Company Ownership
JavaNet is a privately held Malaysia Technology Development Corporation. David Chia, the founder of JavaNet, is the majority owner. Luke Walsh, Doug Wilson, and John Underwood, all hold minority stock positions as private investors.
Start-up
JavaNet's start-up costs will cover coffee making equipment, site renovation and modification, capital to cover losses in the first year, and the communications equipment necessary to get its customers online.
The communications equipment necessary to provide JavaNet's customers with a high-speed connection to the Internet and the services it has to offer make up a large portion of the start-up costs. These costs will include the computer terminals and all costs associated with their set-up.
In addition, costs will be allocated for the purchase of coffee making equipment. One espresso machine, an automatic coffee grinder, and minor additional equipment will be purchased.
The site at Baker Avenue will require funds for renovation and modification. A single estimated figure would be allocated for this purpose. The renovation/modification cost estimate will include the costs associated with preparing the site for opening business.
Company Locations and Facilities
A site has been chosen at Baker Avenue in downtown Johor Bahru. This site was chosen for various reasons, including:
- Proximity to the downtown business community.
- Proximity to trendy, upscale restaurants such as West Brothers.
- Proximity to Johor Bahru Light Rail Station. Parking availability.
- Low cost rent - $.85 per square foot for 1700 square feet.
- High visibility.
All of these qualities are consistent with JavaNet's goal of providing a central hub of communication and socialization for the Johor Bahru community.
Services
JavaNet will provide its customers with full access to the Internet and common computer software and hardware. Some of the Internet and computing services available to JavaNet customers are listed below:
- Access to external POP3 email accounts.
- Customers can sign up for a JavaNet email account. This account will be managed by JavaNet servers and accessible from computer systems outside the JavaNet network.
- FTP, Telnet, Gopher, and other popular Internet utilities will be available.
- Access to Netscape or Internet Explorer browser.
- Access to laser and colour printing.
- Access to popular software applications like Adobe Photoshop and Microsoft Word.
- Access to popular network games.
JavaNet will also provide its customers with access to introductory Internet and email classes. By providing these classes, JavaNet will build a client base familiar with its services. The computers, Internet access, and classes wouldn't mean half as much if taken out of the environment JavaNet will provide. Good coffee, specialty drinks, bakery goods, and a comfortable environment will provide JavaNet customers with a home away from home. A place to enjoy the benefits of computing in a comfortable and well-kept environment.
Competitive Comparison
JavaNet will be the first Internet cafe in Johor Bahru. JavaNet will differentiate itself from the strictly coffee cafes in Johor Bahru by providing its customers with Internet and computing services.
Fulfilment
JavaNet will obtain computer support and Internet access from Bellevue Computers located in Johor Bahru. Bellevue will provide the Internet connections, network consulting, and the hardware required to run the Network. Ali Brothers will provide JavaNet with coffee equipment, bulk coffee, and paper supplies.
Technology
JavaNet will invest in high-speed computers to provide its customers with a fast and efficient connection to the Internet. The computers will be reliable and fun to work with. JavaNet will continue to upgrade and modify the systems to stay current with communications technology. One of the main attractions associated with Internet cafes, is the state of the art equipment available for use.
Future Services
As JavaNet grows, more communications systems will be added. As the demand for Internet connectivity increases, along with the increase in competition, JavaNet will continue to add new services to keep its customer base coming back for more.
Market Analysis
JavaNet is faced with the exciting opportunity of being the first-mover in the Johor Bahru cyber-cafe market. The consistent popularity of coffee, combined with the growing interest in the Internet, has been proven to be a winning concept in other markets and will produce the same results in Johor Bahru.
Market Segmentation
JavaNet's customers can be divided into two groups. The first group is familiar with the Internet and desires a progressive and inviting atmosphere where they can get out of their offices or bedrooms and enjoy a great cup of coffee. The second group is not familiar with the Internet, yet, and is just waiting for the right opportunity to enter the online community. JavaNet's target market falls anywhere between the ages of 18 and 50. This extremely wide range of ages is due to the fact that both coffee and the Internet appeal to a variety of people.
Target Market Segment Strategy
JavaNet intends to cater to people who want a guided tour on their first spin around the Internet and to experienced users eager to indulge their passion for computers in a social setting. Furthermore, JavaNet will be a magnet for local and travelling professionals who desire to work or check their email messages in a friendly atmosphere. These professionals will either use JavaNet's PCs, or plug their notebooks into Internet connections.
Market Needs
Factors such as current trends, addiction, and historical sales data ensure that the high demand for coffee will remain constant over the next five years. The rapid growth of the Internet and online services, that has been witnessed worldwide, is only the tip of the iceberg. Being the first cyber-cafe in Johor Bahru, JavaNet will enjoy the first-mover advantages of name recognition and customer loyalty. Initially, JavaNet will hold a 100 percent share of the cyber-cafe market in Johor Bahru. In the next five years, competitors will enter the market. JavaNet has set a goal to maintain greater than a 50 percent market share.
Service Business Analysis
The retail coffee industry in Johor Bahru experienced rapid growth at the beginning of the decade and is now moving into the mature stage of its life cycle. Many factors contribute to the large demand for good coffee in Johor Bahru. The climate in Johor Bahru is extremely conducive to coffee consumption. Current trends reflect the popularity of fresh, strong, quality coffee and specialty drinks. Johor Bahru is a haven for coffee lovers.
The popularity of the Internet is growing exponentially. Those who are familiar with the Internet are well aware of how fun and addictive surfing the Net can be. Those who have not yet experienced the Internet need a convenient, relaxed atmosphere where they can feel comfortable learning about and utilizing the current technologies. JavaNet seeks to provide its customers with affordable Internet access in an innovative and supportive environment.
Due to intense competition, cafe owners must look for ways to differentiate their place of business from others in order to achieve and maintain a competitive advantage. The founder of JavaNet realises the need for differentiation and strongly believes that combining a cafe with complete Internet service is the key to success. The fact that no cyber-cafes are established in Johor Bahru, presents JavaNet with a chance to enter the window of opportunity and enter into a profitable niche in the market.
Business Participants
There are approximately 16 coffee wholesalers in Johor. These wholesalers distribute coffee and espresso beans to over 20 retailers in the Johor Bahru area. Competition in both channels creates an even amount of bargaining power between buyers and suppliers resulting in extremely competitive pricing.
The number of online service providers in Johor Bahru is approximately five and counting. Those service providers use a number of different pricing strategies. Some charge a monthly fee, while others charge hourly and/or phone fees. Regardless of the pricing method used, obtaining Internet access through one of these firms can be expensive. These service providers are also rather costly for the average consumer.
Distributing a Service
The dual product/service nature of JavaNet's business faces competition on two levels. JavaNet competes not only with coffee retailers, but also with Internet service providers. The good news is that JavaNet does not currently face any direct competition from other cyber-cafes in the Johor Bahru market.
Competition and Buying Patterns
The main competitors in the retail coffee segment are Cafe Paradise, Coffee Corner and Ali Bros. These businesses are located in or near the downtown area, and target a similar segment to JavaNet's (i.e. educated, upwardly-mobile students and business people).
Competition from online service providers comes from locally owned businesses. There are approximately five service providers in Johor Bahru. This number is expected to grow with the increasing demand for Internet access. Larger, online service providers, such as Jaring and TmNet are also a competitive threat to JavaNet. Due to the nature of the Internet, there are no geographical boundaries restricting competition.
Strategy and Implementation
JavaNet has three main strategies. The first strategy focuses on attracting novice Internet users. By providing a novice friendly environment, JavaNet hopes to educate and train a loyal customer base.
The second, and most important, strategy focuses on pulling in power Internet users. Power Internet users are extremely familiar with the Internet and its offerings. This group of customers serves an important function at JavaNet. Power users have knowledge and web-browsing experience that novice Internet users find attractive and exciting.
The third strategy focuses on building a social environment for JavaNet customers. A social environment, that provides entertainment, will serve to attract customers that wouldn't normally think about using the Internet. Once on location at JavaNet, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide.
The following subtopics provide an overview of JavaNet's three key strategies.
Attract Novice Internet Users
JavaNet's first strategy focuses on attracting novice Internet users. JavaNet plans on attracting these customers by:
- Providing a novice friendly environment. JavaNet will be staffed by knowledgeable employees focused on serving the customer's needs.
- A customer service desk will always be staffed. If a customer has any type of question or concern, a JavaNet employee will always be available to assist.
- JavaNet will offer introductory classes on the Internet and email. These classes will be designed to help novice users familiarize themselves with these key tools and the JavaNet computer systems.
Attract Power Internet Users
JavaNet's second strategy will be focused on attracting power Internet users. Power Internet users provide an important function at JavaNet. JavaNet plans on attracting this type of customer by:
- Providing the latest in computing technology.
- Providing scanning and printing services.
- Providing access to powerful software applications.
Social Hub
The third strategy focuses on building a social environment for JavaNet customers. A social environment, that provides entertainment, will serve to attract customers that wouldn't normally think about using the Internet. Once on location at JavaNet, these customers that came for the more standard entertainment offerings, will realize the potential entertainment value the Internet can provide.
Competitive Edge
By providing Internet service, JavaNet separates itself from all other cafes in Johor Bahru. In addition, JavaNet provides a comfortable environment with coffee and bakery items, distinguishing itself from other Internet providers in Johor Bahru.
Marketing Strategy
JavaNet will position itself as an upscale coffee house and Internet service provider. It will serve high-quality coffee and espresso specialty drinks at a competitive price. Due to the number of cafes in Johor Bahru, it is important that JavaNet sets fair prices for its coffee. JavaNet will use advertising as its main source of promotion. Ads placed in newspapers and magazines will help build customer awareness. Accompanying the ad will be a coupon for a free hour of Internet travel. Furthermore, JavaNet will give away three free hours of Internet use to beginners who sign up for an introduction to the Internet workshop provided by JavaNet.
Pricing Strategy
Determining a fair market, hourly price, for online use is more difficult because there is no direct competition from another cyber-cafe in Johor Bahru. Therefore, JavaNet considered three sources to determine the hourly charge rate. First, they considered the cost to use other Internet servers, whether it is a local networking firm or a provider such as Malaysia Online. Second, JavaNet looked at how cyber-cafes in other markets such as Kuala Lumpur and Penang about pricing Internet access.
Promotion Strategy
JavaNet will implement a pull strategy in order to build consumer awareness and demand. Initially, JavaNet has budgeted $5,000 for promotional efforts which will include advertising with coupons for a free hour of Internet time in local publications and in-house promotions such as offering customers free Internet time if they pay for an introduction to the Internet workshop taught by JavaNet's computer technician.
JavaNet realises that in the future, when competition enters the market, additional revenues must be allocated for promotion in order to maintain market share.
Sales Strategy
As a retail establishment, JavaNet employs people to handle sales transactions. Computer literacy is a requirement for JavaNet employees. Their employees are available for customers in need of assistance. JavaNet's commitment to friendly, helpful service is one of the key factors that distinguish JavaNet from other Internet cafes.
Sales Forecast
Sales forecast data is presented in the chart and table below.
Conclusion
After the above mention business plans. I personally think that JavaNet would have 90% in succeeding its organisational goals. Firstly because it will be the first Internet café in Johor Bahru. And secondly, it is a unique concept of combining Internet and café together. It would be a new trend for Johor Bahru’s café lovers and Internet surfers.
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References
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John Stredwick. (2002) Managing people in a small business.
Loh Siew Cheang. (1997) The business guide to Malaysia.
Shailendra Vyakarnam, John Leppard. (1999) A marketing action plan for the growing business.
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