An inspiration: Mainstreet Delicatessen and Bakery: instructors' note.[Special Issue Number 2: Instructor's Notes]

Santos, Annette Taijeron ; Santos, Melanie Cayabyab

CASE DESCRIPTION

Throughout U.S. history, economic recessions come and go. However, despite poor economic conditions, many entrepreneurs still venture out and take the risks of starting up a small business. In fact, according to the 2008 Global Entrepreneurship Monitor executive report, entrepreneurial behavior shows positive signs (Ali et al., 2008). Yet, it is important to note that there have been many small businesses that have failed due to economic recessions (Shane, 2009). Although reality can be harsh, entrepreneurs who believe they have what it takes to thrive in spite of the troubled times, continue to step forward and take the chance. This is true in the case of Christina Toves Perez, the proud co-owner of Mainstreet Delicatessen and Bakery.

Despite the fact that her small business started during the recent economic recession, Christina had high hopes and dreams that her business would continue to flourish. From this case, Christina's persistence is exhibited through her endurance of the trials and roadblocks that tested her efforts. This case is a real world example of what many entrepreneurs may experience during an economic recession. Additionally, it may also serve as an inspirational piece to many aspiring and continuing entrepreneurs.

This case is versatile and for the most part has a difficulty level of three and up, appropriate for junior level and beyond. The case is designed to be taught in two to three class hours in a management, managerial economics, or an entrepreneurship course, and is expected to require about three hours of outside preparation for students, consisting mainly of reading the case and familiarizing themselves with the business environments on the U.S. territory of Guam in the Western Pacific region.

CASE SYNOPSIS

This case is about Mainstreet Delicatessen and Bakery, hereafter referred to as Mainstreet. Located in Hagatna, Guam, Mainstreet recently opened its doors to Guam's residents on February 4, 2009. Mainstreet is a family-owned business. It is owned by Christina Toves Perez, Michael E. Perez, and Josefina Eustaquio Toves. The business opened during the current economic recession which started in December 2007, according to CNNmoney.com (Isidore, 2008). According to Christina, the bakery is an expansion of what used to be Toves Bakery, which is further discussed in the case study. Although Mainstreet is fairly new, a rich history of tradition revolves around the business. Being a new business in Guam's economic market, Christina had to rely on her experience in her mother's bakery business and from there make improvements as days pass by.

TEACHING NOTE

The fundamental question for any entrepreneur is whether the business idea that he or she is exploring is an outstanding opportunity. The U.S. Small Business Administration, Office of Advocacy (September 2009) reported that small business owners usually seek advice from the following sources: 54% individual mentors; 51% social networks; 44% trade associations; 36% business advisors; 31% internet; 27% Chambers of Commerce. Additionally, women (69%) are more likely to seek business advice than men (47%). This case is a great opportunity for discussing some of the excitement and fears which entrepreneurs are likely to face.

While women represent more than 1/3 of all people involved in entrepreneurial activity, seven out of 10 new businesses survive at least 2 years and about half survive 5 years (Source: Global Entrepreneurship Monitor 2005 Report on Women and Entrepreneurship). How might small business owners like Christina continue to sustain their company's business model from inception to growth on top of a continually shifting environment?

Instructors should spend adequate time assessing the personal and career opportunities and risks, which Christina Toves Perez faced and continues to face. Students should also be encouraged to anticipate other potential issues that might surface in the future, both in the shortand long-term.

The instructor can ask students to assume the point of view of Christina Toves Perez so that they may present their arguments and discuss the varying points of views that may surface.

This case is recommended for use in entry-level entrepreneurship and management courses using the Assignment Questions. For higher-level courses, such as the business capstone course, the Case Analysis Assignment is recommended.

DISCUSSION QUESTIONS

1. What is your evaluation of this organization? What would you say are some of its successful ingredients to date?

2. What potential problems or challenges do you foresee in the near term (1-2 years)? What potential problems or challenges do you foresee in the long term (3-5 years)?

3. What should the owners do to ensure the company's continued success?

4. What is the difference, if any, between a small business owner and an entrepreneur?

The case looks at the organization from one of the three owner's perspective. In anticipation of future growth, the owner has some ideas of how she should respond to the challenges ahead.

TEACHING OBJECTIVES

1. To highlight the issues which are likely to surface when starting up a small business venture.

This is a great case to demonstrate the process that new business owners might face when starting up their business. The case is filled with examples of what a small business owner is confronted with in early start up.

Instructors may ask students to construct a Gantt Chart of activities that are required to get a business started. Students may reference the case for some clues to get started on this assignment. Activities may include the following:

a) The business idea or an inspiration.

b) Develop the Business Plan (outline the different components of the plan)

c) Selecting the Legal Form of Business

d) Secure Business Financing (identify different sources: equity vs. debt)

e) Choosing a Location (ready to move in vs. construction)

f) Registration and Licensing

g) Promoting the Business

h) Managing the Business

i) Insuring the Business

j) Bookkeeping

Using Christina's experience highlighted in the section, Roadblocks to Success, Instructors may ask students to discuss some anticipated obstacles that may confront them along the way.

Additionally, this is a great opportunity to ask students how they might avoid some of the "roadblocks" Christina experienced and how they might minimize the impact of these issues.

Students could also be asked to assume the role of Christina and share their thoughts on how they might respond to the different events she faced as well as foreseeable future events.

Students should be asked to list characteristics that are necessary to be a successful business owner. A list of traits often attributed to Entrepreneurs includes (Hornaday, 1982):

1) Confidence

2) Perseverance, determination

3) Energy, diligence

4) Resourcefulness

5) Ability to take calculated risks

6) Dynamism, leadership

7) Optimism

8) Need to achieve

9) Versatility; knowledge of product, market, machinery, technology

10) Creativity

11) Ability to influence others

12) Ability to get along well with people

13) Initiative

14) Flexibility

15) Intelligence

16) Orientation to clear goals

17) Positive response to challenges

18) Independence

19) Responsiveness to suggestions and criticism

20) Time competence, efficiency

21) Ability to make decisions quickly

22) Responsibility

23) Foresight

24) Accuracy, thoroughness

25) Cooperativeness

26) Profit orientation

27) Ability to learn from mistakes

28) Sense of power

29) Pleasant personality

30) Egotism

31) Courage

32) Imagination

33) Perceptiveness

34) Toleration of ambiguity

35) Aggressiveness

36) Capacity for enjoyment

37) Efficacy

38) Commitment

39) Ability to trust workers

40) Sensitivity to others

41) Honesty, integrity

42) Maturity, balance

A discussion could follow on whether such traits are also found in small business owners and if individuals are born with these traits or whether these traits are learned--the nature vs. nurture discussion. Furthermore, ask students how they might begin to develop or acquire the necessary entrepreneurial traits.

Instructors may also ask, "Is Christina an entrepreneur or a small business owner?" Ask students to elaborate on their responses and begin making connections to business concepts.

2. The use of this case is helpful in teaching students to think critically about transitions that are likely to take place in young organizations and predict its likely consequences on the owners, its employees, and the company as a whole.

In this case, Christina envisions Mainstreet as exuding a unique aura of Cinda family traditions. The business concept includes combining a specialty shop of freshly baked goods and a gourmet delicatessen, the Cinda way. After the first week of opening, Christina noticed a drop in customers coming through Mainstreet's doors. Instructors may ask students to identify possible reasons for this decline and integrate planning and organizing concepts that should be considered. Students may cite limited seating capacity and an indistinct company identity as the main reasons for the decline in customer traffic. In identifying potential alternatives to addressing the problem, students should also be asked to relate potential impacts on the owners, the employees, and the company as a whole.

It is important that the instructor hold students accountable to identifying potential consequences on different elements of the organization as a result of their proposed solutions.

3. To encourage students to plan strategically for business growth and organizational change.

Instructors should ask students to review the SWOT analysis of Mainstreet Delicatessen and Bakery provided in the case. Upon review and some discussion, students should be asked to take on the role of consultant to advise Christina in her plans for the next growth phase of her company.

Instructors should ask students how they would proceed with deciding on the next phase of growth. Statistics provided earlier in this teaching note indicated that women (69%) are more likely to seek business advice than men (47%). Instructors could preface this discussion segment by asking, "How many of you would seek the advisement of an outside source to make a decision on the next phase of growth for your company?" Next, ask the following question: "How many of you would make this decision on your own?" It would be interesting to determine if the statistics are reflected in your classroom.

Considering the different sources from which small business owners seek advice, Instructors may consider having students break up into teams and have each team assume the role of: individual mentor, social networks, trade associations, business advisor, the internet or Chamber of Commerce. Each team should provide advice to Christina from their different role perspectives. It would be interesting to see what similarities and differences surface as well as the advantages and disadvantages of such sources.

This will also be a great opportunity to tie in the different approaches to decision making. This could incorporate a discussion of the different types of decisions (programmed vs. non-programmed) which tie in the environment and degrees of risk. This would segue into the application of decision making models (which include administrative, classical and political models) and personal decision frameworks (such as behavioral, analytical, conceptual, and directive).

CASE ANALYSIS ASSIGNMENT

This is a great team exercise for students in higher level business courses. The instructor could ask the teams to assume the role of consultant and conduct research beyond the case to answer the following questions. Students may then be assigned to turn in an analytical report as well as an oral presentation.

1. Christina has sought your consulting expertise and asked you to assess the company's strategy, competitive market position, and overall situation, and recommend a set of actions to improve the company's future prospects. Please prepare a report to Christina and the other two co- owners of Mainstreet Delicatessen and Bakery. Be sure your report includes:

a. An identification of the key elements of the company's strategy,

b. A discussion of which of Porter's five generic competitive strategies most closely match the competitive strategy that Mainstreet Delicatessen and Bakery is employing,

c. The pros and cons of the company's strategy,

d. An assessment of Mainstreet Delicatessen and Bakery's strengths, weaknesses, opportunities, and threats,

e. An evaluation of the key success factors that Mainstreet Delicatessen and Bakery and its rivals compete against,

f. The strategic issues and problems that Mainstreet Delicatessen and Bakery's owners need to address, and

g. A set of action recommendations to deal with these issues and problems.

The report should be 5-6 pages for a mini case approach. The instructor may also include the following questions in addition to the above for a full case analysis which should be no more than 20 pages. Reports should include an assortment of charts, tables, and exhibits to support the analysis and recommendations.

2. What are the pros and cons of Mainstreet Delicatessen and Bakery's strategy? What evidence indicates that the strategy is working well or not so well?

Students may recognize that Mainstreet Delicatessen and Bakery has the ingredients of a focused strategy. However, it is not clear whether they have decisively positioned themselves as a low cost product as the case indicates, "She makes every effort to ensure that the products found at her bakery are not only affordable for her customers, but also provides her the capacity to, at the very least, break-even."

Ask student to provide input on this strategic approach. What suggestions might students offer to Christina in regards to the Mainstreet's business strategy? What business level strategy would work in favor of Mainstreet? Why?

3. What does a SWOT analysis reveal about Mainstreet Delicatessen and Bakery's overall situation?

Students should evaluate the SWOT analysis presented in the case. The instructor may then ask students to diagnose whether their analysis aligns the business strategy they selected in the previous question with the elements of the company's SWOT.

Additionally, instructors may ask students to adopt the TOWS matrix approach and develop some action strategies that Christina may consider in the company's future planning.

An example of a TOWS Matrix is provided as Appendix 1 (David, 2003).well as the benefit of one billing. APPENDIX 1: TOWS MATRIX External Opportunities (O) List opportunities: 1. 2. 3. 4. 5. Internal Strengths (S) List strengths: SO 1. 2. Strategies that use Strengths 3. to take advantage of 4. Opportunities 5. Internal Weaknesses (W) List weaknesses: WO 1. 2. Strategies that overcome 3. Weaknes by taking advantage 4. of Opportunities 5. External Threats (T) List threats: 1. 2. 3. 4. 5. Internal Strengths (S) List strengths: ST 1. 2. Strategies that use Strengths 3. to avoid (or minimize) 4. Threats 5. Internal Weaknesses (W) List weaknesses: WT 1. 2. Strategies that minimize 3. Weakness and avoid 4. Threats 5.

REFERENCES

David, Fred. (2003). Strategic Management Concepts & Cases (pp 200-204). Upper Saddle River, NJ: Prentice Hall.

Global Entrepreneurship Monitor: GEM 2005 Report on Women and Entrepreneurship. Retrieved April 30, 2010 from: http://www.gemconsortium.org/about.aspx?page=special_topic_women

Hornaday, John. "Research about Living Entrepreneurs," in Encyclopedia of Entrepreneurship, ed, Calvin Kent, Donald Sexton, and Karl Vesper (Englewood Cliffs, NJ: Prentice Hall, 1982), 26-27. Adapted by permission of Prentice Hall, Englewood Cliffs, NJ.

SCORE (2009). Small Biz Stats & Trends. Retrieved April 30, 2010 from: http://www.score.org/small_biz_stats.html

Small Business Administration (2009). Office of Advocacy. Retrieved April 30, 2010 from: http://www.sba.gov/advo/

Annette Taijeron Santos, University of Guam

Melanie Cayabyab Santos, University of Guam