DAG Group Case Study

Eric Porter DAG Group Case Study B283 Case Analysis Introduction: Chris Hacket and Val Rayzman were at Harvard Business School when they both came to the conclusion that owning a business would be more satisfying and the dry cleaners were a type that could be updated and modernized. They wanted to have a chain of stores that will have good customer service and satisfaction. Problem Analysis: -Major problems and challenges facing employees and organization: One of the biggest questions facing Chris and Val is whether to start form scratch or to purchase an already existing company. One business they were closely examining was Dynasty located in Indianapolis. They were one of the oldest dry cleaners in the US. They went through extensive study to decide whether it would be more worth it to just buy it from them for approximately 3.5 million. They “faked” a survey by calling random people asking what they knew or thought about the company and all that they heard was negative. They would have a mountain to climb trying to rebuild the reputation the company had already destroyed, so they realized that they would be better off looking else where. They eventually went to a chemical supplier convention where they met the owner of Superb Cleaners who was anxious to sell because his store manager had passed away and the owner had little understanding of the business. It was a free standing building which had room for expansion. The down side was that some of the equipment was old and needed repairs. They would also need a lot of investments for minor fixes throughout the store including computerizing the system. The dry cleaners business at first seems very saturated. Their big nitch that Chris and Val want to bring into the industry is quality. More customer complaints arise from dry cleaners than any other business. This is often due to poor management, taking long periods of time to reimburse are replace damaged goods, and unprofessional courtesy from employees. Knowing what often plagues your type of business can save you from making the same mistake, but only if you can find a way to resolve it. The most effective tool in steering a business is its manager. A good manager can build your business or he can tear it down. The article also clearly stated that most of the successful cleaners have their products personally inspected by the manager. No one values the quality of their business as much as the owner. For most owners they see their name stamped on every thing that leaves their facility. If it is faulty, that puts a stain on their name. It would be best for Chris and Val to not only be the owners but to also have a vested interest by working along side the everyday employees and can have the opportunity to see what improvements can be made sooner rather than later. Too often things are done less efficient because the people who can actually do something about it don’t hear about it. -What do “I” think the business is doing right and what do “I” think they need to change. In the dry cleaning sector, price competition is very high. All stores seem to have coupon deals, etc. to try to get an edge. But with a lot of studying they found that the more successful businesses are the ones with steady prices. The cheapest stores would always have a steep decrease in quality to still make a profit. This sacrifice of quality also created a sacrifice in customers. The most revenue for dry cleaners comes from the frequent, but few “Heavy Users”. These people are the constant returning customers who are typically very loyal. They look for quality instead if cheap, which also means you want to please them as much as possible. Chris and Val are making some great plans in this area to please these type of customers by offering a variety of services besides cleaning. They are offering tailoring, same day service, long hours, open Sundays, and the use of credit cards. Nothing says ghetto dry cleaners more than a store full of quarter machines. Conclusion: Purchasing a business with a terrible reputation and very little capital is not wise to say the least. Which is why I think they would be safe to purchase Superb Cleaners. They know that they were running well before the manager died, which means that it has the capability to be profitable. What was lacking was the proper management. In due time they seem to have the drive to get things up and running more efficiently.