Introduction
Case: Frog Pubs
Written By: Prof. Randel Carlock, Berghmans Lohist, Elizbeth Florent & Laurence Amand-Jules
Character: Paul Chantler & Thor Gudmundsson
Topic: A new Venture down a Road less travelled
Summary: The two MBA students, Paul Chantler & Thor Gudmundsson were discussing possible projects for their forthcoming New Ventures Course. The idea of opening an English Pub in Paris hit their mind. It would be called “The Frog & Rosbif”. Both start doing work on their project inn the form of partnership. Their Project was feasible so they want to start their own English Pub. They have done lot of survey and observations. They were approximately prepared to start their project when a hurdle occurs in their way to success due to their own mistake. The owner of the site where they want to open their business was not agreed for agreement. They made lot of offers to him but all fails. At last another tenet got that site. They tried a lot for searching another site but they fail. In the end after lot of struggle and because of completely out of money they were tense and discouraged. In result they cancel their project and start finding their “real” jobs.
Rational being an Entrepreneur
Characteristics: Details:
Independent: Bots Paul and Thors want to be independent. They want to start their own firm or venture. Both get tired of doing jobs. So they want to be independent.
Opportunity Finder: Yes they are opportunity finder. They find that all the brits want English Pub and Real Alein Paris. They also find that French consumption of ordinary bear had flattened. The French seemed to like “special” bears-imports higher alcohol content bear and their demand was increasingly steadily. They also find that their was also demand of Irish Pub in central Paris.
Risk taker: Both of them are also risk taker because this really looked like the most simulating thing to do after graduating and it was a fun project. At the time, people said’ No, you are not really going to do it are you? It’s too much risk.
Creative: I think they were creative because they come up with new idea of opening an English Pub and Real Ale in Paris. There is no English Pub in Paris before and no place where they easily found Real Ale.
Clear Objective: The objective of opening an English Pub is also clear.
Self Confidence: They both have a lot of self confidence in them. In result of their self confidence they got investors and Bank for investing in their venture.
High Energy Level: Both of them are highly energetic. They try again and again for success of their project until they are out of money.
Discussion:
Paul Chantler and Thor Gudmundsson were MBA students. They were studying in FONTAINEBLEAU In France. They both belong to England. Paul was from a family of doctors and before MBA he was doing job in marketing and sales as well as in agriculture sector of pesticides for ICI. From ICI he got four years experience. While on the other hand Thor was born in England of Icelandic parents. His father was an international civil servant. He grew up in Paris. He had experience of six years of working in corporate finance department in London. Both of them are getting rid of doing boring jobs. They want start their own firm and for this they hopes MBA would provide a basis for such transition.
Paul and Thor were not close friends. In the spring of 1992, they were discussing possible projects for their forthcoming new venture course. The idea that hits in their mind was to open an English Pub in Paris. In joking they would named their pub “The Frog &Rosbif”. This idea comes from their class fellow’s discussion about lack of Pubs in Paris.
Now they are going to implement their project by opening an English Pub in Paris. They become the partners in their project. In start they decided that they were equal partners. In terms of equity, they put in same amount of cash and get the same percentage. They fairly distributed their role according to their expertise. Their partnership based on complicity.
They spent lot of time on their English Pub concept.
For their business idea they start making contacts throughout the industry. They found that there was no place in Paris where they found Real English Ale. They find out great opportunity that. They find that all the brits want English Pub and Real Alein Paris. They also find that French consumption of ordinary bear had flattened. The French seemed to like “special” bears-imports higher alcohol content bear and their demand was increasingly steadily. They also find that their was also demand of Irish Pub in central Paris.
Now its time to chose their target customers.They constructed market research and they established that their key market groups would be French professionals aged 25 to 35.in the end their Pub concept would to attract French and British customers.They summarized their business plan. It was time for Decision to start it or do a job like before MBA. It is very risky because this really looked like the most simulating thing to do after graduating and it was a fun project. At the time, people said’ No, you are not really going to do it are you? It’s too much risk.
Now they start working by spending six weeks training in Worcester with a brewer, learning how to brew bear and operate a Pub. Now they start looking for site as well as for financing. It was very difficult to find site. They visited 30 state agents from whom only one respond to them. They find a site, it was not perfect but it seemed to be fit in their criteria.
It was time for raisin money which is most difficult part. They needed 5.3 million FF for their Pub. They contacted the investors and also approach to 20 Banks. Unfortunately loan committee rejected their proposals. Now they decided for give up and begin looking for alternative occupation after Christmas. Luckily one week before Christmas two positive events occurred. First THE French bank BNP said it would provide financing of up to 3.2 million FF. Second THEY MET David Bruce an Englishman. He set ups a chain of Pubs in UK. David was interested in their project so he brought another investors who provide 1.85million FF.
It looked like they would be finally able to get started. Unfortunately, they had underestimated the expectation of the site owner. They did not get agreement with the site owner in 3 months. Now they are out of money. The bank and would not release any fund until they have lease. They looked for an alternative site.
It was very tough time. The lack of progress on the project put tremendous strain on them. At the end after lot of struggle they were tense, discouraged and completely out of money. Reluctantly they decided that they had to look for “real” jobs, and cancel their project to create the only truly English Pub in Paris.
Problems:
The two partners had underestimated the expectations of the site owner. They did tedious negotiation. They became over confidence because of their negotiation skills. They think that they negotiate and make the best deal. They handled it very naively. They can’t find site for their frog Pub. The most important thing they did not do agreement with site owner when they first time talk.
Solutions:
They made several offers at higher rent but all fail. After that they try to find alternative site but there was no site available and at end they did not find any solution of their problem of site. They cancel their project.
Recommendations:
According to my opinion the only one way left if they will choose they may be successful in their project. They will have to purchase an operating business and renovate it and start their pub.
This all happened because of their mistake that they did not made agreement when they meet him and final the deal.
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