be leased. Staffing For an average crew, you can expect to hire 15 to 20 full-time and part-time employees.

Each restaurant must have a full-time operating partner. We’re talking about a qualified General Manager who has passed our certification requirements on the premises at all times. You should, in addition, be prepared to manage and control your business on a daily basis. Production The franchisees are required to purchase proprietary products through our designated suppliers or directly from us. Franchisees currently purchase the raw materials from various suppliers; however, they have only one supplier for most of our key products. Franchisees purchase all of our cream cheese from a single source.

Also, franchisees purchase a majority of the frozen bagel dough from a single supplier, who utilizes its proprietary processes and on whom they are dependent in the short-term. All of the remaining frozen bagel dough is produced at their dough manufacturing facility in Whittier, California. Although to date they have not experienced significant difficulties with its suppliers, the reliance on a single supplier for most of its key ingredients subjects them to a number of risks, including possible delays or interruption in supplies, diminished control over quality and a potential lack of adequate raw material capacity.

Any disruption in the supply or degradation in the quality of the materials provided by the suppliers could have a material adverse effect on the business, operating results and financial condition. Expertise & Skills It is fundamental that you bring a solid business background as well as the financial capacity to make a franchising investment. Einstein Bros is focused on a rigorous pre-selection process that brings only those candidates to the table that will create a win-win for Einstein Bros. and its franchisees.

Toward the end, it will be required that any franchising candidates have either first-hand or partnered experience in the restaurant industry. Einstein Bros senior management positions are filled with industry veterans who bring a strong operations background to the business to assist in opening up the franchise. They’ve got experienced leadership in all supporting departments. In addition, the program extends to day-to-day operations in each neighborhood store, from training to supplying the right manuals for thorough field support. They also have an in-house culinary department that ranks with the best in the industry.

The culinary researchers and seasoned chefs are in a constant quest for the next thing. As a result, the franchisees, in turn, will get the opportunity to showcase that cutting edge culinary progress in their area. Note: Einstein Noah’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting.

This brings us to the next section of the study. Financial Feasibility Fixed costs Excluding tenant improvement allowances that typically received from the landlord in a leased location, the cost of a new franchise is approximately $600,000 (median value), depending on square footage, layout and location. The fixed costs include equipment, leasehold improvements, furniture and fixtures, and other related capital. Note: For 2009, it is anticipate that the tenant improvement allowances will average approximately $50,000 per restaurant/franchise which will reduce cost.

However, the amount of the allowance can vary widely depending on the location of the restaurant and other terms of the lease. There is an intention to upgrade at least 45 of the current restaurants during 2009, which will include approximately $80,000 in capital costs and approximately $49,000 in deferred maintenance costs, for a total cost of approximately $129,000 per restaurant. Cash Flow Being part of the restaurant industry, it is predominantly a cash business where cash is received at the time of the transaction.

It is believed it will generate sufficient cash flow and have sufficient availability under our revolving credit facility to fund operations, capital expenditures and required debt and interest payments. The inventory turns frequently since the products are perishable. Accordingly, the investment in inventory is minimal. The accounts payable are on terms that are believed to be consistent with those of other companies within the industry. The primary driver of the operating cash flow is the restaurant operations, specifically the gross margin from the company-owned restaurants.

Therefore, it focuses on the elements of those operations including comparable store sales and cash flows to ensure a steady stream of operating profits that enable each franchise to meet its cash obligations. Gross Margin The current gross margin is currently at 20%. This increase to revenue and gross margin was attributed to price increases and the expanded role within the distribution chain for sales to the franchise and license locations. Note: Global demand for commodities such as wheat has resulted, and could in the future result, in higher prices for flour which would increase the cost.

The prices of the main ingredients are directly associated with the changing weather conditions as well as economic factors such as supply and demand of certain commodities within the United States and other countries. The ability to forecast and manage the commodities could significantly affect the gross margins. Any increase in the prices of the ingredients most critical to the products, such as wheat, could adversely affect operating results. Return on Investment (ROI)?

The franchising profit (ROI) will be based on a number of variables including location, operating expenses, retail sales mix, sales margin, occupancy costs, and financing costs. Unfortunately, only a rough estimate can be determined at this time based on a different location. The ROI is estimated to be -2% for the first year and for the following years the ROI will fluctuate between 40 to 50 percent. The break even point for this business venture will occur in one and a half years if projected sales are realized. Financing ($) The franchise agreement requires an up-front fee of $35,000 per restaurant and a 5% royalty based on sales. • The estimated initial investment to develop a franchise location ranges from 492,000-858,350 (median 600,000 in the El Paso area). • Minimum net worth of 1 million and 400,000 of liquid/cash assets is needed and required to open the franchise. • Advertising fees are up to 5% of gross sales. Is financing available thru this business corporation? Einstein Bros does not offer financing at this time but financing could be obtained through banks, private investors, and or forming a partnership for additional capital.