Caribbean Internet Café Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Introduction

David Grant had returned home on vacation from an MBA program in 1996. He was assessing viability for an Internet café in Kingston, Jamaica, as he wanted to be his own boss. He had some experience working as a computer system engineer with Jamaica Telecommunication Limited (JTL). He started to collect information on the project and made a proposal for JTL to invest in the project.He wanted to evaluate his options and to aska consultant group to evaluate the business plan for him.

The analysis for the project is as under:

Managerial Issues

Manager for Caribbean Internet Café

David had been looking for a manager to run the business with experience in managing a restaurant. Although both businesses are services based, however they could have different business models and strategies. The expertise and skills needed for the job would also be different. Moreover, he had not been able to find a suitable person for the job.

2.2. Work and Study Balance

David had been studying his MBA in Ontario, while planning to start a business in Jamaica. He was also relying on his knowledge and skills to look after day to day business activities, but he would not be able to do so due to his academic commitments. He might need to rely mostly on the manager or hire another person to look after the business. This wouldincrease the cost of the business further.

The tax rate can significantly reduce the profits of the proposed. Moreover, he is charging premium prize (30% above the market rate) on the internet services due to the flexibility offered to the clients.

3.0. Cost Definition

3.1. Fixed Costs

Fixed costs are the costs not affected by the changes in the number of units produced or services provided(Spence, 1976). In this case, fixed costs include salaries, wages, leases, insurance, advertising, administration and maintenance and interest loan.

Fixed Costs
Depreciation 264,000
Employees 374,400
Manager 480,000
Rentals 360,000
Utilities 180,000
Internet Lease 120,000
Insurance Premium 120,000
Marketing and promotion 120,000
Miscellaneous expenses 600,000
Interest Expense 125,000
Total Fixed Costs 2,743,400

3.2. Variable Costs

These costs vary due to the changes in the production level(Chambers, Kouvelis, & Semple, 2006). The variable costs at Caribbean Internet café include cost of food, drinks and internet charges..........................

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