Easy Internet Cafe ( EIC ) case study is a most popular case for the internet and modern business leader. We try to present of this case solution which is discusses under below. In 2003, with losses continuing to mount, eIc decided to radically revamp their operations. in 2003, in order to eliminate the need for future investments in new stores, the strategy was changed.
It was decided to appoint franchisees for the new stores and also, if possible, for the existing legacy stores. According to the new strategy, the franchisee would be required to bear the costs of the property and the hardware. It was also decided to that smaller stores with 20 to 30 PCs. Management team thought that it was important that every cafe looked the same, with common signage, furnishings and PCs.
The elc decide to Contract is signed with franchisee for one week. If the franchisee did not already have space for the café, eIc would assist in recommendations with locations within 28 days. The broadband internet connection had to be installed by the local telecoms supplier within 28 days. Also they need to Desk installed within seven days. Server delivered and installed 2 days and PCs delivered and installed 2 days. CVM delivered and installed 1 day Signage delivered and installed 1 day. Chairs delivered and installed 1 day. Testing complete system 2 days and also Open for business within one day.
Are the steps the same for each franchise?
No, all step are not same for each franchise, it may differ on destination of Franchise Country. It generally change on outbound transportation costs. This cost divided into three zone 1, 2, 3,
Zone 1 - closest to UK (France, Spain, Netherlands) - £300 per store
Zone 2 - mid-range from UK (Poland, Czech, Finland) - £450 per store
Zone 3 – farthest from UK (Greece, Turkey, Bulgaria) - £750 per store.
What is the significance of activities that have predecessors on the plan?
The predecessors plan were most perfect if a level of 10 stores openings per Week, and same location for all franchisee that means distance from elc, we see that the negotiations, investigation and discussions with a potential franchisee could take days for a simple individual franchise to several months for some of the more complex deals that included multiple locations. Each store opening was really a “project” in project management terms and an ending point with the actual opening of the store. Some of these “activities” were logistics-related while others were not. And labor cost was fixed not for individual. But at the point of plan we see that the predecessors create a sequence level, when one activity complete than another activity were start.
How much time should it take to open the cafe once the contract is signed?
From the predecessors plan we see that average duration of time for all activity. Under bellow we discuses about time of the contract are signed. A summary of the major steps listed table below-
From this network we find out total time by the way of this
A B C E F J K
7 + 28 + 28 + 2 + 2 + 2 + 2 + 1 = 70
So day of activity should take 70 days to open the cafe once the contract is signed.
If you were Tanmay, which solution would you recommend to the eIc management
team? What are the pros and cons of each proposal?
Before pros and cons of each proposal of four company we mention all the benefits or proposal.
UPS: They offer in several level
1) UPS company don’t maintain billing service to franchise
2) Warehouse provided by franchise.
3) The total cost of implementing UPS proposal was £1110 of which £477 is eIc labor costs
Exel:
Exel offered a similar services to UPS's, with the addition of supplier management services.
1) UPS company maintain billing service to franchise
2) To appoint two dedicated personnel, a contracts manager and an administrator
3) Total cost was estimated to be £1,434 per store, of which £957 was the logistics costs and £477 eIc labor costs totaling.
Globalserve:
Globalserve provides complete IT supply chain globally including IT procurement
1) They will make Value Added Resellers (VAR) for the franchise in several countries.
2) Product directly delivery to the franchise
3) Globalserve will charge a transaction fee of 3.25% and local reseller mark-up of 5%, of the equipment purchase value for each transaction.
4) The total cost per store will be £1,875 + £381 = £2,256. (Global Charge + labor Cost)
Ingram Micro:
Ingram Micro is a provider of technology products and services, including supply chain management. They offer
1) Warehouse facility
2) Transportation facility
3) Provide Computer Configuration ( Provide IT product)
4) Provide billing facility ( Direct billing to the franchise ) and payment collection facility
5) Return management
6) Total Cost 560 (£179 logistics cost + 381 eIc labor cost)
From the above four proposal we understand that Ingram is the most suitable proposal for the elc. Because, UPS didn’t want to take any risk and they maintain billing system with elc, But elc would still require to provide those activities with franchise, the UPS provide ware house facility but they didn’t buy the equipment from the suppliers. Exel provide same facility as like UPS but they provide additional facility such as appoint two dedicated personnel, a contracts manager and an administrator but their logistics cost is higher than UPS. Globalserve, they will make Value Added Resellers (VAR) for the franchise in several countries. The VAR would deliver the products locally and collect the cost of equipment and delivery charges from franchisee directly. Globalserve charge labor cost lower than UPS and Exel but logistic cost is higher than two. On the other hand, Ingram Micro provide several proposal, they give ware house facility, direct billing facility to franchise, transportation facility from ship to road transportation and provide IT equipment. For all activities they will charge total 560 where if elc buy separate IT equipment than elc need to expense total 1357. So from the above discussion we decide that Ingram Micro solution is suitable for the easy internet cafe