Wake Up and Smell the Coffee -Resources and Management Control in the Café Sector

Abstract

Problem Discussion: Small and Medium‐sized Enterprises (SMEs) account for innova‐tions, job opportunities and development in an economy. 99% of all European enterprises are SMEs, but it is the large international corporations that control the market, often at the expense of the SMEs. Sweden is currently facing a situation where there are too few new sustainable SMEs. Since SMEs hold a role as economic drivers, the decreasing number of SMEs could become a global problem. Therefore, it is vital to understand how SMEs can e competitive. In the Swedish café sector it has been observed that large corporations b have a negative effect on SMEs. The Resource‐Based View explains how competitive advantages can be created with help of internal resources. Current research suggests that it is important to study combinations of resources in SMEs. Researchers have also suggested that it is not sufficient to only study resources since there is an interaction between the Resource‐ased View, strategic choice and Management Control. Opinions also vary whether anagement Control can create com BM petitive advantages. Purpose and Research Questions: The aim of this thesis is to see how three SME cafés n Gothenburg have put into practice their own versions of Management Control Systems nd whare: ia at they identify as important resources. Consequently the research questions 1. Which internal resources do the café owners view as important and are these resources able to generate a competitive advantage? 2. How are the cafés controlled and what could be the reasons for their Manage ment Control? Methodology: Three semi‐structured qualitative interviews were conducted with café owners in Gothenburg's city centre. The results from these interviews were then discussed and analysed from a Resource‐Based View. Explanations for the design of the anagement Control System in the three companies were discussed with the help of xisting ther. ivcombination of resources was needed to create competitive advantages. Management Control in the cafés ranged from a simplistic system with a simple budget and legally required reports to a more formalised system where financial ratios, corporate structure and culture, cost calculations and division of responsibility were Meoies Conclusion: All three interviewed cafés agreed that the following internal resources were important when creating customer value: location, reputation and brand, experience nd knowledge, external and internal relationships, service and routines. However, a a added. Management Control was in all three cases largely dependent on the experience and estimations of the owner. Thus the systems can be seen as the sums of the capabilities that exist in the cafés. Company size and needs, the availability of resources nd the ambition to finance the cafés without external help appeared to be causes for rowth of the companies an ag d the Management Control Systems. Possible Future Research: A suggestion for future research, from a Resource‐Based View, is to observe SME sectors that are experiencing increased competitive pressure from large corporations. A more in‐depth examination of the sector or a single company is one alternative in order to see how the advantages contributed by SMEs to society can e maintained. A third possibility would be to include larger domestic enterprises for enchmarking purposes. bb