Money Take Home

Your former roommate asks to borrow $10,000 so that he can start a pizza restaurant in Richardson. He recognizes that there is a high degree of rivalry, numerous substitutes, and a low cost of entry; however, he feels that his concept and ideas for amenities, such as freshly made mozzarella cheese, vine ripened tomatoes, and Asian inspired flavors will allow him to gain competitive advantage. Will you lend him the money? Why or why not?

        I will lend the money to my former roommate with three different reason first one is he was prepare for market research with internal and external analysis. And second reason is that he understood a firm’s general environment. Because he knew that what can be substitutes and high degree of rivalry. Lastly third reason is his plan has cost leadership than any other place.

First reason to lend the money to him is he has strategy that how to get competitive advantages. He had four specific strategic to introduce to customer in Richardson. Also he was clear about his objectives and he already identifies the critical treats and opportunities in this competitive environment, and he was knew that his strengths and weaknesses to identify his business. Another reason that I could lend him money is that he was in business-level strategies; he was not risking opening multiple markets, he was using single market to gain competitive advantages. If he was using corporate-level strategies than I have to think about lending money, because he have to operate multiple market and it is risky.

Second reason will be that he understood that general environment around Richardson. Even that he is opening pizza restaurant, he is well known that demographics of Richardson. He knows that many Asian people around Richardson and he is using Asian inspired flavors and concept is amenities for college students around Richardson. And with these ideas he will be new competitor to pizza industry. And he has proprietary technology to important cost advantages over potential entrants. He might get threat from substitute product such as sushi, burgers, and chicken places but people cannot eat does substitutes every daily bases. With his ideas he can attract Asian, college and family in Richardson. Also he is facing with many of competitors but with that his ideas, concepts and flavors. Our customers will value their product less than his products, because it is brand new concepts of pizza place in area. It means his pizza place is complementor than any other places. It will be his processes in pizza market, because all new design, produce, and sell its products.

Last reason will be that he is using cost leadership business strategy, it means that focuses on gaining advantages by reducing costs to those of all competitors. All he needs $10,000 to start pizza restaurants. Even he is spending only $10,000 to start a pizza place he was focus on just reducing cost can lead a firm to make low-cost products but he was aiming at poor college students and customer who want to reduce their lunch or dinner money. And demographically in the Richardson area has many college students and single working people.