easyInternetcafé Ltd
Issues Identification
The Immediate Issues
Easy Internet Café was started with heavy investments and with the first store opening 21st June 1999 at Victoria London with 330 Pcs and more stores following in Europe and US; the company earned many accolades for their innovation, marketing, use of technology and investments in large and attractive retail properties. eIc operated all their own stores from 1999 to 2002 but despite the accolades, high expectations of growth in demand; revenues did not materialize but cumulative losses of £80-£100 million were incurred over that period. In 2003, with losses continuing to mount, eIc decided to radically revamp their operations and change their strategy.
Systematic/Strategic Issues [Timing: short term & long term]
1. Changing the Strategy - high investments made were not justified and revenues required to break even were huge for each single location with 250-600 PC terminals to fill and service charge being minimal
2. Change of strategy from company owned status to appointing franchisees for new stores and possibly for existing legacy stores with the franchisees required to bear the costs of property and hardware to reduce capital drain by introducing smaller stores with 20 to 30 PCs as a way forward
3. Plan to create quick growth with a goal of opening 10 stores per week over the next 2-3 years which could be completely unmanned with no staff aside from regular maintenance
4. Strategic process of sticking to their core competence and outsource all the non-core activities
Management Reaction [Timing: short term & long term]
As a result of eIc incurring cumulative losses of £80-£100 million over the period of 1999 to 2002; management identified flaws in the status-quo and felt need for strategic change. Stelios, the CEO had given the company 9 months to start to show radical improvement as they were basically
The Immediate Issues
Easy Internet Café was started with heavy investments and with the first store opening 21st June 1999 at Victoria London with 330 Pcs and more stores following in Europe and US; the company earned many accolades for their innovation, marketing, use of technology and investments in large and attractive retail properties. eIc operated all their own stores from 1999 to 2002 but despite the accolades, high expectations of growth in demand; revenues did not materialize but cumulative losses of £80-£100 million were incurred over that period. In 2003, with losses continuing to mount, eIc decided to radically revamp their operations and change their strategy.
Systematic/Strategic Issues [Timing: short term & long term]
1. Changing the Strategy - high investments made were not justified and revenues required to break even were huge for each single location with 250-600 PC terminals to fill and service charge being minimal
2. Change of strategy from company owned status to appointing franchisees for new stores and possibly for existing legacy stores with the franchisees required to bear the costs of property and hardware to reduce capital drain by introducing smaller stores with 20 to 30 PCs as a way forward
3. Plan to create quick growth with a goal of opening 10 stores per week over the next 2-3 years which could be completely unmanned with no staff aside from regular maintenance
4. Strategic process of sticking to their core competence and outsource all the non-core activities
Management Reaction [Timing: short term & long term]
As a result of eIc incurring cumulative losses of £80-£100 million over the period of 1999 to 2002; management identified flaws in the status-quo and felt need for strategic change. Stelios, the CEO had given the company 9 months to start to show radical improvement as they were basically