Hard Rock Café Case Study-Wk 4

Case Study- Where to Place the Hard Rock Café –Week4

GSCM-206 Managing Supply Operations

Hard Rock Café Case Study-Wk 4

Hard Rock Café Case Study

1. From Munday’s Standard Market Research checklist, select any other four

categories, such as population (A1), hotels (B2), or restaurants/nightclub (D), and

provide three subcategories that should be evaluated. (See item C1 [airport] for a

guide.)

A. Population of Area
1. Age demographics
2. Percentage of prospective customers
3. Presence of “party culture” or those interested in the Hard Rock theme
B. Economic Indicators
1. Income level of locals
2. GDP growth rate
3. Rate of inflation and political or social conditions of the area
C. Tourist/Business Visitors
1. Number of tourist attractions or events
2. Average number of tourists
3. Locations or areas where tourists visit or spend their time
D. Hotels
1. Number of hotels
2. Quality of hotels
3. Occupancy rate and average cost per person or group

2. Why does Hard Rock put such serious effort into its location analysis?

Location analysis is very important for businesses of this type, as their success is

almost completely dependent on the location and nearby places. Hard Rock puts such

serious effort into its location analysis to ensure that the decision they make is beneficial

for the company, not only in the short-term, but in the long-term as well. By putting in

this effort at the front end they can prevent unnecessary location closures, low sales or

being forced to move later on due to a dwindling customer base. This analysis also helps
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them to determine what is more beneficial, a branch or a franchise. For example, Munday

has determined that the prospective Moscow location should be a franchise. This is

understandable as there is not only a significant cultural difference, but also political and

economical difference from on-shore locations. By making the decision to franchise they

are able to capitalize, even with the differences between countries. Without the proper

analysis, the market share would not be possible and the investment might not produce

enough return to the business.

3. Under what conditions do you think Hard Rock prefers to franchise a café?

Under certain conditions it is more beneficial to franchise with a local business

than it is to not. Specific reasons include, but are not limited to, dearth of funds, areas of

uncertainty, countries that disallow direct investment or foreign investment, or areas

where local needs are not fully understood or simply to reduce or eliminate advertising

costs. An example of this would be the Moscow location. Russia, though it is considered

a super power, has an unstable political system, economy and different culture than the

United States. By franchising they are able to work with someone, whether a business

entity or individual, to create a restaurant that accurately suites the needs of the locals and

tourists without stepping out of the bounds of what is considered “acceptable” for that

area. This is likely the case for restaurants in countries such as China, South Korea, etc.

On-shore franchises are still of course common, however the reason behind that decision

is different from off-shore locations and are more likely to do with simple investment

strategy.
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