1. What managerial issues should David consider before starting Caribbean Internet Café?
Managerial Issues: Broadly defined as all issues which have an impact on a business manager’s decision. In this case, David should consider: - Political, Economic, Social, Technological (PEST) issues analysis:
(i) Political: Bureaucracy and corruption may potentially slow down the pace of enhancing the necessary infrastructure for internet accessibility and usage e.g. laying of telephone lines, persistently high cost of computers etc.
(ii) Economic: PC and internet connection prices may fluctuate greatly, or drop to such an extent that people can generally afford them.
(iii) Social: There is a potential First Mover Advantage for the European Café concept.
(iv) Technological: The period of time before the “Pentium” processor computers and other equipment become obsolete will have to be considered. -Logistics: There is a possibility that the cost savings on “exorbitant mark ups” might exceed the shipping costs from the US. There is also transportation risk as the equipment might be lost or damaged in the process of being shipped to Jamaica. Insurance costs might have to be incurred, and it might be difficult to obtain maintenance support or upgrades due to the equipment being purchased from US and not Jamaica. -Location: It might be more ideal to locate CIC in an area with no internet access, but nevertheless reasonably close to the target market segments i.e. 18 – 35 year old university students and professionals. -HR: The issue of whether an average of 2 employees plus a manager with experience in the restaurant industry will be sufficient will have to be considered. In addition, the necessity of training and the possibility of trained staff being poached or guilty of leaking “trade secrets” should also be looked into.
2. Identify the fixed and variable costs in the case.