Term Paper on "Yangpin's Noodle"

Quoted Instructions for "Yangpin's Noodle" Assignment:

You are to write a 4-page paper. Your report should be typed in font size 12, double-spaced. You should take the perspective of either being the person who has to make the key decisions in the case, or of a consultant who has been hired by this person to provide expert recommendations. Either way, you should identify the key issues (problems), list relevant alternative actions that can be used to deal with these issues, analyze them, and finally select the best one as your recommendation.

Start your report by writing the case title *****Yangpin's Noodle*****. Then, follow the pattern of the following example:

Key Issues:

1. Sales have declined by 10 percent over the last 12 months

List of alternatives:

1. Increase advertising by $5 million annually

2. Drop the brand

3. Redesign the brand by increasing R&D expenses by $3 million over the next 18 months

Analysis of the alternatives:

1.(here you will list the advantages and disadvantages of alternative #1, i.e. the increase in advertising)

2. Advantages and disadvantages of alternative #2, i.e. dropping the brand

3. Advantages and disadvantages of alternative #3

Recommendations

Recommend alternative #1, because*****¦ (you need to explain why you think that based on your previous analysis alternative #1 is superior to the others due to its more favorable ratio of advantages to disadvantages.

Keep in mind that sometimes you may decide to combine more than one alternative in your recommendations, as long as they are not mutually incompatible. In the above example, one cannot combine alternatives #1 and #2, but one could combine alternatives #1 and #3. In case you decide to combine more than one alternative in your recommendation, you will still need to prioritize them, i.e. explain which alternative should be implemented first, and which one should be implemented second.

Keep in mind that when you list your alternatives, they should be specific actions. Avoid generalities such as *****improve quality*****, *****rethink strategy*****, etc. You need to explain exactly what to do to achieve the objective. Do not confuse the goal with the means to achieve it. The goal is dealing with the issue, and the means are the alternatives.

Case: Yangpin*****s Noodle

Introduction

Phenomenal economic growth, coupled with almost 20% of the world*****s population, has made china our contemporary gold rush. China is an economic juggernaut that has attracted people throughout the world seeking instant wealth to compete with a highly literate and motivated indigenous workforce. And, as the gold rush*****s of bygone years have shown, both winners and losers are produced, a lot more of the latter, although stories usually focused on the former. Into this frenetic opportunity, this case examines one person's quest for riches. It also shows how the global economy cross-pollinates countries. In a nation enamored with the Western ways, can a Chinese restaurant serving Chinese-American cuisine survive?

Case

The cacophony of the construction sounds outside Yangpin*****s apartment usually begins before the alarm rings. It is a measure of China*****s constant march toward modernization in the country's embracing of a new form of capitalization, one that is transforming a billion people into an economic powerhouse. Yangpin grew up in the Shandong province but migrated to the city for work. Today, she will not be a participant at the productivity march. Today she is meeting with *****e, a college friend, whose business acumen consists of nepotism. Long before Yangpin achieved professional success, she and *****e met in college in South Carolina (in the United States), where she tutored him in Chinese. It was the only reason she is offering to help him. When she arrives at *****e*****s apartment, he is huddled over a box of papers. What is this? Yangpin says in both befuddlement and amusement. Well, *****e and sheepishly, it's what I need to be successful. My cousin*****s more of a pack rat than an accountant. But, hey, his business has been successful in its first year. These are all his receipts for the first year. He opened an Italian restaurant in another the Chinese coastal province. Yangpin opens the shoebox slowly. She half expects a rat to leap out. Inside are receipts from *****e cousin*****s restaurant. Having not visited the restaurant, she hopes his food is better than his record-keeping. *****e had told her he planned to open a restaurant, a Chinese restaurant that served American-Chinese food. It's on his mind again today. Remember when I took you to that Chinese restaurant at school, and when you didn't like it, not that you would tell me. Well they get me thinking whether Americans like their Chinese food instead of yours, and Americans are flocking here, and that Chinese love American products. So, it's a can't miss from both perspectives.

Yangpin*****s confidence in *****e*****s restaurant project drops every time he attempts to explain it, since the first time he mentioned it over the telephone. What other research have you done? Not much, he replies. Yangpin interprets this as meaning, none. Yangpin starts to sort through the morass and record information in her computer spreadsheet. She tries to organize it by amount and whether they were ongoing (variable or fixed) or one-time (Table 1). It appears that all of the outgoing expenses are monthly. Yangpin shows *****e her results. His hopes of opening a restaurant are slowly deflating, as he examines the totals and break even. He hopes the revenue side will overcome his despondence. Here, thankfully, the receipts are aggregated. The average customer spent 45 yuan on a meal and 18 yuan one drinks. This had been calculated over a six-month period. The restaurant had served an average about 49 customers daily. Before *****e tends can speak, Yangpin begins detailing what will be needed before a decision on the restaurant can be made. She rattles off concepts *****e remembers vaguely studying in school. When she says they will need more information before continuing, *****e is relieved. His sense of safety is violated, *****e, what will the name of your restaurant be? With less conviction that when he first decided upon, it, he says, my name? She cringes; your business name needs to inspire potential customers. It has to provide a benefit or detail a product attribute, something to convey why customers should come there. Which is another thing: why should people come to your store, what*****s its competitive advantage? Yangpin knows this will be a long day. Ass the afternoon progresses, Yangpin get *****e focus.

We do not have any hard data to support any decisions, but we can at least start formulating a plan, Yangpin says earnestly. Most of the afternoon is spent on what the restaurant*****s competitive advantage will be and, as well as, how to and what to promote to a target market. *****e still believes ex-pats are the target, and the competitive advantage is bringing a portion of home to China while still trying to assimilate into Chinese culture. The food is different and you want to cater only to foreigners. How does that help them assimilate? She hopes logic will enter his analysis. The dialogue begins to show death spiral. Yangpin takes the opportunity to probe *****e*****s commitment. Once we*****ve identified the segments, benefits, costs, competitive advantage, and general location, we need to think in terms of commonalities. What does our target market or markets have in common? I see, like what stores they frequent, where they live, and what they do for fun, right? Yes, if we can establish that, we can identify where to advertise and what to say. If you are serious about this, I am willing to assist, for a fee of 1,500, in dollars. If the restaurant does open, I relinquish the fee for a stake in the project, 15%. What do you say? *****e feels more secure with Yangpin*****s assistance, and dad*****s money will provide adequate start-up capital and research funding. He might be able to provide, he thinks, his father a nice return. Done.

Yangpin is not. Before you agree, to need to know that to research this project will probable take about 27,000yuan. That money is nothing but insurance for us to ratchet up the probability of success. We will need a review of secondary data, traffic pattern study, some focus groups, a pricing study, promotion study, not including spending any money on actual promotions, and an economic study on the area*****s future. *****e is dumbfounded, By that time, I*****ll be dead. We can probably turn it all around in six months to a year. I already know some firms we can line up for the research. Six months later, the research was complete (Tables 2, 3, and 4), sans the economic study, which Yangpin was decided on whether to commission (cost 3,000 yuan). The company has identified three major competitors: a traditional Chinese restaurant, a Japan restaurant, and McDonalds.

Table 1: Expenses per Month

Ongoing (fixed per month): 25,000 yuan

Interest

Rent

Salaries

Managers

Waiter (two)

Bartender

Chef (two) and Chef*****s assistance (two)

Ongoing (variable): 25 yuan per person

Food

Drink

Insurance

Advertising

Water

Electricity

Telephone

Cooking lard

Napkins

Taxes

Paper and pens/pencils

Uniforms cleaning

One-time: 84, 000 yuan

Tables, chairs, legal expenses, paint, molding, china, utensils, cups, refrigerator, freezer, stove, cooking table, dishwasher, cooking vats, marketing expenditures(incl. grad opening expenses), uniforms, pots/pans, art work. Flower (fake), computer/printer, telephone equipment, coffee machine, cappuccino, alarm system, rack for dirt clothes, broom/mop/dust pan, garbage can, blinds and table clothes.

Table 2: Target Market

Food Selection

extensive 1-limited 7 (importance = 5) (ideal point = 3)

Atmosphere

Good 1-poor 7 (importance = 5) (ideal point = 5)

Price

expensive 1-inexpensive 7 (importance = 3) (ideal point = 3)

Food Quality

High 1-low 7 (importance = 1) (ideal point = 2)

Speed

High 1-low 7 (importance = 1) (ideal point = 2)

Very important 1 to very unimportant 7. The Chinese restaurant has a 30% market share, while the Japanese restaurant and McDonalds has 27% and 28%, respectively (the remaining 15% divided among very small competitors). The market is growing at about 5% annually. Seventy-four percent of respondents indicated they would eat at a restaurant that served Chinese-American food, at least twice a month.

Table 3: Laddering

Financial freedom>Successful>Part of a team>More productive>Get back to work quickly (Speed)>Enjoy (brief respite from work)>Food quality

Table 4 Perceptual Map

*Traditional Chinese restaurant: extensive selection, good atmosphere, moderately price, low speed high quality food, (time consuming meals)

*Fast-food restaurant (McDonalds): limited food selection, poor atmosphere, inexpensive price, low quality food, high speed(meal consumption)

*Japanese restaurant: ok selection, ok atmosphere, moderately priced, good quality food, low-speed(time *****“consuming meals

There are four boxes McDonalds sits bottom left corner and Japanes and Chinese are located at top-right corner

Note: * asterisk depicts actual location.