Case Study - Emma's Parlor

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CASE ANALYSIS: EMMA’S PARLOR

A.Problem Statement

a.Facts of the Case

Emma Lathbury left nursing in the early 1990s due to gruelling hours, emotionally draining work and lack of both respect and autonomy resulting to a bad case of burnout. Emma opened a cozy Victorian tearoom in the small Illinois farming community near where she’d grown up. Emma’s parlor was a success due in part to her unintentionally perfect timing of setting up her business when specialty teas had taken off. It can also be attributed to Emma’s hard work and the 60- and 70-hour weeks she’d put in. She personally chosen the colors for the cottage’s exterior, hung the lace curtains, selected the fresh flowers that grace the small circular tables, hired the staff, and tracked down and tested recipes for the finger sandwiches, scones, jams and Battenburg cake. Emma’s parlor earned glowing reviews in numerous guidebooks and a national reputation. Upon realizing that special events were key to attracting customers, she organized and publicized fanciful gatherings. The tearoom was nearly always completely booked.

Emma developed a real expertise when it came to teas. She started by conducting evening workshops on the efficacy of organic teas in treating everything from a simple upset stomach to menopausal distress. She began blending her own Emma’s Parlor Organic Teas and selling them to retail stores, restaurants and individuals over the Web. The Web-based business flourished, generating slightly less revenue than she was realizing from the tearoom. Also, the profit margins were higher. The business is becoming too big for Emma to handle.

Drop the tearoom and focus on the Internet or vice versa Try to master the fine art of delegation and turn Emma’s Parlor over to an experienced restaurant manager Take herself out of the picture by selling the tearoom outright Close the restaurant or the Internet business

b. Key Problem

Emma’s Parlor is becoming too big for Emma to handle. She is considering several options on how to run her business.

B.Key Objectives

To determine the best choice of action for the future of Emma’s Parlor

C.Analysis of Causes

Expanding a Business

Deciding whether to expand a business is a common and important strategic business decision companies face. Business expansion often has the advantage of exposing the business to a wider audience. Expanding the business means additional investment of time, capital and people. It also usually means generating increased revenue and profits. When a business expands its operations, this usually taps new customer markets and attracts and retains new customers. However, business expansion also entails money and other resources. Thus, it is important to determine whether the business expansion will be profitable. Another drawback from business expansion is that the resources and expertise of the company are spread too thin. Business expansion is only possible if the company has adequate people and resources to manage the additional business. Having an Online Presence

Currently, businesses are evolving. Companies need to reinvent themselves to keep up with the advancements in technology. To compete, it is important for a company to have an online presence. However, some customers are more trusting with companies with an actual physical store location than those businesses with only an online presence. Having an online presence helps the company to be visible to its customers who may not be usually reachable by the actual physical store.

D.Developing Alternatives

Alternative 1: Drop the tearoom and focus on the Internet business Advantages:
Since the profit margins were higher in the Web-based business (due to low overhead), if Emma focus on the internet business, she can potentially generate more revenue. Emma can run her business from home and she can set her own hours which can help with her feeling...
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