Benihana of Tokyo Case Solution
Use of Authentic Material for Building New Units
There are currently only two carpenters hired by the company who know how to build a branch with a traditional Japanese touch. As these carpenters, using their maximum potential,can build 5 units per year, therefore the company is limited to grow only at 5 branches per year rate.
Decision on Markets to Expand
The company has several options available to expand the business into various markets but all these decisions have their own risks and rewards. An example of this could be that if the company tries to expand out of US,then the company will have access to large profits but this will result in great loss of control and the restaurant might not be successful in other countries.Moreover,if it tries to expand within other states of the US,then the company will have maximum control over its restaurants and will require minimum controls but the profits will also be less.
The management of the company also plans to diversify its operations; therefore it plans to limit its risks of the operations. The management has plans to diversify into production by manufacturing tinned products under the Benihana label. Nonetheless,these plans also require large capital as well as they are not in line with the companyâ€™s vision.
Possible Alternatives to Identified Issues
Based on the above identified issues, the management of Benihana has several alternatives that might be able to reduce these issues to minimum level however,it should be noted that these alternatives do not produce the most desirable result for the management. Following are the available alternatives to the company to resolve the identified issues;
Hired Trained Staff from US
The management could hire experienced and trained staff from within the United States as this will further reduce the labor expenses for the company while the continuing training programs of the company will allow the new hires to learn cooking in the Benihana style.Hence, this will allow the company to grow quickly without the need for paying excessive amounts to chefs.
Train Amateur Chefs
The company could also hire amateur chefs and provide them with apprenticeship under experienced chefs. This will provide the young chefs to groom and become professional chefs,whereas Benihana will be able to produce high quality chefs on their own and can fulfill their staff requirement easily.
Taking Debt from Banks
In order tofulfill the capital requirement, the company has the option to take debt from commercial banks that are willing to give debt but the company management believes that this could result in loss of control.The company should negotiate with other banks in order to be in better terms in which they are satisfied.
Charge for Management of Franchises
The company can start selling its franchises to other investors again. The adjustments that they can perform is to sign an agreement with franchisee that Benihana will provide management services to the franchise and will charge a portion of revenue for their services. These charges will be separate from royalty payments.Moreover, thiswill allow the company to grow quickly and increase its profitability margins.
Using Funds of Venture Capitalists
The company could call for funds from venture capitalist as these firms have large capital resources and might be interested in investing in Benihana as it has great growth potentials. These firms will demand stake in equity of the company for providing their funds, therefore the management might lose control however these investors are usually interested in profits and not in management of the company.
Issue Stocks Publically
Benihana could go to stock markets and get public ally registered, as this will allow the company to issue stocks to general public and receive equity. Moreover, this will allow the company to retain control while receiving large amount of capital.However,the main problem here is that to get registered the company needs to be larger in size……….
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