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Easy Internet Caf Case Study Essay

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Table of Contents:

Executive Summary

Page 2
Issue Identification

Page 2
Environmental and Root Cause Analysis

Page 3
Alternatives and Options

Page 6
Recommendation and Implementation

Page 7
Monitor and control

Page 9

Executive Summary
It is a fact that the company didn’t achieved the best results in last years, reason way a radically revamp of our operations is required. In order to implement the new strategy regarding the franchise for easy internet cafe we qualified 4 offers from UPS, Excel Globalserve and Ingram for 3rd party logistics. My analysis took in consideration the following factors: total cost per store, ownership of goods, experience and expertise in supply chain for all 4 competitors, cost reduction and our core competency.

All the 4 offers are described in the next chapters in more details.

From all of them I will recommend option 1 from Ingram Micro, company that is able to provide an integrated solution: procurement, warehouse, transportation, configuration, billing & payment collection, returns management, with other words a complete solution that suit eIc needs.

Using current in-house method eIc spends approximately £1300 for all the logistics activities involved in opening a new store, not including the outbound transport to the franchisee, with a eIc labor costs of £602 per store. Alternate, the Ingram solution is £560 (£179 logistics cost + £381 eIc labor cost) in case the equipment are bought from them. Many other benefits are described in detail in my analysis.

Issue Identification
Because of continuing losses from 1999 to 2002 (£80- £100 million), we decided to radically revamp our operations, in order to eliminate the need for future investments in new stores.

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 and will be equipped with 20 to 30 PCs. Our goal is every cafe to look the same, with common signage, furnishings and PCs. Easy Internet Cafe

Facts to consider:

The new philosophy is to franchise the operations. So far the company had created about 20 franchised cafes, mostly in Europe, with 5 in the New York City area. The company has established itself as the per-eminent internet café chain in Europe, but it has still not made a profit.

In May 2000 eIc received funding from Apax Partners and Hewlett Packard, together investing £25 million into the venture.

From 1999 to 2002, easyInternetcafé owned and operated all their own stores (eIc incurred cumulative losses of £80- £100 million over the period).

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 le...

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