Research Methodology_Startup Coffee

RESEARCH METHODOLOGY PROPOSAL

Tran Thi ThuyB0412DHDH1112

1

TABLE OF CONTENTSRESEARCH BACKGROUND.......................................................................................................2

1) Topic Focus.............................................................................................................................2

1.1. Research Topic.................................................................................................................2

1.2. Data Sources.....................................................................................................................2

1.3. Questions of Research......................................................................................................2

2) Rationale..................................................................................................................................2

LITERATURE REVIEW................................................................................................................4

1) About the Coffee Brand....................................................................................................4

Vision.......................................................................................................................................5

Mission....................................................................................................................................5

2) About Franchising...................................................................................................................5

The Definition of Franchising.................................................................................................5

Why Startup Needs Franchising?............................................................................................6

Benefits of Franchising................................................................................................................7

Challenges of Franchising...........................................................................................................8

RESEARCH METHODOLOGY..................................................................................................10

Primary Data..............................................................................................................................10

Survey Sample.......................................................................................................................10

Collecting Data for Survey and Sampling.............................................................................11

Interview................................................................................................................................11

The Technique and Validity of Interview..............................................................................12

Other Primary Data Sources..................................................................................................12

Secondary Data..........................................................................................................................12

Analysis of Data........................................................................................................................13

Research Methodology: A Proposal

2

Time Scale.................................................................................................................................14

Limitation..................................................................................................................................15

REFERENCES..............................................................................................................................16


3

RESEARCH BACKGROUND1) Topic Focus

1.1. Research Topic

The research of franchising opportunity for StartUp Coffee in Vietnam.

1.2. Data Sources

The Primary Data sources for this business plan research include online and leaflet

questionnaires to people who are currently living in two major cities of Vietnam: Ho Chi Minh

City and Hanoi. The research also takes a deep analysis of various Secondary Data Sources.

1.3. Questions of Research

This research aims to solve these questions below:

a) What are the opportunities for StartUp Coffee to franchise it brands in Vietnam?

b) Is franchising the most efficient way for start-up business like StartUp Coffee to

expand its business?

2) RationaleEnjoying coffee has become Vietnamese people’s interesting habit. On the other hand,

Vietnam has gradually become second largest producer of coffee in the world, which takes into

account of 16% of global production (European Coffee Federation, 2015). Furthermore, coffee in

Vietnam has been planted in 36/64 provinces throughout the country and this number continues

growing – the production of coffee grew up to 1.29 million tonnes in 2012.

Total sales revenue of Vietnam coffee has gradually grown from USD 912 millions in

2012 to USD 1.4 billion in 2013. Moreover, according to a report of Business Monitor, coffee

hot drink consumption of Vietnamese people increased the 64.83% in the years of 2008 to 2011.

As a result, there is still room for development of drinking coffee in Vietnamese people. The

growth in sales revenue of coffee has been continuing – there is a potential growth forecast in

sales of coffee from USD 1.8 billion in 2015 to USD 2.24 billion in 2017.

In addition, the constant growth of both modern and classical coffee bar in Vietnam has

shaped the trend regarding to the enjoying of coffee. A report by Agriculture and Agri-Food

Canada (2013) stated that the coffe and tea shop in Vietnam can reach the total value of USD 3.1


4

billion while this figure regarding to the takeaway coffee would be USD 35 million in 2015.

There are few reasons that can be mentioned in order to explain why coffee and tea shops have

the significant development. Firstly, according to Business Monitor (2014), young Vietnamese

people – both adults and teenagers – have open-minded with the new world’s trend and new

idea. Moreover, according to Truong (2012), the young Vietnamese people nowadays dare to

spend higher money for food as well as beverage for better quality.

Vietnam now has a lot of coffee shops which provide various choices for all types of

customers. On the other hand, due to the globalisation and the rapid development of international

trade, more and more global

Secondly, Vietnam has a high diversified range of coffee and tea houses that can adapt to

all types and demographics of customers (Agriculture and Agri-Food Canada, 2013). The

diversified coffee and tea products and services have created the trend and drinking habits among

Vietnamese people. The coffee and tea houses also play an important role to provide appropriate

venues that people can have for various jobs. They can take advantage of the shops for

discussion business, studying or gossiping.


5

LITERATURE REVIEW1) About the Coffee Brand

Being back to Vietnam in 2013, Mr. Mai Truong Giang – the founder and CEO of Startup

Coffee Vietnam – brought with him the dream to build up a Vietnam coffee brand that can

provide and inspire new business ideas for young people who come to the coffee shop in daily

routine. As a result, the owner has started his own coffee shop brand – Startup with various

ranges of price for the products in order to attract young customers. On the coffee shop’s website

(2015), it states that Startup Coffee has offered half of the price for all the products which are

similar to other competitors in the same positions. Furthermore, Startup Coffee shows the vision

of creating the nice place with competitive price for young Vietnamese customers to enjoy not

only the nice coffee but also to discuss about the innovative business idea and startup. Startup

Coffee is managed by Khuong Viet Jsc. Ltd. and has been looking for franchising partners to

expand its business.


6

Vision

The founder of Startup Coffee wants the brand to be a leading brand name in the

segmentation of modern and urbanised coffee chain stores like Starbucks or Coffee Bean but

with cheaper prices (Startup Coffee Vietnam, 2014). In order to reach that vision, Startup Coffee

will need to accomplish these below categories:

a) Food and beverage are served in the coffee shop must be controlled carefully

regarding to the quality, hygiene but still have it own taste.

b) Startup Coffee pursues the competitive price strategy in which the coffee and tea are

served with high standard but only charged with reasonable price. Therefore, more

customers can be reached.

c) The employees must be trained with higher standard in comparison with other

competitors so as to deliver to customers the best service.

Mission

Startup Coffee is established by a young Vietnamese guy who has an ambition to bring a

new and innovative business concept in order to compete fairly with other international brand-

names such as Coffee Bean and Starbucks. From that thought, Startup Coffee really wants to

share its own business concept, idea, knowledge and experience for young people who want to

step into startup business world.

2) About Franchising

The Definition of Franchising

Franchising is a definition about a business approach in which one company or

entrepreneur is willing to share the rights of brand name usage, capable technology and other

specification of products and services for other organisations in the trade of a sum payment or a

fee which is on the basis of sale (Cateora et al., 2011). According to Johnson et al. (2007), the

holders of franchise will be responsible for the special activities of producing, storing in

warehouse, distributing and doing sales. On the other hand, the franchiser will take into account

of the brand name marketing, human resources training in order to help the new franchised store

to operate smoothly so that the franchisee can deliver the same culture and other intangible

values to the customers. Usually, according to Daft (2010) the franchise consists of three types:


7

Business Format Franchising: the franchisors will allow the franchisee to use the market

products and services as well as the brand-name and other trademarks such as logo, slogan, and

brand colour. In return, the franchisees will have to pay for the fees and royalties for the

franchisor. This can be considered as the most popular way of franchising.

Franchising by Distribution of Product: this type of franchising has been applied by a lot

of large companies such as PepsiCo, Coca-Cola, Shell or BP. This type of franchise means a

limited franchise will be granted to an organisation in which that organisation will have the

license to sell products that are produced by organisation’s factory.

Franchising by Conversion: TIGI can be considered as a successful sample for this type

of franchising. The conversion franchising means a small independent business can be brought

with the chance to affiliate a franchise company. TIGI has helped a lot of small hairdressers to

join the organisation through franchise.

Why Startup Needs Franchising?

Franchising, in another hand, is a significant growth strategy for any business that wants

to have an impressive expansion to gain financial benefit (Bygrave & Zacharakis, 2011). As a

result, a very small startup business idea can become a big business entrepreneur someday by

replicating the business model. For this reason, a business model must be developed carefully so

as to help operating business smoothly. One of the approach can be applied in order to develop

an excellent business model is Ostawalder’s Business Model Canvas. A Business Model Canvas

is used to generating the suitable model through customer’s segmentation, relationship with

customers, distribution channels, key partners, value proposition, key resources, cost structure,

key activities and stream of revenue.

Additionally, according to David (2012), franchising is significantly effective in an

industry which has the trend of fast growth at the moment and in the future. Regarding to

Bloomberg (2013), the hot drink consumption – especially coffee – in Vietnam showed the trend

of increasing more than 55% from 2008 to 2012. Furthermore, the development of coffee and tea

shops is forecasted to reach US$ 3 billion in 2015. For the customer’s segmentation of the coffee

shop, according to Business Monitor (2014), the young and high-end adults in Vietnam has

increased and this population is large in comparison with the world. These young people are very

perceptive with new business ideas and concepts and they are willing to spend money for strange


8

and unique products – especially in food and beverage industry. For all those reasons, the coffee

industry is still quite attractive and has significant growth trend in the future for Startup Coffee to

develop its business.

Benefits of FranchisingOne of the most essential and significant benefits of franchising is the tremendous

expansion of the business in comparison with the original idea because franchising has the ability

to deliver the mutual benefits to both sides – the franchisors and franchisees (Gale, 2009).

Particularly, Startup Coffee can reach to the number of hundreds of coffee shop without

spending so much financial capital in building rental, infrastructure constructing and other

equipment such as the machine or furniture. The franchisees will be in charge of those

investment. Thus, Startup Coffee has a very great chance to spend those opportunity cost into

other activities such as the marketing or promotional programs.

Another benefit of franchising is that with the number of stores increases, Startup Coffee

can have the economies of scale which means long-run average total costs will decline since the

output of the production increases. For this reason, Startup Coffee can widen their products range

after a time of operation. The franchising business model can help Startup Coffee to expand the

revenue stream from the operation. Two of those streams include the franchising fee and loyalty

from the franchisees and the extra revenue stream from the products and materials that

franchisees buy from franchisors.

Additionally, the franchising also supports the franchisors in establishing its appearance

in countries or territories whereby the population there cannot have enough capital for a

significant expansion (Wheelen & Hunger, 2012). Therefore, Startup Coffee with competitive

price getting along with the quality products can penetrate into poor provinces and places in

Vietnam to gain more benefits.

A benefit for franchisees is the franchisees do not need to spend financial resources in

order to promote and advertise for the business. The franchisees also can receive the business

advices with experiences, together with solutions and technology from the franchisors.


9

Challenges of FranchisingAlthough Franchising can help the business owner to develop and expand the business

quickly through replicating; however, franchising still encounters some of limitations during the

business operation of an organisation.

The very first limitation of franchise is that the one who is granted with franchising right

surely cannot have the utmost independence toward the brand (Gale, 2009). The franchisee

surely is restricted into the business process which is established by the franchisor through the

tight contract. Therefore, such restricted franchising contract will avoid a lot of franchisees to

adjust the products and services regarding to the specific requirements and demanding of each

geographic region. As a result, the threat appears that non of the franchisees can have appropriate

and immediate adjustment whenever there is a change regarding to the demographic and lifestyle

at that region.

For the franchisor, since the franchisee cannot make prompt implementation toward the

particular challenge in particular region, the customers may abandon the whole brand just only

because of one distribution store.

Another risk that franchisees have to face is the financial problem. Since the franchisees

still have to pay for the fees and loyalty cost; therefore, it is very challenging for them in the first

year of operation, when there is no revenue but the franchisees still have to cover those fees.

Last but not least, a tremendous threat toward franchised entrepreneur is that whenever

there is a crisis regarding to the brand, the franchised brand would be affected as well because

franchise can be applied everywhere on the world.


10

RESEARCH METHODOLOGYStartup Coffee has created a trendy and reasonable place for young customers to come

and not only enjoy the drink but also discuss about new innovative ideas or business concepts.

Therefore, Startup Coffee must build up for it own an unique cultural atmosphere for attracting

the customers. In order to identify the attractiveness of such business concept together with a

thorough understanding about the business culture, a research will be conducted.

Primary DataSo as to collect a broad range of comprehensive information, the primary data will be

collected and analysed through two main methods: interview and survey. For the interview, an

in-depth interview with the top management board will be carried out since the in-depth

interveiw can help the researcher to explore the current issues and seek new insights (Saunders et

al., 2009).

In addition, a survey will be conducted in order to identify the customers’ demanding,

requirements as well as awareness regarding to the Startup Coffee. Moreover, through the

survey, the researchers also wants to acknowledge about the customers’ behaviours, habits,

interests and favourites in order to support for the idea of franchising Startup Coffee.

Furthermore, the market research through survey also helps the researcher to find ways in

planning and creating the strategic capability which include two aspects: unique resources and

core competences (Johnson et al., 2007). The strategic capability will be used for market analysis

and help to build up the competitive advantages.

Survey Sample

The survey will be conducted by both online and paper questionnaire. The participants

for the survey will range from 16 to 55 – the main customers’ age range of Startup Coffee. These

people are more proactive concerning to the lifestyle. Moreover, some of young Vietnamese

people from 18 years-old have the part-time job so that they can use their money for enjoying the

drink.


11

Collecting Data for Survey and Sampling

The simple random sampling will be applied in this survey. According to Saunders et al.

(2009), the simple random sampling is probability sampling procedure which can ensure each

case within the sampling population will have its equal chance to be involved into the survey.

The respondents will be invited through Internet or randomly on streets with questionnaires.

According to Benson et al. (2011), for the personal information, all of personal data will be

remained unknown in order to ensure there is no any biased factor within the survey. All of

information about the research objectives and aims will be notified to the participants and the

participation will be on the basis of voluntary.

Interview

The researchers will conduct the interview with open question regarding to some of

categories below:

a) Overview about Startup Coffee culture: the business culture is important for any

entrepreneur. This question will focus about the culture that the managers have built

up so as the researchers can base on that to identify whether this culture is suitable for

the customers and employees. Moreover, understanding the culture would be very

important for the researchers in doing franchise the brand of Startup Coffee.

b) Tangible and Intangible Resources: this question will focus into the essential

resources that Startup Coffee has in order to build up the competitive advantages.

Moreover, this question also helps the research to shape in the mind about what needs

to be done and collected before opening another franchised store.

c) Leadership and management: the managers will be interviewed clearly about their

styles of leadership in order to identify the best approach for the employees so as they

are comfortable to serve customers. This section also helps the researchers in

understanding the necessary management process for a new franchised store in order

to ensure the synergistic concept of franchising.

d) Performance of the employees & other stores: the researcher wants to identify the

performance of each staff as well as other stores so as to be easy in making decision

of franchising.


12

The Technique and Validity of Interview

In order to ensure a smooth interview concerning about the key operation of Startup

Coffee, all of the managers will be communicated through phone or mobile to the headquarter of

Startup Coffee so as to clarify the objective of the franchising purpose and the interviewer will

persuade the interviewee about this. Then, a cover letter which has the interview question will be

sent first through email. In the case they do not have the email, the letter will be sent by post –

according to the managers’ requirement. This action will be carried out from one to two months

before the interview. The confirmation process will be carried out later by telephone and then,

confirm once again by email. In order to obtain more information, with Vietnamese people, the

interview will be carried out with the low degree concerning to the degree of formality. The

interview will be conducted right in Startup Coffee shop since it will helps the conductor to have

an open environment and atmosphere in order to help gaining more information. According to

Saunders et al. (2009), the validity of this project about franchising Startup Coffee is the usage of

methodological triangulation with more than one method is applied for collecting necessary data.

Other Primary Data Sources

Other sources of primary data include the internal report of Startup Coffee regarding to

the financial report, and performance review of the employees.

Secondary DataOnce the interview and survey are through for the data analysis, the secondary data will

be applied for the deep analysis about the external environmental factors which concern to micro

and macro-economic environment. These factors will have the significant effect toward the

franchising process.

Some of sources would be:

Business Monitor Report about the food and beverage in Vietnam.

Vietnam General Statistic Office for the exact value of material.

Other report from academic journals about the habit of young Vietnamese people.


13

Analysis of DataAfter collecting the data, the researcher must conduct the data analysis in order to get the

necessary information from the number and code. The research project will encounter some of

difficulties since the researcher has to analyze both quantitative data (from the survey) and

qualitative data (from the interview). For the qualitative data, Saunders et al. (2009) stated that

with the complex range of information, the researcher will need to code and categorize the

information carefully in order to extract the essential data. Furthermore, the qualitative data will

need to be considered upon the participants’ tone and mindset in order to have the most accurate

meanings.

According to Saunders et al. (2009), so as to organize and support the data analysis, a

deductive approach will be carried out. The data will be intertwined with the main reason of this

research project: to identify the chances as well as clear understanding about Startup Coffee for

the franchising business model. The culture of the business and which aspect can be used to

adapt with the business context in Vietnam.

In order to support with the qualitative data, the quantitative data will be analyzed as

well. The quantitative data will be put in Microsoft Excel software in order to make the coding

process and then put into SPSS software for statistical analysis. There will be some test to be

conducted including of Chi-square, Simple linear regression, ANOVA and so on. The data will

be interpreted with both inferential and descriptive statistic.


14

Time Frame for the ResearchA Gantt Chart will be used in order to manage the time of the research. The research

project will be managed with the specific tasks and details. The Gantt Chart is proposed as

below:

Figure 1. Research Project Gantt Chart

Limitation of the Research ProjectThe limitation of the Project can be considered that there is not enough secondary data

for the analysis of Startup Coffee in Vietnam. There would be a lot of secondary data regarding

to the coffee and tea export or shops growth but for specific Startup Coffee, there is not so many

sources.


15

REFERENCES1. Agriculture and Agri-Food Canada, 2013. Market Analysis Report 2012 - Foodservice:

Vietnam. Minister of Agriculture and Agri-Food Canada.

2. Bloomberg News, 2014. Vietnam Bulls Unfazed by Riots as Foreigners See Bargains.

[Online] Available at: http://www.bloomberg.com/news/2014-05-19/vietnam-bulls-

unfazed-by-riots-as-foreigners-see-bargains.html [Accessed 01 June 2014].

3. Business Monitor International, 2014. Vietnam Freight Transport Report - Q2/2014.

Business Monitor International.

4. Business Monitor, 2014. Vietnam Food and Drink Report - Q2/2014. Report & Forecasts.

Business Monitor International.

5. Bygrave, W.D. & Zacharakis, A., 2011. Entrepreneurship 2nd Edition. New Jersey: John

Wiley & Sons, Inc.

6. Cateora, P.R., Gilly, M.C. & Graham, J.L., 2011. International Marketing. 15th ed. New

York: The McGraw-Hill.

7. Czinkota, M.R., Ronkainen, I.A. & Moffett, M.H., 2011. International Business. 8th ed.

John Wiley & Sons, Inc.

8. Czinkotta, M.R. & Ronkainen, I.A., 2007. International Marketing. 8th ed. Thomson

South-Western.

9. Daft, R.L., 2010. Management. 9th ed. Mason: South-Western Cengage Learning.

10. Dao, L.T., 2012. 'Soft' human resource management in small international joint ventures:

Cases from the Danish - Vietnamese context. In International Conference on Human

Resource Management and Professional Development for the Digital Age (HRM&PD).

Singapore, 2012. Global Science and Technology Forum.

11. David, F.R., 2012. Strategic Management: Concepts and Cases (13th Edition). New

Jersey: Pearson Prentice Hall.

12. EIU ViewsWire, 2013. Vietnam economy: Not as good as it looks. New York: The

Economist Intelligence Unit.


http://www.bloomberg.com/news/2014-05-19/vietnam-bulls-unfazed-by-riots-as-foreigners-see-bargains.html

http://www.bloomberg.com/news/2014-05-19/vietnam-bulls-unfazed-by-riots-as-foreigners-see-bargains.html

16

13. European Coffee Federation, 2015. European Coffee Federation. [Online] Available at:

http://www.ecf-coffee.org/about-coffee/coffee-facts [Accessed 01 March 2015].

14. Gale, 2009. Encyclopedia of Management. 6th ed. Cengage Learning.

15. Johnson, G., Scholes, K. & Whittington, R., 2007. Exploring Corporate Strategy. 8th ed.

Prentice Hall.

16. Mankiw, N.G., 2012. Principles of Microeconomics. Mason: South-Western Cengage

Learning.

17. Ostawalder, A. & Pigneur, Y., 2010. Business Model Generation. John Wiley & Sons

Inc.

18. Pieterse, A.N., Knippenberg, D.V. & Dierendonk, D.V., 2013. Cultural Diversity and

Team Performance: The Role of Team Member Goal Orientation. Academy of

Management Journal, pp.782-804.

19. Portny, S.E., 2010. Project Management for Dummies. 3rd ed. Wiley Publishing Inc.

20. Pride, W.M., Hughes, R.J. & Kapoor, J.R., 2012. Foundations of Business. 3rd ed.

Cengage Learning.

21. Saunders, M., Lewis, P. & Thornhill, A., 2009. Research Methods for Business Students.

5th ed. Pearson Education.

22. Startup Coffee Vietnam, 2014. Startup Coffee Vietnam: An Introduction. [Online]

Available at: http://www.startupcoffee.vn/ [Accessed 19 October 2014].

23. Wentling, M.R. & Palma-Rivas, N., 1998. Current status and future trends of diversity

initiatives in the workplace: Diversity experts' perspective. Human Resource

Development Quarterly, pp.235-53.

24. Wheelen, T.L. & Hunger, J.D., 2012. Strategic Management and Business Policy:

Toward Global Sustainability. 13th ed. New Jersey: Prentice Hall.

25. Wheelen, T.L. & Hunger, J.D., 2012. Strategic Management and Business Policy:

Toward Global Sustainability. 13th ed. New Jersey: Prentice Hall.


http://www.startupcoffee.vn/

http://www.ecf-coffee.org/about-coffee/coffee-facts

17

26. Yin, R.K., 1994. Case Study Research: Design and Methods. 2nd ed. SAGE Publications

Inc.


Documents

Research Methodology_Startup Coffee