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Strategy Paper 1: Proposal
The purpose of this paper is to examine the prevalence of family owned small business through analysis conducted to assess their contribution and impact to the society. The research is aimed at assessing the problems faced by small family owned businesses. First, the study will examine specific case of family owned small business, Mama Mancinis, a mid size restaurant in Chicago area, in order to examine how closely it fits the general principles of family owned small business.
The success of this small business is owed to good planning, quality of their product and identification of the niche market. Bruno Mancinis vision and planning contributed greatly to the success of the business. The paper focuses on dynamics of owner-owned enterprises and Mama Mancinis business was chosen for this case because of the successful, family owned small businesses which are typical example of increasing numbers all family owned businesses all over the world.
Mama Mancini is a small family business started in 1913 by Arturo Mancini, an Italian Chef specialising in serving genuine home made sources. The restaurant has gained popularity over the years due to its unique delicacies of Italian recipes and dining experience combined with good cultural atmosphere.This small family owned business was running at a loss five years ago, the break even point was achieved during the third year. The figures below present the companys financial statements.
INCOME STATEMENT FORM MAMA MANCINIS FOR THE PAST FIVE YEARS
(Amounts are in $000)
Mama Mancini is classified as a small business because the enterprise is owned and operated by family members. Family owned business is defined as a general agreement among family members that requires ownership and management of the business. Small business enterprises contribute greatly to the American economy and studies have showed that 75% of all businesses in the United States are family owned.
Studies have also shown that small businesses contribute to 50% of the GDP and 78% of jobs generated within the United States This research demonstrates that family owned businesses across the United States are the major backbone of the domestic economy (Philips & Raspery 1).
Strategy paper 2: Target Marketing and Positioning
Mama Mancini restaurant is situated at a secluded environment, in the suburbs of Chicago area characterised with great atmosphere and serves a traditional cuisine of authentic Italian food to its customers. The sound system of the music is neither loud nor too slow and offers comfortable seats cushioned with avante-gard-styled booths.
The water foundation and aluminium ceiling funs provides a cool atmosphere in hot summer days adding more serenity to the environment. Jack Mancini, the restaurant chef accredits the food in his restaurant as sensational, tasty and satisfying and the harmonise music the restaurant provides helps create the perfect ambiance that attracts more customers to the place.
Just to add to the ambience of the place, the restaurant plays a wide array of Italian music that adds more dining experience to the cultural atmosphere. Marketing mix comprises of product, price, place and promotion, and as mentioned earlier, Mama Mancini has incorporated all this strategies in its product (Dissanayake 9).
Segments that make up the target markets in Mama Mancini restaurant revolve around how the business targets its market in terms of distribution of products, its promotion and pricing. Mama Mancini restaurant offers as the best example by charging relatively low prices on their menus and offering buffers to returned customers. This strategy has established the firm long term relationship with its clients.
The firm has also streamlined its products to specifically meet customers needs by offering a variety of sauces to choose from. Mama Mancini friendly environment located in a convenient location in the heart of Chicago and its culinary precision places it at a better advantage over its competitors. Third, partnership with customers helps develop the level of trust which makes the customer commit to staying in purchasing the products even if they dont need it (Philips & Raspery 2).
The companys competitive advantage is derived its exceptional culinary precision in serving Italian foods of genuine home made sources offers it a better competitive advantage over other businesses.
The firm configures its resources (employees, customers and suppliers) within a challenging environment to meet its demands and has also been able to offer its customers incentives that include buffers to gain competitive advantage over its competitor and as a strategy to retain and attract more customers. In addition, a strategic perspective would also require a company employing resources such as skills, assets, finance, relationships, facilities and technical competence.
On social and economical perspective, Mama Mancini development strategy involved passing off management leadership from one generation to the other, a strategy that pulls in new skills and products to the stale markets. Different ideas brought in by new members positively impacts on the productivity and profitability of a business and may have positive influence on the communities (Philips & Raspery 2).
The product position in marketing describes how a business creates its image or identity of their target markets. Mama Mancini for this instance has been able to maintain its Italian family for generations and its exceptional culinary precision in serving Italian foods of genuine home made sources offers it a better competitive advantage over other businesses.
The is has helped the company to be identified as an Italian Cuisine in all its branches opened all over Chicago and within the United States making their sales doubling over a period of five years. Even though the business was running at a loss for a period of five years, its strategy in serving exceptional meals at affordable prices made it achieve break even point on its third year in business (Philips & Raspery 3).
Strategy Paper 3: Product and Channels
The restaurants strategy to branch out into sauces enables it to gain niche markets that existed for the sauces of Mama Mancini. As demand the restaurants products increased, Mama Mancini started extending its services outside Chicago borders to more international borders such as Japan.
Mama Mancini product offering that include a variety of sauces to choose from has given the company a differential advantage over other competitors. The total numbers of branches opened by Mama Mancini over the past decades has had great impacts on the US GDP.
Capital expansion of the business is generated from firms reinvest into the business to support and perpetuate wealth for future generations. Also, its ability to make long term investments in opening up branches in different locations would subsequently help its future generations as opposed to the large corporation motives of short term returns (Philips & Raspery 4).
Small family owned businesses often face cash flow crunch problems and Mama Mancini is no exception. Its Income statement displays a negative cash flow in the first years of business. These small businesses were in the habit of short term planning, with simple budgets that projected only into the immediate future.
This could not enable them develop new markets and extend credit facilities to their clients due to the cash flow crunches they faced as result of overtrading as the case of Mama Mancini. Mama Mancini experienced overtrading within its first two years of trading since it had incurred large capital expenditure in purchasing production facility that made it difficult to meet orders it had already taken due to lack of funds.
Also, the business was not in a position to extend credit facilities to the customers and did not have enough buffers in case of such emergencies. However, Mama Mancinis credit crunch improved over the years as the Company was able to build up on its profit base as owed to effective management of production and selling cycles (Philips & Raspery 4).
Family owned businesses often encounter the problem of retirement as opposed to large corporations. Most cases the founders of these enterprises pass on the management to younger family members that often welcome tensions and problems.
Research reveals that family businesses are concentrated upon the issue of effective succession of male family. Over the years families have tended to move away from transferring possession to their direct heirs to a shared leadership since the chosen successors may be incapable of handling the business and this makes more economic sense.
Multiple successors may offer advantage to the company because of the new ideas they bring into the business that may stimulate growth and performance of the enterprise. In the case of Mama Mancini, the founder of the business Arturo gracefully stepped aside to allow Bruno to capitalise on bringing new ideas and products into the business (Philips & Raspery 4).
Mama Mancini fulfils customer needs and provides benefits by developing its strategies on risk taking, innovation, productivity and independency thereby increasing firms productivity and personal responsibility to the economy.
This strategy enhances the firms strength and success and disables the burden during leadership transition. Since the firm has heavily invested in customer service, respect tradition and take good care of their employees contrary to large corporations, they are more likely to gain long term trust with its employees and to the clients as a whole.
And also, since Mama Mancini operates on attributes such as management status, family union and ownership, and share simultaneous roles, history, identity and language and their emotional involvement and acknowledgement of privacy gives them a caring heart about treating their employees fairly, luring family members into the business and providing jobs for the public (Philips & Raspery 4).
Brand name of a business may include family names, individual names or combination brand names. Mama Mancini for this case uses the Italian name Mancini to identify with classic Italian recipes and culture. Since the firm is involves majority members of its Italian family, direct family involvement and transition is passed on to multiple generations, which results into more businesses and larger economic contributions.
The excellent dishes provided by the restaurant and friendly working environment leads to satisfied employees and retention, productivity ultimately leading to good services thereafter, customer satisfaction and loyalty, key determinants to financial success (Taguiru and Davis 1).
Product life cycles are strategies a firm encounters when introducing a product to the markets. The stages include market introduction stage, growth stage, maturity stage and saturation and decline stage.
In market introduction stage, a firm always experiences low sales, no competition, create demand, incur high costs in product orientation and there are either makes little or no money. When sauces were first introduced Mama Mancini, family members were directly involved in the day-to-day running of the business with no compensation. Customers were charged relatively low prices and buffers were offered to returned customers.
In the growth stage, the restraint financed its activities through personal funds and resources to cover up the initial set up costs. The business was started with limited personal resources and continued to grow gradually through personal recommendations among the Italian community in Chicago, later extending to other networks across the United States.In maturity stage, the company starts to realize increased competition, sales volume increases and industrial profits go now.
For the restaurants case, the wide array of Italian music that is neither loud nor too slow adds more dining experience to the cultural atmosphere. In addition, the comfortable seats cushioned with avante-gard-styled booths helped the firm realize increased sales.
The water foundation and aluminium ceiling funs provides a cool atmosphere in hot summer days adding more serenity to the environment and the sensational, tasty and satisfying and the harmonise music the restaurant provides helps create the perfect ambiance that attracts more customers to the place. In my opinion, I would like to recommend the restaurant to build close relationships with its employees as a strategy to build customers loyalty and establishes viable business (Philips & Raspery 4).
Vertical marketing system is where members of a channel of distribution that comprises of producer, wholesaler and retailer work together to achieve business goal. Mama Mancini uses vertical marketing system since it configures its resources (employees, customers and suppliers) within a challenging environment to meet its demands.
The firm does not use any intermediaries since all restaurant activities are run by family members. Members of the channel that perform the regrouping activities are Mancini family members since they head most of the restraint branches all over United States. Vertical integration does not make sense in this case since all family members are involved in running of the business and there is no significant authority figure (Philips & Raspery 4).
Strategy Paper 4: Promotion and Pricing
Personal networking and interpersonal relationship in Mama Mancini Restaurant had greatly contributed to product promotion and pricing. Since small businesses may not have the advantages of huge advertisement budgets large corporate have, they are expected to go an extra mile to create their own brand recognition for their products through personal level of service they provide.
Numerous studies have concluded that success of small enterprises is owed to the heavy investment of the owners to the businesses and the hard work they put into the business to make their investment successful. These businesses never fall short on manpower as they tend to pull in their family members in case of emergencies unlike large corporate businesses.
Studies reveal that customers tend to favour family owned business due to the personalised services provided that ensures more satisfied customers, a key to success of any business (Ashley-Cotleur at al 10). Satisfied customers tend to spread the word faster than any other form of advertisement which favours small family owned businesses better.
A typical example is that of Mama Mancinis. Clients who visit the restaurant frequently due to the remarkable high quality home made sauce and personalised services recommend the place to other people which validate the principle Philips & Rasbery states to be the best form of advertising there is. (3).
Mama Mancinis another subsequent branches opened all over Chicago have thrived because it invested heavily from its family resources and the exception services it provides to its clients.
The goals of the business
According to a study conducted by (Taguiru and Davis 1), Mancinis business were discovered to be functioning within six goals; developing new products, financial security and benefits for the family, created a home based work environment and concentrated on personal growth and autonomy.
Mancinis business goals were of a family oriented that provided more personal nature to the business and opposed to a sheer monetary motivation as evident in most non-family businesses worldwide. A more distinguishing feature about family business is that they offer interactive working environment and tight relationships very different from the impersonal, corporate culture relationships seen in most large businesses.
This makes them very responsible for the success of the business and economic productivity since employees work in a happy atmosphere which enhances good services and attracts more customers. Prices of Mama Mancini foods are consistence in its entire stores all over United Stated and products of the company are not priced according to competitors from other companies. Low priced dishes in Mama Mancini have been able to attract more customers into buying the companys products.
Conclusion
The study question at the beginning of this research was to examine the factors that contributed to economic success of family owned small business and it has become clear that personal networking and interpersonal relationship contributed greatly to the success of the business. Small business back in the day faced finance problems and credit crunch, but since loans are available today, adequate planning and creativity can enable long term planning.
In my opinion, Mama Mancinis has showed a perfect example on how small businesses are backbone of the economy. The government should step in and offer attractive loan facilities that attract low interest rates to these enterprises to stimulate their growth. It took Mama Mancini five years to penetrate other markets, if affordable loans were in place, that wouldnt have been the case and more jobs would have been generated sooner.
Works Cited
Ashley-Cotleur, Catherine., & Sandra,West. Family Business and Relationship
Marketing: The Impacts of Relationship Marketing On Second Generation Family Business . Frostburg State University, vol .35 (2000) pp. 1-14.
Dissanayale, Kumudinei. The construction of Organizational Structure;
Connection with Autopoietic System Thoery Contemporary Management Research, vol.2, issue 2 (2006) pp.1-12.
Philips, Mancini & Raspery, Stephen. Welcome to Mancinis Not just a place to eat great food, but a restaurant to have the perfect meal Good life, October Issue, (2002). pp.1-4.
Tagiuri, Davis, J & Swarts, Stephen. The challenges of multi-displinary consulting to family owned businesses . Family Business Review, 2(1989.):pp.1
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