Management Plan for an Internet Cafe and Karaoke Bar

Introduction:

            Karaoke bars are a cultural import from Japan and Asia, and Internet cafes are a universal phenomenon now. A small setup comprising the above two features is a small venture started by small, first time entrepreneurs. A small establishment in the neighborhood is heavily dependent on the patronage of its neighborhood customers. There could be many other small establishments like this, who would be vying for the same customer base. Hence, competition in this business is going to very heavy.

            Karaoke bars and internet cafes are businesses which require the physical arrival of the customer to the premises. A restaurant can solicit business through physical presence, take away, telephone ordering and online ordering. But this business does not have those options, and hence the footfalls generated to the store are highly critical to the business’ success.

            The management plan for the venture must be backed by management principles and backed by market research of the locality which is going to be the feeder area for the business.

Management Principles and their Importance: 

            Management principles lay the foundation for a sound and profitable business. These principles are proven ways to be effective and also efficient in the way the business is conducted. Without a strong background of the basic principles and how they could shape the business, the business could well be groping in the dark.

            Management principles help in constructing an organization through various established templates and hence make the decision of starting off a business or running it a very pragmatic process, rather than going about it in a random and unstructured manner. A good manager or a promoter must be able to make full use of management principles that could be relevant to his business to be able to succeed. Management principles bring in rationality into the decision making process and hence give us a higher probability of making the right decision.

            When an entrepreneur starts planning for a new venture, he is faced with countless management principles he could use to come to a plan or a conclusion. Different industries will demand a different analysis, and hence we discuss some management principles relevant to a service business – Karaoke Bar and Internet Café.

Key Management Principles and how they can help shape the Business: 

External Environment: 

            John Kotter (1979), states that every organisation is dependent on the external environment to varying extents. This is because the resources required to run the business could be held by a factor which is outside the business, like labour, raw materials, capital, information, legal approvals, etc. If the dependency on one factor is high, then the business could be at high risk, like a Government body ordering a restaurant closed due to compliance problems.

            In the karaoke bar and internet café business in discussion, a $100,000 loan has been taken. Servicing this loan is going to be a major external factor. The necessary approvals, registrations and licenses required from various agencies are pre requisites. Also, the availability of labour, in the form of a computer specialist and an audio-visual specialist and various other support staff is going to be critical. These people will form the identity of the business and a long stint from external people is necessary to establish the business on a firm footing.

            A thorough analysis on listing down these external factors has to be done by the promoters to understand the risks associated with their external environment and the measures they need to implement in order to survive in the business. It will be time well invested to do a week long field study on this. 

Internal Environment:

            An organisation uses different types of resources from within itself to be in an advantageous position. Optimum utilization of internal resources leads to synergy within the organisation. Faulkner (2002), states that utilizing internal resources poses the greatest challenge for any organisation. The internal environment is a function of resource strength, unique proposition, internal synergy and organisational behaviour.

• The strength of resources of the company is the speed and reliability of the connection vendor for internet browsing, computer terminals’ quality and life, audio equipment quality at the karaoke bar.
• Unique proposition is the quality in which the business is going to outdo its competitors. It could be competent employees, better browsing speed, very good audio effects, snacks and drinks, etc.
• A synergistic situation is where the added individual parts make up more than the logical sum. The bandwidth contracted for must be supported by utilization of terminals, for example, else it will be an investment that has gone waste.
• Organisational behaviour is the set of behaviours that is attributable to the organisation during the utilization of its resources. Thus, an organisation could remain lax to customer needs, rude to vendors, rude or very nice to customers.

The promoters must work on this, though this could be an early stage to be doing this. But the internal environment has to be sketched atleast in a rough manner and quality and other standards set now, to be developed and substantiated later. 

Organisational Culture:

Balogun & Hailey (2004) “simply put, culture is how we do things around here”.

Culture in an organisational perspective is the values, attitudes, rituals and behaviours, along with its beliefs and assumptions. An organisation’s culture is usually evolved from the beliefs, assumptions and values of the promoters, and then gets set as the organisation’s culture. An organisation’s culture is always moving or changing, ever so slowly, but bringing about a change in culture as part of a change management process in a short time is extremely painful and difficult.

            Every organisation has a visible aspect to its culture like its traditions and rituals, dressing, language, etc. There is also a deeper culture which is the true essence of the organisation’s culture. These could include the means-to-the-end assumptions, camaraderie, power distance, etc.

            The promoters must get a policy document ready on their organisational culture. The karaoke bar and internet café business has young people as its prospective customers, and hence the culture it breeds within itself is very important to success. The venture must be seen as youthful, throbbing with life, happiness and friendship. This could be just one way of perceiving the business, but the promoters need to work on their culture.

Strategy and Structure: 

      Strategy is the course of action to achieve the organisational goals. Strategy is long term planning on how to win the war and not the individual battle. The promoters have to get a strategy ready for the next five years atleast for the business – how big, how many more, how else. They must have a road map ready for how big they would be at the end of five years of operations in terms of revenues and profits, how many more kiosks or setups they would be operating, and what other businesses they will get into.

      The promoters must also have a long term management structure worked out. Especially since they are not technically competent in the business, how they are going to organize the skilled and unskilled labour; when they become a multi location organisation, how they are going to expand. Franchise or wholly owned, funding pattern and financial plan.

            The entry into the business is a significant turning point in the life of the promoters, and hence they must have the strategy and structure of the business well laid and thought out, to be sure that they don’t go wrong at the planning stage. The strategy plan must give them confidence to move into the business in a well planned and methodical way, with fixed objectives and goals for each year, for each functional area and for the five year period. Thus, this can be reviewed and corrections can be made to achieve these goals or to realign the strategy to suit the environment at that time.

            Before this, they must have the Mission statement for the business, i.e. the purpose of existence of the organisation or business and the Vision defining the desired state which it would like to be in, in the long term.

Leadership: 

            Leadership is going to be a very significant aspect of this business. The promoters are not technically knowledgeable in computers or in audio-visual equipment operations. Hence, they can get involved only at a management level and not in an operational level. Hence, their leadership skills are going to be out to the test, by people who are technically strong.

            There are various styles of leadership, and there could be some import in which style is applied in a given situation. Entrepreneurs who start out for the first time place a lot of emphasis on transactions and tend to rule the organisation by a carrot and stick approach. But the real challenge comes in managing by participation and thus helping people to get empowered, derive satisfaction and thus give a better performance. The best example for this type of leader achieving great things is Lou Gerstner of IBM (DiCarlo, 2002). He turned around the failing company by empowering his people, creating the right work environment and maintaining fairness and the dignity of the individual, while getting actively getting involved in the operations of the company, looking deep into the hierarchy when he needed resources and not being strictly hierarchical (Sheppard, 2003).

            Leadership, here, could be the most significant concept that is highly intangible and indefinable. The promoters face their biggest challenge in the way they lead their employees and the business, especially as pure management people.

Managing Information: 

            This business is going to be dependent on people walking into the floor and consuming the services offered. These people are going to have to be brought in. the business will be heavily dependent on a neighbourhood or a larger locality for its business, and getting through to these customers with the right communication is going to be a key success factor.

1. The promoters will have to access public or private databases to gain customer information.
2. Every customer who walks in must always be remembered by the company.

Both of the above factors need an effective CRM system. Baltzan P. & Philips A. (2008) define CRM as a system for managing the company’s relationships with customers through its various services and thus increase customer loyalty, retention and ultimately, profits. This system is going to be very important to understand customer preferences, know repeat customers, designing promotions, and future pricing considerations. A CRM system provides the platform for gathering customer information, gathering pointers from the information and suggesting actionable solutions and scenarios for future action. Without this information, a customer facing service organisation will not be able to serve its customers effectively.

Summary: 

            The above pages list out the major management principles that need to be considered and worked upon by the promoters. These principles are interconnected to each other, and hence the failure or overlooking of one will be detrimental in the long run.

            Any plan for a new venture will start with the tangibles and then move on to intangibles in trying to work out how the tangibles can be achieved. So, first comes the market analysis, with an environmental study and then goes on to strategic planning, with projections for the company in the war, and the required structure of the organization. Now, the systems required to achieve these objectives, strategic and short term, need to be developed like a CRM system and an artificial intelligence system, ERP, etc.

            The intangible will pose threats which are invisible now. The management leadership style, motivational aspects of employees, the decision making skills of the management will determine the success of the organization.

References: 

Lisa DiCarlo, November 2002. How Lou Gerstner got IBM to Dance. Forbes. Retrieved on May 6, 2010 from http://www.forbes.com/2002/11/11/cx_ld_1112gerstner.html

Julia Balogun and Veronica Hope Hailey , 1999. Exploring Strategic Change. Prentice Hall.

John P. Kotter, 1979. Academy of Management Review. Vol. 4 No. 1, Pg 87-92.

David Faulkner, 2002. Strategy – Critical Perspectives on Business and Management, Vol. 1. Routledge.

Baltzan P. & Philips A., 2008. Business Driven Information System, 2^nd Edn. McGraw Hill.

Paul Sheppard, February, 2003. Leading the Turn Around: Lou Gerstner of IBM. Wharton Leadership Digest. Retrieved May 6, 2010, from http://leadership.wharton.upenn.edu/digest/02-03.shtml