Easy Internet Cafe

Section 1 - Executive Summary:

Easy Internet café (elc) is planning to re-organize and revamp its business model in such a manner that it can again become profitable company. At present, the easy Internet café is engulfed with the dot com burst and losses are mounting. This case report is dealing with the attempts to implement a new logistic system that if well executed it can develop operations and can transform easy internet cafe into a profitable company. The original business model is to build and operate on the principle of ‘economics of scale’ or Yield Management.

It has been decided to appoint franchisees for the new stores and 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 move from large stores to smaller stores with 20 to 30 PCs.

The current logistic situation represents a bottleneck and it is one of the major causes for the ongoing losses at easy internet cafe.

It entails analyzing and studying the different logistics scenarios. It would be imperative to take a closer look at the logistic alternatives. Ideally, it would benefit in the warehousing, accounting, and transportation areas, it should also help reduce the logistics costs and labor per new store that would help to achieve overall objective of being a profitable company.

Section 2 - Root Problem:

Despite the excellent support and recognition from the public, elc was experiencing adversity of keeping their business profitable after the Internet Investment bubble burst.

The original concept of owning many of the large stand-alone cafes with 250-500 PC terminals at each café was not working well. elc undertook a dramatic restructuring of the company by downsizing the cafes. Many of the large, original stand-alone elc stores will be run by franchisees. These franchised stores will become smaller stores that have 20 to 30 PCs terminals at each cafe and with no staff required except for regular maintenance. Less involvement with store operations allows elc to concentrate on activities of their core competence and outsource all the non-core activities. Their core competence was to continue building their ‘easy’ brand and applying the yield management model to the Internet café business. Their business goal was to open 4 new franchises per week over the next 3 years. In order to achieve the goal of growing their franchised Internet cafes business, an efficient, flexible, and cost-effective logistics system is what they need for the provision of equipment to the franchisee. Since logistics is one of the non-core activities that are perceived as a bottleneck for scalability, the present logistics system of elc will be reviewed and findings of whether to outsource