Catherine Horton was an expert cook, and she immensely enjoyed the creative freedom of developing new dishes. — Her specialty desserts For years friends had raved about creations
Business & ManagementGeneralWorked Solution
Catherine Horton was an expert cook, and she immensely enjoyed the creative freedom of developing new dishes. Her specialty was desserts. For years, her friends had raved about her creations, and many had suggested that she go into business for herself.
About seven years ago, Catherine took the plunge. At first, she worked out of her home, generating sales through word of mouth and a small advertisement in the Yellow Pages. Most of her initial sales were for special occasions, such as weddings and banquets. Catherine would plan with the customer, usually weeks in advance. This gave her plenty of time to order the ingredients and prepare the desserts beforehand.
1. What are the three major types of customers Catherine serves? How do they differ from one another? What do you think the order winners are for each group?
2. Consider Catherine's decision to lease the restaurant space (a structural decision). Was this decision consistent with the needs of her different customers? Why or why not? How did this decision change Catherine's business?
3. Consider Catherine's initial decision to hire unskilled labor to help with the walk-in business (an infrastructural decision). Was this decision consistent with the needs of her different customers? Why or why not?
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4. Catherine is clearly unhappy with the way things are going right now. What would you suggest she do? What information would you like to have before making a decision?
SOLUTION
1.) The three major types of customers that Catherine serves are the special-occasion customers, the restaurant customers, and the walk-in customers. They differ from one another in which order winners are most important to each of them. The special occasion customers want personal service, but allow more delivery time and are not as price sensitive. The restaurant customers are price sensitive and require higher volumes and product mix changes. The walk in customers want quick and polite customer service and are price sensitive.
2.) The decision to lease the restaurant space was consistent with the needs of the restaurant business in that it allowed higher volume and quicker production however it will increase the costs of the product to a customer that is price sensitive. The decision does not meet the needs of the special-occasion customers. The decision made it possible to service the needs of the walk-in customer, but this was not the intent of Catherine when she leased the space. The decision changed her business in that it made it necessary to hire more staff and serve a broader market to sustain the cost of the lease.
3.) The initial decision to hire minimum wage workers to service the walk-in customers was not consistent with the needs of the special-occasion and restaurant customers, as they were not affected. The decision did serve the needs of her walk-in customers however it required continued attention and management from Catherine due to high turnover and training.
4.) I would suggest that Catherine analyze which parts of her business are most enjoyable to her as well as find the breakdown of her costs and revenues from the different areas of her business. Then I would suggest that she decide to only undertake the business that is both enjoyable and profitable, and not broaden her market to include other business.