Ateneo de Davao University School of Business and Governance Graduate School Masters in Business Administration

DUAL PANE COMPANY

A Case Study
As a Partial Requirement for Development of Enterprise Submitted by:

Kristelle Brooke Dianne B. Jarabelo

Submitted to:

Prof. Antonio Boquiren

I.

Background of the Study

Dual Pane Company is a housing restoration company owned by John Grayson and his wife Elizabeth. In 2001, John invented a machine that could remove old windows without damaging the window panes. This was a technological breakthrough in their line of business and John Grayson was able to cease the opportunity to apply and been granted a patent for this unique cutting tool in 2002.

The main geographical market of Dual Pane Company is the Boston area, although they have also had some business on neighbouring cities. Most of the customers of Dual Pane are residential homes.

Due to their technological advantage, business has been booming for Dual Pane Company. However, due to their increasing customer base, they are getting more customers than the couple could handle. Because of this, the couple is considering to expand their business. II. Statement of the Problem

Dual Pane Company is primed for expansion. There are many options that are currently available to them. III. Areas of Consideration What is the best way for the company to expand?

There are numerous external and internal factors to consider before the Dual Pane Company can proceed with their planned expansion.

External Factors Economic Factors In 2002, the economy has been performing positively which in turn increased the employment level locally and increase the disposable income of consumers. Interest Rates Interest rates are down at this time. Because of this, there has been a trend in borrowing for expenses such as house restoration, etc.

Cost of Energy In 2002, people have already started becoming conscious that energy is a limited resource. In which case, people have become more conscious in looking for alternative energy sources.

Internal Factors Technological Factors John Grayson is the inventor of a unique cutting tool that prevents damages when cleaning or replacing windows. He held the patent for this technology since 2002. Organizational Structure John Grayson and his wife Elizabeth are the owners, as well as the only staff of their company. Elizabeth handles advertising and promotion while John does the actual window installations. They are both unwilling to manage staff in case of expansion. Geographic Market they are currently only serving the Boston area. Customer Profile their current customers are residential homes Expansion Opportunities there are many expansion opportunities available for Dual Pane Company such as internal expansion, partnerships, franchising, or buy-outs from bigger companies to name a few. SWOT ANALYSIS STRENGTHS 1. Dual Pane Company has more business than they can handle 2. Double-Pane insulated windows are more energy efficient 3. They have a patented cutting tool 4. They emphasise on the quality of their work WEAKNESSES 1. Staffing is only limited to John and Elizabeth 2. The owners are not interested in managing more staff 3. The Graysons have limited knowledge on growing their business OPPORTUNITIES 1. Steady economic growth 2. Increasing employment level

3. Increasing consumer disposable income 4. Drive for energy conservation 5. Franchising 6. Advertising and Promotions via word of mouth THREATS 1. Competition 2. Legalities involved in venturing into franchising 3. Economic performance which may burst at any time 4. Market Demand 5. Operational Costs in expansion IV. Alternative Courses of Actions

1. External Expansion

External expansion via franchising in order to cater to more customers without having to manage internal staff

2. Internal Expansion

Focus on internally growing their business by acquiring additional staff.

3. Maintain Current Business Size

Continue with the status quote and maintain the management and operation of the business between John and Elizabeth only.

V.

Analysis

Business expansion is a business strategy in which growth is obtained by increasing the number of stores or services in which customers can obtain a companys products. Unlike relocation, business expansion entails opening up new

stores in different physical locations while still maintaining the current business locations.

Its good times when business entrepreneurs need to expand their business and open themselves to new markets. There are some points that entrepreneurs need to keep in mind while considering expanding their business ventures. The first point to consider is to find a plan of expansion that does not harm the companys current interests. Business analysts say that entrepreneurs considering expansions also need to make sure that they do not hike the price of the products and services so as to alienate clients. Retail businesses should be especially aware of how a new group of patrons can change the experience for existing customers In addition, entrepreneurs considering expansion of business ventures need to make sure that they offer a balance of products and services so that they can cater equally to the different demographic groups.

There are numerous possibilities in growing the business. Choosing the proper one for your business will depend on the type of business owned, the available resources, and how much time, money and sweat the owners are willing to invest all over again.

Internal Expansion. Physical expansion is not always the best growth answer without careful research, planning and number-planning. Franchising is the practice of using another firms successful business model. For the franchisor, the franchise is an alternative to building chain stores to distribute goods that avoids the investments and liability of a chain.

The factors used in the decision criteria are as follows: 1. Feasibility 30% Feasibility means logical probability, or that which is achievable. It is the potential of the proposed project to be achieved. 2. Cost 20% The costs that will be incurred in the expansion.

3. Ease of Implementation 10% Given the strengths and limitations of John Grayson and his wife, this will be measured by the ease that they will be able to execute the proposal. 4. Profitability 40% The return on the expansion investment

VI.

Decision Statement

Criteria 1 Feasibility 2 Cost 3 Implementation 4 Profitability

WT 30% 20% 10% 40% 100%

ACA 1
4 4 4 3 1.2 0.8 0.4 1.2

ACA 2
2 4 3 4 0.6 0.8 0.3 1.6 3.3

ACA 3
3 2 2 2 0.9 0.4 0.2 0.8 2.3

3.6

Dual Pane can best implement their expansion via franchising their business.

Franchising is generally effective as a vehicle for expansion because it provides an operating system that would allow profitability even without managing a pool of staff while covering more markets.

A franchise business structure would offer Dual Pane a way to earn further incoming without having to sink its hard-earned investments into new stores or more staff. It is a way for stable businesses such as Dual Pane to expand its reach beyond its home community and promote its brand in other markets. It would also offer enthusiastic investors a way to start running a business that has a proven track record with minimal investment on their end.

Further, franchising allows the parent company to maintain strategic control of the business, while benefiting from the expertise of other investors. For some companies that translates to a smarter business model with set productivity levels and standardized operating procedures. At the same time, it allows the parent

company to maintain control over key decisions when it comes to marketing, advertising, employee training and structure.

In many cases the parent company experiences better cash flow and higher profit earning potential. Distribution and advertising costs are many times shared between the franchisor and the franchisee, resulting in a cost savings for both parties.

However, as with all types of business structure, the pros come with the cons. Here are the cons to franchising Dual Pane Company:

A franchisor must be able and willing to share her knowledge and the blue prints to the businesses. John and Elizabeth Grayson must be comfortable with providing support and training, and be able to ensure standardized business procedures that new staff can follow.

While franchising defrays much of the cost that would normally be incurred in start-up investment, but the franchisor must still be financially prepared to carry certain parts of the costs of researching and implementing the new legal structure.

Operating a franchise business is hard work for both the owner and the investor, and not every business or every business owner will find a comfortable fit. But the advantages of opening a franchise are often rewarding in reputation as well as in profit, and offer many incentives for the well-established business owner. VII. Implementation

Since John and Elizabeth Grayson have limited knowledge about expanding their business, it is best that they initially hire a franchise consultant that would orient them with the legalities, and the proper procedures in securing their business for franchising. At this point, they should have already done their research of the market in order to identify potential growth areas.

Dual Pane Company also needs to streamline their internal system and marketing in order easily communicate their strategies and franchise procedures to their prospective franchisees. Further, control measures must be put in place in order to ensure that the quality of the services provided by their franchisees will not compromise their brand or patent.

VIII.

Contingency Plans Contingency planning is about being prepared for the unexpected so youre not caught off guard.

If you have a contingency plan, instead of going into a mad panic and trying to figure out what to do before acting, which can be costly in both revenue and reputation, you can jump straight into action with minimal damage. And your action will be well thought out and proactive, instead of reactive and potentially the wrong action because you didnt think things through thoroughly.

For Dual Pane Company, something might go wrong in the franchise implementation itself. In order to respond to this, the Graysons must improve their communication to their franchisees.

Market demand may also decrease, and economic fluctuations may affect the profitability of their franchise considering that their main market is residential homes. Dual Pane Company must also consider targeting more commercial businesses in order to secure a more stable part of the market. These economic fluctuations may also cause the decrease in their customers disposable income, in which case, Dual Pane may want to venture into other geographical markets in order to retain their revenue.