Final Project 1

Running Head: Final Project

Final Project: Tim’s Coffee Shoppe

Bridget Quattrucci

Kaplan University

MT299-01 Career Capstone

August 28, 2010

Final Project 2

Table of Contents

Executive Summary 3-4Bulleted Summary of Report Sections

Regulations 4-6

Management 6-8Graph

Finance and Accounting 8-9Graph

Financial Statements 10Graph

Problem Solving 11-13SWOT AnalysisRecommendations

References 14

Final Project 3

Final Project: Tim’s Coffee Shoppe

Executive Summary

An assessment of Tim’s Coffee Shoppe is necessary before any decisions about the

business can be made. Knowledgeable decisions can be made with a clear picture of how the

business is currently functioning. To get a clear picture several areas of Tim’s Coffee Shoppe

need to be analyzed. The following list summarizes these areas and their significant topics.

Regulations-There are many regulatory forces that affect businesses today.

o Health and Safety Regulations

o Employment Laws

Management- The primary functions of management are planning, organizing,

controlling, and leading.

o Staff Issues

o Efficiency and Staying Competitive

Diagram

o Reward and Discipline

Finance and Accounting- Financing funds business activities while accounting

tracks business activities.

o Assets

o Inventory

o Records

Diagram

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Financial Statements- The financial statements are used to give a picture of how

the business is functioning financially.

o Diagram

o Missing Documents

Problem Solving- There are many solutions to the problems that Tim’s Coffee

Shoppe faces.

o Completed SWOT Analysis.

o Meeting health and safety requirements.

o Compliance with employment laws.

o Addressing staff issues.

o Ensuring efficiency and competitiveness.

o Implementing the proper rewards and punishments

o Attending to the financial needs of the company.

o Establish accounting practices.

o Compile all financial statements.

Regulations

Abiding by all of the regulations that affect Tim’s Coffee Shoppe is essential to avoid

having legal issues. Health and safety compliance is regulated by the Occupational Safety and

Health Administration (OSHA) and the Illinois Department of Health. Compliance with

employment laws, Equal Employment Opportunity (EEO), is regulated by the Equal

Employment Opportunity Commission (EEOC). These agencies have the ability to fine, bring

suit against, and even close down companies that violate the laws that affect their business.

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There are many areas of concern at Tim’s Coffee Shoppe regarding health, safety, and

employment laws.

Employers are required to post certain information for employees to see. OSHA requires

employers to post an OSHA poster in a well-known place so that employees can see what their

rights and responsibilities are with regards to health and safety (Bohlander, Snell, 2007). The

EEOC also requires that an EEOC poster be displayed in a prominent place so that employees

can be informed of their rights and responsibilities regarding discrimination in the workplace

(Equal Employment Opportunity Commission [EEOC], n.d.). These posters are displayed at

Tim’s Coffee Shoppe, but they are completely covered by other papers on the bulletin board

where they are posted and this would be considered a violation. There are other health and

safety concerns to be addressed.

There are health and safety issues regarding storage at Tim’s Coffee Shoppe. The office

could be considered a fire hazard because computer boxes are everywhere; it should be noted

that this computer could replace the inefficient WWII typewriter currently in use. That is not the

only storage issue as the inventory is stored on the same shelves as painting and cleaning

supplies. Food must be protected at all times from cross contamination with any substance of

public health concern (Illinois Joint Committee on Administrative Rules, Section 760.120,

2006). These concerns only require reorganization while EEO concerns will require more to

assure compliance.

Discrimination based on race/color, sex, age, disability, religion, national origin, genetics,

and/or pregnancy is prohibited by EEO laws (EEOC, n.d.). Two questions on the employment

application being used at Tim’s Coffee Shoppe conflict with these laws. Asking applicants if

they are U.S. citizens, as the current application does, reveals information about their national

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origin, and an applicant who is turned down could imply that his/her answer to that question was

the cause. Another problem question on the application is asking applicants to indicate the dates

they attended school; this can be an indication of their age and could also be used against the

company. It is important that these problems be addressed by management promptly.

Management

Management is responsible for planning, organizing, controlling, and leading employees

and business activities. The management team must be unified to fulfill these responsibilities

successfully. At this time there is discord in the management team at Tim’s Coffee Shoppe as

the assistant manager, Darryl Pettitte, feels that he is not being paid a fair amount because he is

not paid the same amount as his superior manager. Darryl has received five warnings for

allowing his feelings on the subject to affect his behavior in front of and towards customers.

This issue will need to be dealt with before other responsibilities of management such as pricing

can be fully addressed.

Offering competitive prices is essential when a business faces a large competitor like

Queequeg’s that has the ability to purchase in larger quantities at lower prices. In the event that

Queequeg’s decides to open a store closer to Tim’s Coffee Shoppe, the few items that Tim’s

Coffee Shoppe offers that Queequeg’s does not offer will not be enough to counteract the fact

that Queequeg’s accepts credit cards and has lower prices. This is worrisome because a majority

of the prices at Tim’s Coffee Shoppe are higher than Queequeg’s prices, yet Tim’s Coffee

Shoppe does not offer the convenience of paying with credit cards. Staying competitive involves

offering conveniences and prices that are the same as or better than what the competition offers.

Controlling costs is one way for Tim’s Coffee Shoppe to stay competitive and offer lower prices.

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Controlling costs is an important responsibility of management. Ensuring that the

primary business activities such as opening and closing the business are completed in a timely

and cost effective manner plays a big role in controlling costs. At this time the register being

used is not computerized and, as a result, closing Tim’s Coffee Shoppe is quite a lengthy process

which is not cost effective. Remedying this issue is likely to improve employee morale, reduce

costs, and allow prices to be reduced in a chain reaction effect as seen in Figure 1. This is not

the only area of the business where costs can be reduced; there is an employee reward in place

that involves a cash payment.

Figure 1: The Results of Purchasing a New Register

Rewarding employees for their hard work helps to motivate them to work harder. The

only reward that is in place at Tim’s Coffee Shoppe at this time is the employee of the month

reward which includes posting the recipients picture and giving the recipient $100. While this

reward does motivate the employees it costs the company $1,200 a year. The problem with this

reward is that only one employee benefits from it each month and it seems as though Maria

Posada benefits from it more often than any other employee. Rewarding employees is only one

form of motivation that management has at its disposal.

E ffi c i e n t R e g i s t e r

S h o r t e r C l o s i n g

T i m e

I n c r e a s e d E m p l o y e e

M o r a l e

R e d u c e d C o s t s

A b i l i t y t o L o w e r P r i c e s

Final Project 8

Discipline is used to motivate employees to behave correctly. The importance of this

type of motivation must not be overlooked. Several employees have received nothing more than

a warning for committing the same offense more than once. This indicates that there is no real

system for disciplining employees when repeat offences occur; this is problematic because the

employees are not being deterred from the unacceptable behaviors that got them a warning in the

first place. Creating an effective structure for disciplining unacceptable behaviors will allow

management to be more effective. This kind of planning is necessary in any business.

Management must pull all these aspects of control together in order to effectively run

Tim’s Coffee Shop. It may be necessary to purchase new equipment and write new policies to

ensure that management has all the tools necessary to pull all these aspects together. The payoff

will be in the form of a more efficient and cost effective business.

Finance and Accounting

Financing often provides the largest source of cash for companies to purchase assets.

Tim’s Coffee Shoppe used financing to purchase a new freezer in 2002 that has a balance due at

this time. Replacing other assets such as the register and coffee machines would need to be

financed just as the freezer was. Making prompt payments on the freezer is absolutely necessary

to ensure good credit terms for the financing used to replace other assets. Choosing the right

form of business can also play a role in securing financing (Calhoun, 2010). Financing can be

used to purchase both assets and inventory.

Financing inventory by using trade credit is a common practice in the business

environment (Longnecker, Petty, Palich, & Moore, 2010). Replacing all inventory items at

Tim’s Coffee Shoppe may be necessary. The fact that there are no receipts for inventory

purchases combined with the fact that no deductions were taken for tax purposes leads to the

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assumption that all inventory in the store is old and unacceptable for sale. Trade credit can be

used to do so if this is truly the case. The financing needs of Tim’s Coffee Shoppe would be

much clearer with efficient recordkeeping practices.

Accounting practices are used to record all financial activities a business participates in.

This recordkeeping activity organizes the sales, purchases, and expenses of a business so that

management can easily see where money is going to and coming from on a daily basis as shown

in Figure 2. There are no accounting ledgers at Tim’s Coffee Shoppe indicating that this

important practice has been neglected. It will be very difficult to ascertain the true financial

condition of Tim’s Coffee Shoppe without accounting records. Compiling the financial

statements will also be very difficult because they are constructed with accounting records which

Tim’s Coffee Shoppe does not have.

Figure 2: The Components of Accounting Records

Reorganizing the records and the way they are kept at Tim’s Coffee Shoppe

will aid in implementing accounting practices. Once accounting practices have

Accounting Records

Expenses

FinancingSales

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begun management must be vigilant in keeping records updated. This is especially

important because the accounting records are used to compile the financial

statements.

Financial Statements

The four financial statements that companies use are the Income Statement, the Statement

of Owner’s Equity, the Balance Sheet, and the Statement of Cash Flows. These statements are

interconnected because information from one can be found on another as shown in Figure 3.

Net income is found on both the Income Statement and the Statement of Owner’s Equity; any

change in the owner’s equity is shown on both the Statement of Owner’s Equity and the Balance

Sheet; and the net cash balance is found on both the Balance Sheet and the Statement of Cash

Flows (Duchac, Reeve, and Warren, 2008). It is much easier to find and investigate

discrepancies in the financial statements because they are interconnected in this way. This

advantage is lost however, if any of the financial statements are missing.

Figure 3: Financial Statements are Interconnected through Shared Information

The accuracy of the financial statements is questionable when any of the four financial

statements are missing. This is a problem for Tim’s Coffee Shoppe as both the Statement of

Income Statement

Statement of Owner'

Equity

Balance Sheet

Statement of Cash Flows

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Owner’s Equity and the Statement of Cash Flows are missing. The Statement of Owner’s Equity

should be constructed to ensure accuracy on the Balance Sheet. The Statement of Cash Flows

should be constructed to cross check the net cash balance and to have a clear picture of how cash

is flowing in and out of the business. These statements must be completed promptly in order to

ascertain the true financial position of Tim’s Coffee Shoppe.

Problem Solving

Figure 4: SWOT AnalysisStrengths:

Location

Hours of Operation

Entertainment

Exclusive Items

Weaknesses:

Old Equipment

Do not Accept Credit/Debit Cards

Higher prices than Competition

Lacking Finance and Accounting Skills

Opportunities:

More Promotional Sales/Events

Begin Advertising

Carry New Products

Accept Credit/Debit Cards

Threats:

Queequeg’s Opening a Closer Store

Other New Competitors

Disgruntled Assistant Manager

There are many issues to address at Tim’s Coffee Shoppe as can be seen in the SWOT

Analysis in Figure 4. Some issues will be easier to address than others. Regardless of how

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difficult it may be, there is a solution to every issue noted in this report. Suggestions for

resolving these issues are as follows:

Regulation Issues

o Post the OSHA and EEOC posters on a wall in the break room and save

the bulletin board for other announcements.

o The break/storage room needs to be reorganized and all food related

inventory must be separated from supplies that contain chemicals.

o The office also needs to be reorganized and the typewriter should be

replaced with the computer that is in boxes.

o Find an application that asks if applicants can legally work in the U.S. and

that does not ask for dates in the education section.

Management Issues

o Look at Replacing Darryl Pettitte if his attitude about pay does not change.

Possible replacements that should be considered are Koyo Matsui and

Eugene Clemens because they are both knowledgeable employees who are

happy at Tim’s Coffee Shop.

o Purchase a new register and accept credit/debit cards to stay competitive.

o Reduce the employee of the month reward to $50 a month to reduce costs.

Begin buying lunch for the staff once a month for every month that store

goals are met so that more than one employee is rewarded for hard work.

o Create an appropriate structure for disciplining employees for repeat

offences to ensure that they are motivated to follow the rules of the

company. This structure should be incorporated into a new employee

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handbook that can be used to inform employees of company policies and

procedures.

Finance and Accounting Issues

o Seek the assistance of a financial manager to ensure that financing for

assets and inventory at Tim’s Coffee Shoppe is done appropriately.

o Work with the financial planner to choose the correct business formation

for Tim’s Coffee Shoppe. Consider a Limited Liability Company (LLC)

for the benefits it provides in having the qualities of both a sole

proprietorship and a corporation.

o Hire an accountant to implement accounting practices at Tim’s Coffee

Shoppe.

Financial Statements

o Have the accountant that is hired compile the financial statements

correctly.

Conclusion

In conclusion, the analysis of Tim’s Coffee Shoppe is moderate. This company is not

operating as efficiently as it could be, but it is not a hopeless case either. The suggested

solutions address the weaknesses, opportunities, and threats that Tim’s Coffee Shoppe faces.

Implementing the suggested changes will make Tim’s Coffee Shoppe a stronger competitive

force.

Final Project 14

References

Duchac, J., Reeve, J., & Warren, C., (2008). Accounting I. Mason, Ohio: Cengage Learning.

Fotolia, (2005). Coffee beans and a cup of coffee. Office.microsoft.com: Microsoft Corporation.

Retrieved from http://office.microsoft.com/en-us/images/results.aspx?qu=coffee#pg:4|

mt:2|.

Equal Employment Opportunity Commission, (n.d.). EEOC poster request form [Electronic

version]. Equal Employment Opportunity Commission. Retrieved from

http://www1.eeoc.gov/employers/poster.cfm.

Veer Images, (2009). Lady in a cafeteria. Office.microsoft.com: Microsoft Corporation.

Retrieved from http://office.microsoft.com/en-us/images/results.aspx?qu=coffees#pg:8|

mt:1|.

Bohlander, G., & Snell, S., (2007). Managing human resources, fourteenth edition. Mason,

Ohio: Thomson Higher Education.

Illinois Joint Committee on Administrative Rules, (2006). Section 760.120 general food

protection. State of Illinois. Retrieved from

http://www.ilga.gov/commission/jcar/admincode/077/077007600B01200R.html.

Longnecker, J.G., Petty, J.W., Palich, L.E., & Moore, C.W. (2010). Small business management.

Mason, OH: Cengage.