PRANAV Case Analysis

Hi Sir,

respectfully passing my PRANAV. Thank you.

Case Analysis: Pranav New York

Submitted by: Eduardo Y.Tuazon

SITUATION: Students Karlo and Mark of the Asian Institute of Management had an assignment in Development of Enterprise and their project was a male spa. The concept was introduced to Karlo by a friend who experienced several male spas in New York. They opened the shop on the third floor of the Robinsons Galleria Mall.

PROBLEM: In the few month operations of the male spa, the main problem was financial. Losses incurred amounted to P825,568.00. Analyzing the source of the problem systematically through SWOT ANALYSIS: 1. Strengths: a. the original idea of the business that is to be introduced to the Philippine market, b. the owners also had some capital to start the business and c. they also had good professors who can advise them with their project. 2. Weakness: The core competency of the owners was weak for they are not experts in their chosen  business, hence this weakness translated to many wrong decisions or mistakes like the shop's location, choice of shop's layout and  furniture,  specifically the barber's chair that are not the standard of the industry. In addition, they probably focused on the "macho psychographic target customer idea" by employing female barbers which are not the norm for male haircut and shave services. The misalignment of this strategy translated probably to the awkwardness of services towards the customers. The location or place of the male spa was not strategic; it was located on the third floor of the mall, where foot traffic was poor with regards to their target male customers. 3. Opportunity: The new idea of a male spa was exciting and an innovative business concept and doable. The ever increasing population of males who are conscious of their grooming, the business looked attractive. 4. Threats or competitors who also offered some of their services were more strategically positioned in their chosen place of business.

ALTERNATIVES: The owners are new players in the business hence they must increase their marketing efforts to penetrate the market as their strategy.

1. Product/Service: The main service of the business must be improved by having experts in the field of grooming. The existing staff must be retrained, or hire more male barbers and lay-off some female barbers and possibly retrain them for the spa services. Their competitors have experts and stylist who were trained abroad, hence they were more patronized.
2. Price must be competitive to add more value for money. They must be aware of price-     sensitive customers.
3. People or their employees must be in sync with the company's mission vision. The service staff must be knowledgeable of the ins and outs of their grooming business.
4. Place and physical evidence must be improved in terms of lay-out and the internal temperature of the spa area must be pleasant to customers who are almost naked when undergoing the therapy. The barber's chairs must be changed to the standard ones, though pricey.
5. Processes concerning proper use of the spa and barber's supply will decrease wastage and also incentives must be given to the staff to make them more proactive. These measures will translate to decrease in expenses and increase in revenues.
6. Promotion and advertising must be enhanced and with a good location, store layout and excellent services will bring in more sales.
   They can also take into consideration Michael Porter's Five Generic Strategies:
   TYPE 1:  Low Cost Strategy. Are the owners ready to offer low cost for their main service, the haircut and shave?
   TYPE 2: Best-value strategy where they must offer a wide range of services to a wide range of customers at the best price-value available on the market.
   TYPE 3: Differentiation aimed at producing services considered unique industry wide and directed at consumers who are relatively price-insensitive. Special spa treatments can be offered to their high end customers.
   TYPE 4: Low-cost focus strategy that offers products or services to a small range (niche group) of customers at the lowest price available on the market.
   TYPE 5: Best value focus strategy (focused differentiation) that offers products or services to a small range of customers at the best price-value available on the market. For their case, these are the salaried workers ages 30's and above who are willing to avail more specialized and stylized spa treatments.
                       
   DECISION:  The owners must do a strategy for their business. An application of a quantitative process like decision trees must be employed to make an intelligent solution to their problem. Some of the possibilities are:
   1. Whether to transfer their business to a new location or not.
   2. Whether to cater to women and children.
   3. Whether to offer volume and value driven packages or services to increase sales and improve margins.
   ACTION: The owners must also benchmark to improve their business but in the end the owners have two actions to contemplate; 1. To continue the business and infuse more capital into it like inviting new investors (which would be a big challenge for the owners and investors) or taking up a loan, or source out money from their "deep pockets". Should they continue, proper strategies are a must. The option to close the shop is not distant and they can simply charge it to experience and as an "expensive tuition fee in the business school of life".
   CONCLUSION: A conclusion of the case reveals that from the start, the business idea was flawed because the idea and experiences of the male spa business was not from one of the owners; hence the execution of the business plan was incomparable to the New York male spa business models.   The owners also did not heed their mentor's advice about the location of their business. The owner's weak core competency led to the series of unsatisfactory business operations and activities and decisions that fuelled the vicious cycle of financial loss.
   Bibliography:
   David, Fred. Strategic Management: CONCEPTS AND CASES 13^th Edition. Philippines, Pearson Education South Asia Pte. Ltd., 2012.
   www.yomarketin.blogspot.com/2012/12/service-marketing-7ps.html. Yo Cool Marketing, December 5, 2012

Doc Edu