Case study of the Image Cafe
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Published: Tue, 16 May 2017
Image Café was founded by Clarence Wooten in 1998. Prior to that he was also a founded of Envision Designs while he was an undergraduate in 1991 and Metamorphosis Studios in 1994 with co-founder Andre Forde. However, the three company did not really last long. In 1998, Metamorphosis Studios had sold to Medisolv, Inc and Image Café was acquired by Network Solution after sever months of market launch (Clarence Wooten, Jr., 2005).
About Clarence Wooten, Jr.
Clarence Wooten had a big dream since childhood. His dream is to get rich someday. His childhood hobby was playing with computer games. He was so obsessed with computer that his parents banned him at the age of 14 (Kathryn F, Spinelli, 2004: 33-40).
At the age of 18, he attended college to study architecture in Catonsville Community College. During that time he believes that by taking up architecture courses can satisfy his creative instincts. In the early 1990s, many professional architects went back to school to upgrade themselves due to the recession. At that point of time, he manages to learn from the senior architects. After the first two failure of his business, he realised that he did not really understand anything about finance after he read the stories from Fred Smith, Reginald Lewis and Bill Gates. This had inspired him to upgrade himself with a business administration and finance. In 1998, he was graduated with B.S. in Business Administration from Johns Hopkins University (Kathryn F, Spinelli, 2004: 33-40).
Clarence Wooten, Jr. Venture Spirit
Clarence Wooten started Envision Design which was his first business while he enrolled for Catonsville Community College. The type of service he was offering was using form and cardboard to model out a proposed building. The company did not perform well during that time and eventually closed down (Kathryn F, Spinelli, 2004: 33-40).
In 1994, Clarence Wooten started his second company Metamorphosis Studios with his co-founded Andre Forde by focusing on special effects and multimedia presentations. Their first customer is Bingwa, an educational software company. However, Bingwa require Metamorphosis Studios to relocate to Princeton, New Jersey and worked for Bingwa. After a thought Clarence Wooten and Andre Forde turned down the offer as they know they are heading for something big (Kathryn F, Spinelli, 2004: 33-40). Metamorphosis Studios was not a successful project too, in 1998 Metamorphosis Studios was acquired by MediSolv, Inc (Clarence Wooten, Jr., 2005).
In early 1998, Clarence Wooten started his third company Image Café. Back in 1995, internet service began to grow. Many companies had started to create their own companies website in order to promote their products and services over the World Wide Web. However, during that time, many companies do not have their own expertise to create a website. Clarence Wooten knew that this is an opportunity and started Image Café to help companies by design their website to promote their products and services over the web (Kathryn F, Spinelli, 2004: 33-40).
At the start of Image Café, Clarence Wooten went around to search for capital in order to start his business. What Clarence Wooten wants was $300,000 capital based on $3 million valuation. In total he received $110,000 from 10 different investors. Image Café website was ready to launch after four month of preparation. However, at that point of time, Clarence Wooten had utilised the cash during the launch. He went back to the existing investors to ask for additional $150,000 in form of bridge loan. This time, Clarence Wooten expects to raise $3million at $10 million valuation (Kathryn F, Spinelli, 2004: 33-40).
In June 1999, Image Café once again runs out of cash. He approaches three major investors who are keen on investing, two venture capital firms and Network Solution. This time he asked for $1 million from each investor on a $10 million valuation. Out of three, one investor felt that $10 million valuation is too high. Clarence Wooten remembered Mid-Atlantic Venture Association was interested to invest in Image Café. After negotiation, Mid-Atlantic Venture Association will not invest till Clarence Wooten perform the required due diligence. However, Mid-Atlantic Venture understands that Clarence Wooten needs immediate cash so they refer him to two new investors who willing to give him the loan at $300,000 bridge loan on $6 million valuation. At this point of time, Clarence Wooten need to make a final decision to look for more investor or continues to fight as all a long Clarence Wooten wanted a $10 million valuation (Kathryn F, Spinelli, 2004: 33-40).
A Business Plan to Manage Clarence Wooten Business
The author felt that Clarence Wooten cannot sustain his business is because his venture spirit lacks of a proper business plan. Every business he does he only based on his feeling, “he thinks he believes or the investor might” all these are base on what he feels. Before starting a business, he should draft a business plan outline. By doing that, he will have a better view on what he is doing. Business plan outline consist of an Executive Summary on the entire business plan. Second, Company Description is about his products and services, ownership, partnerships etc. Third, Industry Analysis base on industry trends, size, growth rate and sales projection. Fourth, Market Analysis on buyer behaviour, competitor analysis, market segmentation and target market selection. Fifth, Marketing Plan focuses on how Clarence Wooten should market his services. Sixth, Management Team and Company Structure consist of the founder and key personnel. Seventh, Operations Plan is about how the company will run and how do Clarence Wooten produce his work. Eighth, Product (or Service) Design and Development Plan on development status and tasks, challenges and risks, and Intellectual Property. Finally, Financial Projections is a very important factor for entrepreneur. Clarence Wooten should layout how much money his firm needs before the start of his business and how he is going to raise the money and how he is going to use the money. He should not source for investor when he feels that money is not enough (Bruce R. Barringer & R. Duane Ireland, 2010: 144-154).
Clarence Wooten is daring, creative and smart guy. To start a business, the founder or founders should have a proper business plan. From the business plan the founder or founders will be able to have a better view on what are their strength and weakness is there any opportunity or threat to start or with the business. Fire fighting is not advisable, the founder and founders should prevent fire from burning.
Essay Title: Case Study – Roxanne Quimby
Roxanne Quimby was graduated from San Francisco Art Institute in oil painted. She has two sisters, one working with AMEX and one working with Charles Schwab, her father worked for Merrill Lynch. During her collage time, Roxanne Quimby’s father disowned her due to her father found out that she was living with her boyfriend (Franklin W. Olin, Jeffery A. Timmons & Rebecca Voorheis, 1997: 119-125).
In 1975, Roxanne Quimby married her boyfriend and moved to Guiford, Maina. They bought a land and build a two room house without electricity, water nor phone. Two years after married, Roxanne Quimby gives birth to a twin. However their married did not last long, when their twins were four, their married broke apart (Franklin W. Olin, Jeffery A. Timmons & Rebecca Voorheis, 1997: 119-125).
In the 1984, Roxanne Quimby came to know Burt Shavitz. Burt Shavitz was a beekeeper with 30 hives. During that time, Burt Shavitz was earning $3000 a year by selling honey off the back of his truck during hunting season (Franklin W. Olin, Jeffery A. Timmons & Rebecca Voorheis, 1997: 119-125). After Roxanne Quimby and Burt Shavitz met, the bond was immediate. Burt Bees is born.
History of Burt’s Bees
Burt’s Bees was founder by Roxanne Quimby and Burt Shavitz in 1984 by starting to sell candle made from beeswax (Burt’s Bees, 2010). They earned their first $200 during a school craft fair, sales went up to $20,000 at the end of first year (Heather Riccio & Hilary Rowland, 2010).
In 1989, Burts Bees expanded their production and hired 40 employees to start set up a shop (Burt’s Bees, 2010).
In 1991, Burts Bees increased their products variety. Besides selling candle they have invented soaps, perfumes and their best selling item is lip balm (Burt’s Bees, 2010).
From 1993 to 1994, due to the increase of order they started to look high and low for a new location to expand their product line (Burt’s Bees, 2010). After a search they have relocated Burts Bees from Maine to North Carolina and dismissed 44 employees back in Maine (Franklin W. Olin, Jeffery A. Timmons & Rebecca Voorheis, 1997: 119-125).
Why the move?
At that moment, Roxanne Quimbly sat down at her new location surrounded by all the unpacked boxes and keep asking herself, why did she move Burt’s Bees out from Maine? Should she sell Burt’s Bees away, as she might not need the business when her child grow up or stay in North Carolina to expand her business (Franklin W. Olin, Jeffery A. Timmons & Rebecca Voorheis, 1997: 119-125).
The reason for the move is due to high transport cost, high payroll taxes and lack of expertise in Maine. In Maine, Roxanne Quimbly hardly can hire a manager to help manage their business, this was due to the location of their business. In order to cope with the demand, Roxanne Quimbly has no time to focus on the management issues too. One fine day, Roxanne Quimbly just felt that Burt’s Bees have to move away from it current location. She was looking at the map and notice North Carolina. By looking at the map she felt that North Carolina seemed central compare to other location. Without any objection from Burt Shavitz, they did a three days tour in North Carolina and shifted in 1994 (Franklin W. Olin, Jeffery A. Timmons & Rebecca Voorheis, 1997: 119-125).
Question to ask before the move?
Is the industry a realistic place for their new business? Second, can their company do a better job than other as to avoid or diminish the factors that suppress the industry profitability? Third, do they have any unique position in the industry that able to avoid or diminish the forces that suppress the industry profitability? Lastly, do they have any superior business model that can put in place (Bruce R. Barringer & R. Duane Ireland, 2010: 182-183)?
If the above answer is yes, then the business will be success. However, if any of the answer is no, this indicates that the company should reconsidering the new venture (Bruce R. Barringer & R. Duane Ireland, 2010: 182-183).
Before the move to North Carolina, Roxanne Quimbly and Burt Shavitz should sit down to go through a business plan by using SWOT model. Using SWOT model to compare what are the strength and weakness to have business between Maine and North Carolina. Is there really an opportunity in North Carolina (eg. Low taxes and expertise) and types of threat they might face (eg. Competitive markets, security). Roxanne Quimbly should not start asking herself why she moves Burt’s Bees when she had moved.
Essay Title: Case Study – Globant
Globant is an information technology (IT) outsourcer in Argentina, over the three years Globant sales have exceeded $12 million. Today Globant is one of the largest independent IT outsourcer companies in Argentina (Shingo Murakami, Roger Premo, Ina Trantcheva & Eril Yeager, 2006).
Globant was founded in year 2003 by four engineers. They left their job and started Globant when they noticed that there was an increase growth of IT outsourcing in India (Globant, 2010). They started their own business base on simple strategy: “Recruit the best local talent and deliver high-quality solution by ensuring superb customer service” (Cited: Shingo Murakami, Roger Premo, Ina Trantcheva & Eril Yeager, 2006: 234-244).
During hiring, human resource focuses on three distinct areas they are: People care, Career and talent development and Staffing and recruiting. People care focus on personnel benefits and work environment. Career and talent development focus on employees’ growth in the organisation by offering training or courses. Staffing and recruiting focus on attract and hiring in new talent (Shingo Murakami, Roger Premo, Ina Trantcheva & Eril Yeager, 2006: 234-244).
After seven years of hard work, Globant had become a global payer in the IT industry with a team of 1500 professionals. Globant had also received many awards and recognitions from different institutions. They are: MIT, Endeavor, Global Services, La Nación, Sadosky, International Association of Outsourcing Professionals, The Black Book of Outsourcing and Mercurio (Globant, 2010).
Over the past decade many organisation are trying to focus on their core business. In order to do so, most of the multinational companies are outsourcing part of their functions out to third party companies. Example: Recruitment, Marketing, Call centre, Logistics, IT etc.
In early 1990s, some of the multinational companies start to outsource their IT function. Base on a research done by “Forrester Research”, by 2005 in United Stated IT outsourcing market have grown to $84 billion (see Globant Exhibit 1) (Shingo Murakami, Roger Premo, Ina Trantcheva & Eril Yeager, 2006: 234-244).
There are many reasons why organisations choose to outsource their functions. However, the most three critical areas are: (1) Cost and time saving, (2) Lack of expertise in the organisation, (3) To focus on company core business (Shingo Murakami, Roger Premo, Ina Trantcheva & Eril Yeager, 2006: 234-244).
Competition in 2006
During 2006, when IT industry reached a matured stated, Globant is facing a fierce competition not only from the local market, they are also facing challenge from giants companies like IBM, EDS, direct competitors and other country in term of cost (see Globant Exhibit 3) (Shingo Murakami, Roger Premo, Ina Trantcheva & Eril Yeager, 2006: 234-244).
Example: Tata Consulting Services (TCS) in Mumbai, India with 90,000 employees. Infosys in Pine, India with 80,000 employees and more than 3 billion in revenues. Luxoft from Russia and Accenture which based in Chicago.
Michael Porter’s “Five Forces” Model
With the competition come from all direction, Globant management can consider to apply using Michael Porter’s Five Forces Model to over come the threat (Bruce R. Barringer & R. Duane Ireland, 2010: 174-180). They are: Threat of Substitutes, Threat of New Entrants, Rivalry Among Existing Firms, Bargaining Power of Suppliers and Bargaining Power of Buyers (Bruce R. Barringer & R. Duane Ireland, 2010: 174-180).
Threat of Substitutes: Compare competitor products and services and theirs. How can they be different whereby others cannot have any substitution (Bruce R. Barringer & R. Duane Ireland, 2010: 174-180)?
Threat of New Entrants: Economies of scale – willing to accept cost disadvantage. Product differentiation – to achieve product differentiation from others. Capital requirements – require new company to invest large amount of money. Cost advantages independent of size, Access to distribution channels and Government and legal barriers – require license by the authority before enter (Bruce R. Barringer & R. Duane Ireland, 2010: 174-180).
Rivalry Among Existing Firms: focus on Number and balance of competitors, Degree of difference between products, Growth rate of an industry (Bruce R. Barringer & R. Duane Ireland, 2010: 174-180).
Bargaining Power of Suppliers: focus on Supplier concentration, Switching costs, Attractiveness of substitutes and Threat of forward integration (Bruce R. Barringer & R. Duane Ireland, 2010: 174-180).
Bargaining Power of Buyers; focus on Buyer group concentration, Buyer’s costs Degree of standardization of supplier’s products and Threat of backward integration (Bruce R. Barringer & R. Duane Ireland, 2010: 174-180).
In today environment, organisation not only facing competition from the local market it is also facing competition from all over the world. As what we see from the case study, Globant are facing direct competition from India IT firms and local Multinational companies. If Globant wants their customers to continue to use their service besides focusing on their products, they might need to focus on their after sales service.
Essay Title: Case Study – Quick Lube Franchise Corporation (QLFC)
This research is base on a case study of “Quick Lube Franchise Corporation (QLFC)”. Quick Lube Franchise Corporation was a franchisee of Super Lube. Super Lube was founded by Mr Jeff Martin in March 1979 (Stephen Spinelli & William By-grave, 1991). Their core business at that time is focusing on quick lube concept, servicing the lube, motor oil etc.
Super lube is also the number one franchiser of quick lubrication and oil change servicing centre in United States (Stephen Spinelli & William By-grave, 1991).
In 1980s, Super lube is having some financial issues. In order to pull out from the financial issues, Super Lube sold 80 per cent of it share to Huston, the major oil company during that time (Stephen Spinelli & William By-grave, 1991).
Mr Frank Herget was one of the four founders of Super Lube. However, during that time Mr Jeff Martin, chairman and CEO of Super Lube, is committed to franchising his servicing centre. Due to their differences, Mr Frank Herget set up his own company name Quick Lube Franchise Corporation (Stephen Spinelli & William By-grave, 1991).
Relationship between Quick Lube Franchise Corporation and Huston
In 1982, Mr Frank Herget started off with two service centres. Over the ten years of hard work Quick Lube Franchise Corporation grow from two service centre to forty-seven service centres (see QLFC Exhibit 1). During that time Mr Frank Herget CEO of Quick Lube Franchise Corporation was facing debt for further financing new service centres as the cost of land and construction have rise from $350,000 to $750,000 per service centres comparing to ten years ago (Stephen Spinelli & William By-grave, 1991).
At that point of time, Mr Frank Herget knew that rapid growth is impossible till Quick Lube Franchise Corporation stuck a deal of $6.5 million from Huston Oil of subordinated debt. From there, Quick Lube Franchise Corporation was committed to purchase Huston products (Stephen Spinelli & William By-grave, 1991).
QLFC Exhibit 1
Source: Citied from Case – Quick Lube Franchise Corporation (QLFC)
Current Issues facing by Quick Lube Franchise Corporation
When Huston had acquired 80 percent of Super Lube due to their financial problems, most of the franchisees start to felt discontent. As the franchisor is now focusing on motor oil sales instead of their service centre profit (Stephen Spinelli & William By-grave, 1991).
Mr Frank Herget did some research about the past relationship between Quick Lube Franchise Corporation and Super Lube. After a thorough analysis Mr Frank Herget request for a meeting with the new franchisor, Huston to present his finding and concerns (Stephen Spinelli & William By-grave, 1991).
Mr Frank Herget main concern is that Huston is only interested in promoting the core products (lubricant oil) via franchisee chain and not in the area of promoting the service centers profitability. Mr Frank Herget also felt that there is a conflict of interest, as Huston is selling their product to Quick Lube Franchise Corporation as a franchisor and obligated to promote service centre profitability (Stephen Spinelli & William By-grave, 1991).
According to the license agreement it stated that, “The franchisee is contractually bound to a system of operation and to pay the franchisor a royalty in the form of a percentage of top-line sales” (Citied: Stephen Spinelli & William By-grave, 1991). Since Quick Lube Franchise Corporation is paying a loyalty fees to the franchisor how can they also benefit from the core product sales profit. These have goes against the franchise ethics of “conflicts of interest between franchisors and their franchisees” (Bruce R. Barringer & R. Duane Ireland, 2010: 535-536).
Recommendation to resolve the issues
Base on the research Quick Lube Franchise Corporation did not violate nor beach the contract called license agreement, as Mr Frank Herget was still providing service as a service centers operator. After Huston acquires 80 percent of Super Lube, Huston should offer a new license agreement to Super Lube existing franchisees. Huston should offer a solution pertaining to Quick Lube Franchise Corporation oil deal and, franchisor and franchisee agreement to avoid conflict of interest.
It is important to practices franchise ethics in order for the franchisees to trust the franchisor. Franchisor must not have the mentality to get rich by just franchises. Overselling or over promise might end up losing franchisees (Bruce R. Barringer & R. Duane Ireland. 2010: 535-536). Franchisor must be firm on what types of service they expect from the franchisees. Taking the above case study as example, Quick Lube Franchise Corporation do not understand should they be promoting core product from the franchsior or promoting service centers profitability. If the franchsior, it unclear this will lead to conflict of interest.
Essay Title: Case Study – Indulgence Spa Products
Robert Dawson and Ulissa Moser was parent of Jimella and Angela. In 1959, Robert Dawson invests $10 in Fuller Products sales kit and started selling personal care products in Brooklyn, New York (Sandra Sowell-Scott, 2005: 614-625).
In 1963, Robert Dawson fell in love with Ulissa Moser and they got married. Few years later they started their very own business by opening a Fuller products distributorship (Sandra Sowell-Scott, 2005: 614-625).
In 1978, Robert Dawson and Ulissa Moser expanded their business which includes Dawson Beauty School and beauty supply chain in Midwest. In year 1988, their business get better and they opened their first 37,000 square foot headquarter office and manufacturing facility in Chicago. At the same time Jimella came abroad as a Marketing Director (Sandra Sowell-Scott, 2005: 614-625).
Jimella was their younger daughter, she was very hard working. At the age of 11 she started to help her parents by selling products door-to-door (Sandra Sowell-Scott, 2005: 614-625).
In 2000, Jimella launched a new line of luxury product named “Indulgence”. She was selling along with Dawson product in the start (Sandra Sowell-Scott, 2005: 614-625).
In 2003, Jimella changed the way of selling their products. She took the ideas by using salaried sales representative, she changed the selling method by using multilevel marketing sales model also can be known as direct selling (Sandra Sowell-Scott, 2005: 614-625).
Starting of “Indulgence”
Since young, Robert Dawson and Ulissa Moser have thought their children to dream big and never try to take the easy way for their success. Jimella has an entrepreneurial spirit just like her father. The reason why Jimella wanted to pull “Indulgence” out from Dawson product line was because she knew that if she continued to stay with Dawson, she would never be able to make any important decisions as her parents were still in control. Any major decision would still need to go through her parents. (Sandra Sowell-Scott, 2005: 614-625).
At that time, Ulissa Moser also felt that the product line was going two different directions. Ulissa Moser wanted Jimella to succeed in what she does, however she also wanted Dawson products to continue to be a successful grow family business (Sandra Sowell-Scott, 2005: 614-625).
Ulissa Moser had a conversation with Jimella by telling her that running a business is not as easy as what she think. She needs a lot of time commitment compare to working for her parents. Jimella confidently replied her mother that she was ready for the coming challenges. With the support from her parents, she started her business (Sandra Sowell-Scott, 2005: 614-625).
Although Jimella was starting her own business, her parents had arranged her to work for Dawson and handle special projects. In return, Dawson would lend Indulgence Spa Products $250,000 and allowing her to use Dawson to manufacture her products (Sandra Sowell-Scott, 2005: 614-625).
Road to Success
Jimella is a smart lady. From the case study, the author found that she is equiped with some personal characteristics of an entrepreneurship besides getting support and understanding from her parents. She had identified some of the critical issues if she continues to work under her parents. From there, she identified the opportunity and started off with her own business from her prior experience from Dawson. Jimella is also alert in term of running her own business. Instead of having salaried sales representative, she changed to direct selling. From there, the sales representative did not really depend on their basic salary but were going for commission. The more they sell, the more money they are getting back. This can be known as cognitive factors, an opportunity that others might miss (Bruce R. Barringer & R. Duane Ireland, 2010: 77-81).
Social Networking is another important factor as a successful entrepreneur. When Jimella was a Chief Marketing Officer (CMO) in Dawson she had made a bold move by firing lazy or unproductive employees. From there she had developed a nurturing family work place, where employees were able to feel long term employment in Dawson (Bruce R. Barringer & R. Duane Ireland, 2010: 77-81).
Creativity is also one of the factors that Jimella have. As a CMO in Dawson, she had initiated several operation changes example: direct selling. She also brought in new direction plan for Indulgence Spa Products by using five creative processes. They are: Preparation, Incubation, Insight, Evaluation and Elaboration (Bruce R. Barringer & R. Duane Ireland, 2010: 77-81).
Jimella is a very hands on person. Since young she had started to learn the hard way of selling. As an entrepreneur, besides having family support, she also understand an entrepreneur must also have a clear mind on which direction they are going. Having prior experience, cognitive factor, social network and creativity is important (Bruce R. Barringer & R. Duane Ireland, 2010: 77-81).
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