Utopia IB Business Management Case Study May 2017

Unfortunately, a storm wrecks most of the villas, which dents sales. He needs to raise funds to rebuild the villas.  He uses internal sources again, rejecting external sources. Along with his children, he wants to expand the coffee business, though each child has a different perspective.

Click here for a list of business terms in the case study.

Key characters

John Ariki

Sole owner of private limited company Utopia.
Starts company around 2000.
Grows company from 12 to 24 villas.
Clear he is passionate about maintaining the culture of the local island and retaining local sources for suppliers. Ethically inspired decision-maker. He has a paternalistic approach to leadership.
In 2006 opens café (JAC) in island’s capital, which in turn becomes a significant tourist attraction in islands.
In 2011 hands over JAC operation to his twin children, Paul and Liza, to concentrate on Utopia.
Not keen on outside investors when rebuilding the business after the natural disaster in 2016.
Shows he wants the final say on all business decisions when considering growth options. Doesn’t want to compromise the vision or social responsibility.
Realises that the company structure will need to change if they need to expand

Liza (probably around 26 years old)

JAC human resource and finance manager.
An IB graduate.
Entrepreneurial and visionary, thinks globally rather than locally for coffee brand.
Wants to expand around the Pacific.
Not so keen on Paul’s plan for souvenirs.
Interested in exploring strategic alliances, joint ventures or franchising for JAC business.

Paul (probably around 26 years old)

JAC head of marketing and operations.
An IB graduate.
Well-travelled post-graduation.
Has experience in coffee café culture, and more inspired by small, socially responsible chains than multi-nationals.
Keen on product development and engaging with the local community.
Interested in using 3D printers to produce Utopia branded souvenirs.

Key topics to explore

Business plans
Reasons for devising a plan
Reasons for changing a plan

Ethics
Benefits and costs of being an ethical company

Social responsibility
Benefits and costs of being socially responsible

Suppliers and supply chain
Benefits and costs of using local suppliers – cost v convenience v relationships v social responsibility

Marketing
Income elasticity of demand (HL)
Price elasticity of demand (HL)
Methods of promotion for both businesses
Product development
Market research
Distribution channels
Brand loyalty

Operations
Technology – pros and cons of 3D printers
JIT for food and coffee
Quality control
Capacity utilization

Business structure
Private limited company v PLC

Finance
Sources of finance – internal v external
Gross profit margin, net profit margins
Capital expenditure / investment appraisal

Human Resource Management
Pros and cons of paternalistic style of management
Organizational structures/charts
Why organizational design is important as a business grows

External influences
Exchange rates

Crisis management and contingency planning

Growth of a business
Strategic alliances, joint ventures, franchising

Conflicts
Possible conflict between Paul and Liza on direction of business
Stakeholder conflicts – John avoids external finance – why