This paper is the culmination of a whole semester of work with a great group. Our mission was to take a local company and work with them trying to find ways to enhance the company.

1. A Comprehensive Analysis of
Azia Restaurant
Prepared by: Taem Nowlan
December 7, 2008
Joseph Agriesti

2. Patrick Cattoor
Tom Haag
Christine Hoene
Kayla Nowlan
Evan Schawartz
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3. Table of Contents-
Executive Summary.............................................................................................................6
Introduction..........................................................................................................................6
A.) An overview of Azia's: Strategies and Planning Activities..........................................8
Mission Statement............................................................................................................8
Degree of Diversification.................................................................................................8
Level of Vertical Integration............................................................................................9
Industry Key Success Factors........................................................................................10
Distinctive Competencies..............................................................................................10
Overall Corporate & Business-Level Objectives..........................................................11
Basic Competitive Posture.............................................................................................11
Implementation Tactics..................................................................................................11
Operational Planning Process........................................................................................12
Evaluation Methods.......................................................................................................12
B.) Porter's 5-Forces model: applied to Azia Restaurant..................................................14
Porters 5-Forces Model..................................................................................................14
Potential Entrants...........................................................................................................15
Bargaining Power of Buyers..........................................................................................15
Threat of Substitute Products or Services......................................................................15
Bargaining Power of Suppliers......................................................................................16
Industry Competitors......................................................................................................16
C.) A Description of Azia's Marketing Strategy................................................................16
Key Products and Services.............................................................................................17
Products/Service life cycle Velocity..............................................................................17
Promotion Mix...............................................................................................................18
D.) S.W.O.T. Analysis ......................................................................................................19
T.O.W.S. Analysis..............................................................................................................20
E.) Contrast Azia's Strategies with its Closest Competitors' Strategies............................21
F.) Define Any Problems That You Foresee Regarding the Strategic Direction/Planning
Efforts of Azia's Restaurant...............................................................................................21
Part II – Azia’s Structural and Behavioral Characteristics....................................................22
A) Observed and Learned Behaviors On-Site...................................................................22
Structure.........................................................................................................................22
Decision Making Process...............................................................................................23
Leadership Style/Tendencies.........................................................................................23
Culture/Ethics.................................................................................................................23
Level of Diversity..........................................................................................................24
Focus on Learning, Creativity, and Innovation.............................................................25
Internal and External Recruitment Programs................................................................26
Criteria for Hiring..........................................................................................................26
Training and Development Programs............................................................................27
Criteria for Promotion into Management Positions......................................................27
Motivation Techniques – Compensation ......................................................................27
Approach to Job Design.................................................................................................28
Use of Teams..................................................................................................................28
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4. Method for Assessing Employee Performance.............................................................28
B) How a Choice in HR Affects the Rest of the Organization..........................................29
C) The Strategic Perspective: How Azia’s Choices Help/Hinder its Competitive
Advantage...........................................................................................................................29
D) Areas for Improvement Regarding Structural and Organizational Behaviors/Programs
............................................................................................................................................30
Part III- Examine Azia's Operations......................................................................................31
A.) An overview of Azia's Operations...............................................................................31
Location..........................................................................................................................31
Layout.............................................................................................................................32
Supply & Distribution Chains........................................................................................34
B.) Azia's Process Choices.................................................................................................35
Capacity & Productivity Levels.....................................................................................35
Level of Standardization vs. Customization..................................................................35
Quality Program.............................................................................................................36
C.) Degree of Fit between Current Situations/Strategies and Process Choices................39
D.) Azia's QFD Matrix.......................................................................................................40
Part IV- Systems’ Analysis....................................................................................................42
A.) Flow of Information.....................................................................................................42
Sales/Marketing:............................................................................................................42
Forecasting:....................................................................................................................44
Purchasing Inventory:....................................................................................................46
B.) Integration of systems..................................................................................................48
C.) Big Picture ...................................................................................................................49
D.) Strategic Perspective/Competitive Advantage............................................................50
E.) Areas for Improvement................................................................................................51
A.) Income statement.........................................................................................................53
B.) The Balance Sheet........................................................................................................54
C.) Basic Ratio Assessment...............................................................................................55
D.) Azia’s Financials versus its “competition”.................................................................57
E.) Areas for improvement regarding Azia’s financials....................................................58
Part VI- Recommendations for Azia......................................................................................59
A.) Problem Areas..............................................................................................................59
Part VII- Appendix.................................................................................................................61
Facilities Tour.....................................................................................................................61
Azia 2008 Projected Income Statement.............................................................................64
Azia Balance Sheet 2005...................................................................................................65
Azia Balance Sheet 2006...................................................................................................66
Azia Balance Sheet 2007...................................................................................................67
Correspondence with Client...............................................................................................68
Group Responsibilities
............................................................................................................................................75
Gantt Chart Overview and Critique of Overall Group Project Effort ..............................76
Individual Statements.........................................................................................................77
Thank you letters to Thom Pham.......................................................................................83
Azia’s Menu (everything included)...................................................................................89
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5. Gantt Chart.......................................................................................................................103
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6. Executive Summary
Azia, a restaurant that is frequently described as chic, has grown and expanded in
its short existence. This has both helped and hindered the company. It has helped in the
sense that Azia has posted positive profits and serviced many customers leaving them
happy and satisfied, but it has not allowed Azia the time to develop certain parts of the
restaurant devoting the necessary time to every detail. While exploring the intricacies of
this company and its management we came up with some recommendations that may
improve their restaurant and future success.
Introduction
Located in between uptown and midtown on the corners of Nicollet and 26th, Azia
has carved out a niche in the market for providing “A unique dining experience” as their
mission statement says. They do not focus on any specific demographic but relish the fact
that they are able to provide a great dining evening or afternoon to just about any person.
They have the unique ability to be able to serve many different foods and eating styles.
The restaurant has three main areas that they break the restaurant down into: the
main dining area, which includes the main bar, the Anemoni sushi bar, and the Caterpillar
lounge. Each area is unique in its own way and offers different menus, even though you
are able to order from any menu from any area.
Azia has attempted to stay on top of the restaurant game by innovating with their
menus and keeping their food fresh with the best possible suppliers. The owner Thom
Pham believes hard work combined with smart business decisions will always be an
important factor in the future of this company, and that Azia’s success is because of this.
He also believes that by his example his employees will recognize this and follow his lead.
In its short history Azia has already proven that it can compete with high end
restaurants while maintaining affordability. This is one reason why Azia is considered by
many to be on top.
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7. 7

8. Part I- Examine the Organization from a Strategic Perspective
A.) An overview of Azia's: Strategies and Planning Activities
Mission Statement
Azia Restaurant's Owner and Executive Chef, Thom Pham, explains Azia's Mission
Statement as quot;To create an environment were People of all ages can enjoy themselves in
through the diverse menu or in one of the three different environments of Aziaquot;. This
mission was created by Mr. Pham himself, however he does give recognition to his staff for
there effort in pursing his mission and making Azia what it is today.
*Owner Thom Pham
Degree of Diversification
In the beginning Azia started simply as a one section restaurant that offered many
classic Asian dishes and did not yet have the funds to expand or renovate. The restaurant's
location and cuisine was an instant hit. With the increasing number of customers and a
growing fan base Azia believed this would be a great reason to grow the restaurant and
diversify. Conveniently the location next door to Azia became available, as well as the
location behind them. Azia decided to combine all 3 locations and diversify the restaurant
into three different, yet connect areas. Keeping the original dining area, the back area
became a bar and lounge area known as quot;The Caterpillar Loungequot;, and the area to the side
of them became known as quot;Anomone Oyster & Sushi Barquot; offering a whole different
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9. atmosphere and made the restaurant extremely diversified and able to cater to a much
larger crowd.
This plan of diversification worked extremely well and Azia is still looking for
ways to expand. Recently Azia during the summer months has used its outdoor boulevard
to it's advantage by creating seasonal outdoor seating areas around the building. This not
only created more space and allowed more business at one time, but also created an
atmosphere for those who want to eat while enjoying the warmer summer weather. They
also succeeded at this by continuing to create a unique enjoyable atmosphere and décor,
even though the seating area was on the side walk. Mr. Pham, Owner and Executive Chef,
is considering the possibility of taking another opportunity to diversify. The upper level of
the building they are located in recently became available. Azia is still in the planning
process, but is trying to figure out how they could use this space to expand and diversify
the restaurant even more. Mr. Pham states, quot;We are always trying to find the most unique
ways to expand and diversifyquot;.
Level of Vertical Integration
Due to certain key factors Azia has a low degree of vertical integration. The 2
major key factors Azia is lacking are 1. Not owning the property at which they operate
business and 2. Receiving all food and beverages from different suppliers. Mr. Pham says
that the greatest thing he regrets is not owning the property his business is located on. He
says that he could do so much more if the building belonged to him, and would fix some of
the buildings structural elements as well as redo the basement to have a more productive
and neat business office area, but until he actually owns the location there is no reason for
Azia to invest money into fixing up the basement of the property. However the lower level
of vertical integration works well for Azia for now because they are able to rely on many
different vendors' products to offer what they do to customers, and if Mr. Pham had chosen
a different location for Azia, one that he could have purchased, Azia may not be as popular
and may not have had the ability to grow as much as it has, which could have lead to its
downfall.
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10. Industry Key Success Factors
The biggest success factor according to Mr. Pham is Azia's ability to attract such
a diverse demographic of people. He believes that every person can find something on the
menu that caters exactly to their liking. He gave the example of a person who comes in
and orders completely off the happy hour menu and another person who comes in
and wants a thousand dollar bottle of wine and best stake or seafood dishes, both leave
satisfied with there meals and the experience. Another example would be a group of
friends who meet to catch up and chat over a quite dinner and a group of friends who
want the bar atmosphere with live dj and fun bar and lounge area, both groups of friends
can have a great time although each wanted totally different things out of the night out. He
believes that many other restaurants fail to cater to a large diverse demographic and instead
cater to smaller target markets of either higher class buyers or lower class buyers, where as
Azia has found a way to succeed in the restaurant industry and cater to all classes of
people.
Distinctive Competencies
Azia's has five main strengths that distinguish them from their competitors. The
first is the layout, Azia offers three different areas to dine in as well as an outdoor eating
area in the summer. The second is their locations, they are located conveniently on the
corner of Nicollet Ave. and 26th street right in-between Uptown and Downtown. The third
is their diverse cuisine, they offer everything from ceaser salad to Omokase (a large
Japanese dish). The fourth is their pricing strategy, they offer an all night happy hour as
well as a $2000 shot of liquor both appealing to different types of people. The fifth is the
décor, Azia has a completely unique décor that is unlike another potential competition.
Because Azia is so different in these ways Mr. Pham truly believes that they do not have
any close competitors.
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11. Overall Corporate & Business-Level Objectives
The current short term goals of Azia are to begin to research the possibly of
expanding into the upper level of the building. Azia needs to figure out how the upstairs is
going to be different without taking away business from the lounge or sushi bar yet still
attract new people to the upstairs location. Another issue that lucky has not effected Azia
is the current economic recession. Mr. Pham believes that because their restaurant has so
much to offer so many they have been lucky enough to not yet feel any effects of the
recession. A long term goal is to expand and create other sister restaurants to Azia whether
throughout the state or country, Mr. Pham is always ready for something new and want to
grow his restaurants and have multiple locations.
Basic Competitive Posture
Azia prides itself on its superior quality of food, atmosphere, décor, and customer
service. Because so many consumers are loyal to Azia they have an achievement of such a
high level of customer satisfaction shown through its fan base of repeat customers.
Although they are not the lowest or highest cost provider, they provide so many unique
items and an experience that there is really no substitute for.
Implementation Tactics
Azia is open until 2am every night of the week. This means that they must have an
eager and efficient staff. Each staff member must have had previous restaurant experience
and therefore know that a restaurant as busy as Azia is can be hard to come by these days.
Therefore, motivating staff is not a problem for Azia. The servers and bartenders have to
potential to make good money in tips and money as Mr. Pham says seems to be the best
motivator to keep them wanting to work later and longer shifts.
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12. Operational Planning Process
Azia uses a mixture of both formal and flexible operational methods. For instance,
a manager may need to be more formal in making sure the duties for the day are completed
in order to accurately run the restaurant. On the other hand, a server or bar tender may
need to be more flexible depend on what section they are working in and in effort to keep
guests happy. If a guest requests a change to a particular item on the menu it is the servers
job to put the order into the kitchen (formal) but needs to relay the special change in the
order to the cooks themselves (flexible) in order to keep the customer service at a high
level. By having a mixture of both formal and flexible Azia is able to maintain a well
structured business while meeting individual customers needs.
Evaluation Methods
In terms of forecasting, evaluating the future for Azia is always changing. There
forecasting is based on past data and sales patterns that help indicate what level of
performance the restaurants future should be performing at. Evaluating performance of the
restaurant is done on a regular basis. The restaurant orders its food and drinks from
vendors at specific times. However it is the responsibility of certain employees at Azia to
monitor levels of food and re-order items that may be low. For example, if it has been an
extremely busy weekend for sushi and Azia is down to its last few pounds of salmon, it
would be the head sushi chef's responsibility to order the correct amount the restaurant
needs for about two or three days of operation based on how many items on the menu
contain that salmon. He would need to order it direct and have it flown into the U.S. by
next day air, in order to keep the fish as fresh as possible and to keep customer service
high. It is easy for Azia to evaluate if an employee is performing well because of examples
like the one above. If the restaurant was completely out of salmon and had to disappoint
each customer that wanted salmon it would be the sushi chef's fault for not ordering more
because now they will be out for two days due to the wait of over night for a shipment to
get in. Another way Mr. Pham evaluates his employee's performance is found in his
dedication to the restaurant. Mr. Pham is workaholic and can be found working or dinning
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13. at his restaurant every night until 2am. While he is there he is constantly observing his
employees and will always point out to them in private when they have made mistakes and
gives them helpful critiques because he wants them to be topnotch and professional. Mr.
Pham also has an all staff meeting every other Sunday morning which is mandatory. At
this meeting he discusses new items on the menu and is often giving employees flash cards
and pamphlets to help them memorize the elements of Azia's large menu. Memorization is
not required, but he wants them to have amicable knowledge of the menu and what
ingrediance make up each dish.
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14. B.) Porter's 5-Forces model: applied to Azia Restaurant
Porters 5-Forces Model
Porters 5-Force *Barriers to entry - Azia is such a large
unique restaurant that it is difficult to
Model compete with its variety and quality of
food as well as the unique décor and
experience .
* They offer a outstanding quality
*Developing neighborhood . Much
of service
Potential entrants room for renovation in neighboring
*They have the ability to diversify buildings .
within the same building Threat of new entrants
*They motivate their employees
through a profit sharing program
Industry Competitors
*High volume, frequent
Bargaining power
purchasing and close
of suppliers
relations with suppliers
Buyers
Suppliers
allows them to
negotiate prices .
*Not many upscale restaurants offering high
Bargaining power
Rivalry among
* Relationship with of buyers
price items and low affordable priced items on
existing firms
direct supplier for its the same menu .
seafood allows Azia to
have delivery’s flown in
*Azia’s happy hour menu .
within 2 days of Threat of substitute
ordering . products or services
*Customer comes first at Azia. The owner is
*Other restaurants on site ready to solve problems to ensure
customer leaves satisfied with their
offering a similar menu
Subsitutes experience at Azia .
orders seafood from *Buyer Propensity to
secondary suppliers .
Substitute- Other dining
choices in neighborhood ,
however Azia is open till
2 am every night.
*Diversity of food types.
Azia offers
predominately seafood.
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15. Potential Entrants
The barriers that arise in entering into the restaurant industry are extremely high.
Very few restaurants have the ability to be successful unless they have been around a long
period of time and have a huge fan base, or if they are in a high traffic location and have a
good enough product to be an instant success. Mr. Pham believes with the market the way
it is we will sadly see more restaurant going under verses starting up. Over the past seven
years the neighborhood around Azia has grown and there now are many restaurants on this
one block chain. Mr. Pham says that he loves the fact that other restaurants have come into
the neighborhood because even if the customers are not eating at his location, he believes
that they will see how updated the area has become, see his restaurant, maybe look it up
online, and next time they are in that area they will want to eat at his restaurant and
hopefully will keep coming back.
Bargaining Power of Buyers
Price is not something that a customer can come in and bargain about. There are
many other lower priced alternatives they could be eating at. And if the lower priced
item of Azia does not interest them they can simply travel to a different type of restaurant.
Threat of Substitute Products or Services
There are few substitutes to the services, cuisine, and dinning experience Azia
offers all in one convenient location. Very rarely could a large work party be held at a
restaurant and have each member of that staff be able to find something they want and have
an enjoyable night out. No many other restaurants have such a popular bar and lounge area
while offering a fine dining experience and also having a very low key, casual sushi bar.
Other sushi bars do not offer the same fine dining experience and other fine dining
restaurants do not offer lower cost alternatives or a popular bar and lounge area with a live
dj until 2am every night.
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16. Bargaining Power of Suppliers
If a supplier were unhappy with Azia and threatened to cut off service to them or
demand more money for their products, Azia would have no problem finding an
alternative. However, because Azia is so busy while so many other restaurants are going
under a supplier would be in rough water if they are going to challenge one of their biggest
customers and possibly lose Azia's business. Many other suppliers would be more than
happy to have the amount of business Azia would be giving them.
Industry Competitors
Azia's biggest competition is most likely its neighboring restaurants. However
Azia is open until 2am every night, meaning that even if others choose to eat dinner at a
neighboring restaurant there is still the chance that they may come to Azia for a drink or to
experience the lounge and bar atmosphere if they are not ready to go home. And upon
entering in Azia that customer may decide to dine at Azia instead the next time they are in
that area. Mr. Pham believes they truly have no competitors because no other restaurant
has all of the same elements that Azia does and can not please such a wide variety of
guests.
C.) A Description of Azia's Marketing Strategy
At this time the suggestions that we are going to make for Azia are minor but beneficial.
We have decided this because Azia has a large fan base of repeat customers, changing the
way they run their business could effect their W.O.M. reputation. We believe that the best
short term business strategy Azia should invest in is the expansion into the upper level.
Expanding into the upper level will create a buzz and something new for veterans of the
restaurant as well as get the W.O.M. about the restaurant up again. It will get the
W.O.M. for the restaurant up because once it is completed people will be talking about the
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17. restaurant even more, as long as the upper level is at the same level of quality as the rest of
the restaurant. The upper level should not be taking away from another part of the
restaurant, and Azia should take the time to figure out what the restaurant is missing and
what addition would be most successful to the 2 bars, lounge, 1 private dinning area and 2
other dinning areas. A long term business strategy Azia could succeed at would be
expanding to other locations. Being located between uptown and downtown has been
successful so far, but there are big markets of people in the northern and southern suburbs
that Azia could tap into. Azia restaurant could spend some time researching which areas
could be successful to expand into. The best idea would be to look for a place where they
could also purchase the place they were going to be located at and not have to worry about
paying rent or making necessary updates abiding around a lease and alternate ownership.
Each of these business strategies would make Azia successful in the short and long run.
Key Products and Services
Azia offers 3 different areas of the restaurant to dine, drink, and dance. They offer
an large yet affordable happy hour as well as a classy assortment of fine foods, wines, and
liquors. The restaurant constantly maintains a high level of customer service and quality
level of food. Without quality cuisine or quality service, Azia would not be as popular as it
is today.
Products/Service life cycle Velocity
Azia's product and service life cycle is accelerated in order to meet customer needs
in a timely manner and at a high level of quality. In the restaurant industry, quick service is
expected, it is the servers responsibility to get the orders in promptly, is the chef's
responsibility to create a high level of cuisine, and is then the serves level to get the
completed dish out to the customer quickly upon it being made. The life cycle of the
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18. products, such as the fish for sushi, must always be the freshest available. Sushi grade fish
needs to be extremely fresh, and because of Azia's great direct communication line with its
overseas vendor, the fish can be ordered and in the restaurant over night, so there is no
excuse to offer a lackluster grade of fish to any customer.
Promotion Mix
Azia does not use any forms of marketing besides its website. Azia does receive
free marketing from websites like citypages.com and other sites or magazines where food
critics have reviewed Azia's atmosphere and cuisine, and up until this point in time Azia
has received nothing but raving reviews. Because the restaurant is so constantly busy, and
attracts so many repeat customers, they see not reason to focus any time or money into
public advertising and rely more on W.O.M.
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19. D.) S.W.O.T. Analysis
Strengths Weakness
Researching cost and
effectiveness of Thom efforts to
expanding into the expand and open new
Opportunities upstairs level locations
Thom is at Azia until
2am every night to
insure every guest is
Azia is open until satisfied and can talk
2am and serves food to him personally if
Threats until 2am otherwise
Strengths-
High level of customer satisfaction
Decor
Quality of Food
Quality of service
Diversity in price
Different Atmospheres of the Restaurant
Open until 2am every night
Motivated employees
Weaknesses
Most employees do not have college degrees
Lack of marketing
Only one location
Do not own building location
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20. Opportunity-
Expanding into upper level
Growth of the neighborhood
Possible sister restaurants opening in the future
Location near uptown & downtown
Threats
Economy could become worse and drastically effect business
Location owner could decide not to renew lease
A competitor could enter the neighborhood
T.O.W.S. Analysis
Strengths Weakness
As Azia does not want
The diversification of to spend in marketing
Azia’s offerings to and focuses on
customers and the W.O.M. instead, it
possibility of more could possibly benefit
Opportunities growth. from its use.
Threats A large threat Azia Largest external
has is the current threat is a major
economic situation of downturn in clientele
the U.S. but Azia spending due to the
combats this with its economy.
diverse offering to
many different
options. (main dining,
sushi, caterpillar
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21. lounge etc.)
E.) Contrast Azia's Strategies with its Closest Competitors' Strategies
Azia has few competitors that employ similar strategies. A big difference is that
Azia has been successful on W.O.M. advertising where as many other restaurants need to
put big bucks into advertising and marketing of their restaurant and could not be busy until
2am every night simply on W.O.M. and repeat loyal customers. Another strategy that sets
Azia apart from its competitors is its different areas of the restaurant. The Caterpillar
lounge area is a revenue center on its own. The Oyster & Sushi bar is also very self
supporting. When Azia is going to sponsor a local charity event they refer to the recorded
sales from each different area and decide based on that information if the event should be
hosted by The Caterpillar Lounge or Anomone Oyster & sushi bar, this being their only
true marketing of either area of the restaurant. Because Azia has a different strategy from
any possible competitors has proven to be very successful for the type of business they are
offering customers.
F.) Define Any Problems That You Foresee Regarding the Strategic
Direction/Planning Efforts of Azia's Restaurant
At this time I would suggest that if it isn't broke don't fix it. Azia has a huge fan
base of customers and changing the way they run their business could effect their W.O.M.
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22. reputation. I believe expansion in to the upper level will only create more of a buzz for
veterans of the restaurant as long as it does not take away from any of the other 3 areas of
the restaurant. By establishing these 3 different areas of the restaurant, Azia has a larger
line of revenue and has the opportunity to put money into making a beautiful decor and
quality cuisine with out have to cut funds or costs and lack quality.
Part II – Azia’s Structural and Behavioral Characteristics
A) Observed and Learned Behaviors On-Site
Structure
Azia has a flat organizational structure. Thom Pham is the controller and is also at
the top of organization. He has an Office Manager who reports directly to him from Azia.
Below him are the other managers, and under the managers are the employees.
The organization’s structure creates a comfortable environment where all
employees are able to talk with Thom.
Thom Pham
Office Manager
Restaurant Managers
Servers Hosts Cooks Bartenders
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23. Decision Making Process
Thom is the head decision maker. He makes the final decisions and is responsible
for just about everything at Azia. There are a few occasions where others may be used to
help make a hiring decision, but that is normally after the candidates have been narrowed
down and usually only for important positions such as a new floor manager. Thom holds
weekly meetings with all of his staff. He invites the staff to these meetings, and often
attends their meetings as well. It is during these weekly meetings that problems are
discussed and resolved.
Leadership Style/Tendencies
The leadership style at Azia is a mix between authoritative and participative. He is
very honest when talking to employees about the good and bad things they are doing. It is
because of this, that he is seen as authoritative. Thom, however, has been very successful
at Azia by using his authoritative approach. He has an extreme passion for his work, and it
shows.
It is also participative because Thom and the other managers play an active role in
decision making. Even though most of the decisions are made by Thom, the other
managers usually have a good deal of input.
Culture/Ethics
Although Azia does not have a Code of Ethics, the culture and ethics of the
company are strongly based on the values of Thom and his upper management. He
believes that one should, “define the company by your own example.” As time has passed,
he has learned many things by trial and error, but most of all, “We pride ourselves on being
fair,” he says.
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24. They try to establish this fair work environment through their weekly manager’s
meetings. During the meetings, the managers discuss what is “fair.” For example, no one
is just fired at Azia. There are three warnings and a review of the employee by two
managers who are not involved in the situation before the employee is suspended without
pay. Thom says that this helps keep their ethics in check and the culture of the workplace
comfortable.
Level of Diversity
Azia has a significant level of diversity and is an equal opportunity employer.
Thom explains that since the restaurant industry is diverse, Azia is able to work without a
diversity program because it inevitably attracts a diverse workforce. Working with people
from different cultural backgrounds is one of Thom’s favorite parts about working in
hospitality and that shows as the staff at Azia is made up of many racial and ethnic groups
of people.
Gender is not an issue at Azia. The wait staff and hosts are pretty evenly split
between male and female. The cooks and managers have more males than females but
there aren’t any glaring examples of having too many males or females.
When I asked Thom about employees with disabilities he said, “We work with the
State and Federal guidelines for ADA. We are obligated to create a work space and
environment for anyone with a disability.” He was unaware of any employee with a
disability and said that employees know how physically demanding jobs at Azia can be.
Consequently, Azia has not received applications from disabled candidates to date.
Employees at Azia are not given time off for religious holidays. Thom said that
employees are welcome to use their paid vacation, or if they choose, unpaid time off for
such holidays.
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25. Focus on Learning, Creativity, and Innovation
Azia is very open-minded regarding creativity and innovation. It also understands
the value of employees who can learn new skills. Thom has his managers become learned
about wines and all the different aspects about them since wine sales are a key factor in
Azia’s revenue.
Thom and some of his upper level mangers take an annual trip together as well.
The trips are social but also allow them to “go out to a lot of restaurants and try to see what
people are doing,” he explained. This helps with learning, creativity, and innovation.
Managers have quarterly reviews which allow them to assess their creativity and
innovation, as well as, areas that need improvement. Thom says that training and
education are put into the manager’s quarterly performance to ensure that, at the bare
minimum, they are thinking about learning, creativity, and innovation on a quarterly basis.
25

26. Internal and External Recruitment Programs
Most of Azia’s employees come from an external search process. Thom said that
they will look internally first, but a lot of times there is not a second in command who can
easily take over an open position. For example, a line cook is most likely not going to
become an executive chef since the executive chef is Thom himself. It is common for a
veteran at Azia to become part of management, but Thom said that it is, “really nice to
have some fresh ideas, too.”
To get those fresh ideas, Azia goes through an external recruitment process. The
process is different depending on the position. To search for managers, Azia begins by
putting advertisements in the newspaper and online at monster.com. Thom will then
personally interview the potential managers and use his own judgment in whether or not
they will be fit for Azia.
For wait staff, an advertisement is also put in the newspaper, and the candidate
must come to the restaurant to fill out an application, and often, the interview is done on
the spot. Thom doesn’t necessarily do all of these, as many times he is out overseeing his
other restaurants and business endeavors. If he doesn’t do the interview, then it is
performed by the manager on duty.
Criteria for Hiring
Azia is always looking for employees with an entrepreneurial spirit, especially in
management positions. They need people who are creative and artistic, because the food
industry flourishes with creative and artistic people. It is not essential to have a college
degree to work at Azia, in fact, most employees do not. On the spot interviews of potential
wait staff employees allow managers and/or Thom to see if the candidate is a good fit. If
they seem competent they are likely to be hired.
26

27. Training and Development Programs
Azia has training and development programs for its employees. For servers, there
is a minimum three day period in which a new server shadows a current server. If the
manager does not feel the new hire is ready yet, that time period can be extended to five or
seven days. It is also likely that new servers will get a smaller section of the restaurant
before taking on a full load of tables.
New managers normally come in experienced and ready to work, so they receive
minimal training. Typically, they need to be trained in on the systems that Azia uses until
they feel they can do their job competently as Azia is definitely a different restaurant than
most traditional ones.
Criteria for Promotion into Management Positions
Employees many times are promoted to management positions despite the fact that
Azia also dabbles in external recruitment endeavors. There is no objective way to get
promoted. If the position opens up, Thom definitely takes a look at his current employees
before going external. It’s up to him to decide if any employees are fit to become
managers.
Motivation Techniques – Compensation
Both compensation and non-compensation based motivation techniques are used at
Azia. Managers who perform well are offered the option to participate in profit sharing.
Obviously wait staff are motivated on their own as they are working for tips, which makes
up most of their salary. Wages are either at or above a competitive level and given the
affluent clientele that visit Azia, the tips are usually very generous.
27

28. Approach to Job Design
Jobs at Azia are designed with an entrepreneurial mindset. Thom stated that it is
important to find people who think outside the box. Thinking outside of the box is
supported by profit sharing. The jobs at Azia allow employees to think creatively. For
example, Thom does not want to tell the Bar Manager how to increase bar sales, instead he
wants the Bar Manager to think, “How can I increase the bar sales?”
Use of Teams
Management rarely uses teams at Azia. Hiring is not done in teams, rather hiring is
done by individual managers. All managers have a group of employees that are below
them, so that could be considered a team. For example, the restaurant manager is in charge
of the waiters and waitresses, and the executive chef (Thom) is in charge of other cooks. In
some instances, Azia uses partners when reviewing an employee if they are suspended
without pay, but other than that teams are not widely used.
Method for Assessing Employee Performance
At Azia, Thom has one-on-one reviews with all of his managers on a quarterly
basis. During these meetings, the managers set their quarterly goals. He then reviews
these goals with the managers on a monthly basis. Goals can range from having a certain
number of “excellent” ratings on customer comment cards each month to increasing bar
sales. A manager’s performance at reaching the quarterly goals helps determine if they
will be entered into the profit sharing plan or not. If the manager misses their goals for
severely quarters in a row, it is likely that they will not be part of the profit sharing plan.
This is a big deal because managers can nearly double their salary sometimes by
participating in the profit sharing program. If Thom sees that the manger is not meeting a
goal due to lack of effort, he is likely to exercise some form of discipline. He also
28

29. encourages his managers to have one-on-one meetings with all the employees below them
as well.
Instead of having a policies and procedures manual for its employees, Azia has an
employee handbook. Thom explained that if they had a policies and procedures manual
they would legally have to stand by it; the handbook simply offers guidelines that the
organization is not legally obligated to follow. He said this is important because it allows
them to fire an employee without having to give three warnings, however, he does not
allow managers to terminate in anger. This means that employees are normally suspended
without pay, and then reviewed by two other managers. If the other two managers agree
that the employee should be terminated, the decision is made final.
B) How a Choice in HR Affects the Rest of the Organization
All hiring is done by managers. This directly affects the rest of the organization.
For example, Thom is known to be more authoritative which might cause him to hire
candidates who react better to that type of management. This, in turn, could affect client
relations. Additionally, if another manager hired an employee who did not respond well to
authoritative management, it might affect employee-employer relations. It is important that
Thom and all other managers carefully select their employees to ensure that both client and
employee relations continue to be positive, thus continuing to make Azia successful.
C) The Strategic Perspective: How Azia’s Choices Help/Hinder its Competitive
Advantage
Thom has had a lot of experience in the restaurant business and seems to have a
sixth sense when it comes down to hiring good, quality people to work at Azia. This alone
has given him quite the competitive advantage over other restaurants. All his employees,
from the managers to the wait staff are quite competent and only have helped Azia meet its
revenue goals. Also, with Thom being the executive chef, his instincts and feel for what
people what have definitely helped Azia.
29

30. D) Areas for Improvement Regarding Structural and Organizational
Behaviors/Programs
Marketing is an area that needs to be better looked at according to Thom. While
there are a few ads and publicity through the media has helped, there isn’t much in terms of
advertising or marketing. Word of mouth has really helped spur business as well as repeat
customers. Thom thinks that through effective marketing he can gain even more
customers.
30

31. Part III- Examine Azia's Operations
A.) An overview of Azia's Operations
Location
Azia Restaurant is located in Minneapolis, Minnesota on the corner of 26th and
Nicollet Ave. in-between uptown and downtown. This location is near many businesses
and gets its business from the busy uptown and downtown areas. Being in this location is
an advantage because it offers lots of space to expand operations, local cabs nearby,
parking lot and street parking as well as lunch traffic, and business until 2am.
31

32. Layout
32

33. DJ booth
Lounge Bar
Parking
Bathroom
Private
dining backdoor
36.0 in. x 36.0 in. x 36.0 in. x
24.0 in. 24.0 in. 24.0 in.
storage
36.0 in. x
24.0 in.
Up
36.0 in. x
24.0 in.
36.0 in. x
24.0 in.
Main dinning
2nd sushi
area
bar
36.0 in. x
24.0 in.
Kitchen
36.0 in. x
24.0 in.
36.0 in. x
24.0 in.
36.0 in. x
24.0 in.
36.0 in. x
24.0 in.
Main Bar
Sushi Bar
36.0 in. x 36.0 in. x 36.0 in. x
24.0 in. 24.0 in . 24.0 in.
36.0 in. x 36.0 in. x 36.0 in. x
24.0 36.0 in. x
24.0 in. 24.0 in. 24.0 in.
in. x 24.0 in.
24.0
Main door in.
33

34. Azia's layout has become that of 3 different areas. Upon entering guests are greeted
by a host and either sit in the bar area while waiting for a table, request to eat there, or may
continue to the room behind the bar which leads to the Sushi bar. In the Anenome Sushi
bar guests may enter or exit through the revolving doorway from the outside and are
offered the full restaurant menu. If the guests are not choosing to dine they may walk
through the dining room and into the back lounge area where local djs play until 2am. This
back lounge area is known as the Caterpillar Lounge and also has an entrance from the
outside directly into its private area. Between the Caterpillar Lounge and the main Azia
dining area is a private dining area and an upscale bathroom. The Anenome Sushi Bar and
main dining part offer both booths and tables that are fairly close together but never to the
point of crowding. Seasonally, outdoor seating is available along the boulevard; however
Azia is still able to create a quite, clean, romantic atmosphere even for this outdoor
seating.
Supply & Distribution Chains
Azia has different products delivered multiple times per week depending on the
demand for certain items. For example, Azia receives weekly deliveries of liquor and food
but if necessary can re-order more of a certain item (primarily seafood or sushi fish)
multiple times as needed. Deliveries primary come between lunch and dinner hours as to
not stop any of the restaurant processes. Azia does have a large storage area and two bar
areas so they are able to store large quantities of liquor and other items on shelves as well
as in the basement and kitchen area. They also have many freezers and refrigerators for
storage of meats, fish, and other perishable items. It is the responsibility of the head chef
and sushi chef to place orders and to throw out any expired or risky food. Azia gets most
of its ingredients from Asian Foods, who is the major distributor to the Midwest.
Over the years Azia has found its vendors in many different ways. Whether from referral
and meetings or offers from the suppliers themselves, Azia has been able to meet all the
restaurant needs in an orderly and timely fashion. Mr. Pham says that he is satisfied with
34

35. his vendors and maintains good relationships with each and would use the same vendors in
any other restaurant he were to open.
B.) Azia's Process Choices
Capacity & Productivity Levels
Azia offers plenty of different options for its guests all in one location. They offer
a full separate menu of wine, beer, champagne, sake, and cocktails. They offer a full all
night happy hour menu of discounted food, half priced sake bottles, wine bottles,
champagne bottles, discounted cocktails, and discounted pints of beer. They offer a huge
menu of appetizers, salad, seafood, meat dishes, sushi, and other Asian classic items. With
these high level of menus Azia must always focus on keeping there productivity levels just
as high. Azia has a large capacity for guests as each dining area can seat over 100. This
includes the lounge area and seasonal outdoor area. Azia has a very high level of capacity
meaning that even during very busy hours Azia does not need to rely on a pager system or
waitlist in order to seat guests and are able to get them seated in a timely manner.
On the occasion where a large number of reserved guests will be attending, Azia
will often seat them in the separate private area near the Caterpillar Lounge or may close
down the Caterpillar Lounge for private parties. Because most of these private parties will
not last until 2am and there is another bar area, guests will not be differed from the
Caterpillar Lounge for long when that is where they are wanting to go. Azia has many
large reservation parties every night and does not always seat them in the private area.
Other times the large parties can be found in the main dining area and in the sushi bar. For
reserved parties, Azia will assign there best servers to the section and will make sure they
receive just as adequate service as if they were a smaller more intimate party of guests.
Level of Standardization vs. Customization
35

36. Azia's level of standardization can be seen more on a day to day basis. Customer
service and a high quality level of food are standards which Azia tries to meet each day.
The process of serving guests itself is a standard process of greeting, seating, giving out
menus, informing customers about specials, taking beverages orders, taking appetizer
orders, taking meal orders, and bringing each to the guest in a timely manner and
continuing to serve the guest while they are eating. This standard process is ideal for any
successful restaurant and can be an element of accreditation to the success of Azia.
However Azia's level of Customization is what making it unique and a success of W.O.M.
advertising. Mr. Pham is the executive chef of the restaurant and has formed the menu to
what it is today. He has used input of guests, employees, and experiences from others
throughout the process, but claims its success to the consistency of its unique menu. He
gave the example of restaurants that serve seasonal specials or only have certain deals at
certain times of the year (Red Lobster all you can eat shrimp Tuesdays) and says that you
are targeting a type of person who just wants a deal and has to go to your restaurant on
certain days to get it. That type of person does not want to enjoy food and the atmosphere
because they have already been told what to order and what day they have to get it. Azia's
customization comes from the large diverse menu, the ability to get any dish any day or
time of year, the ability for customers to mold the order to their liking and the multiple
atmospheres located in one location.
Quality Program
Azia focuses largely on the quality of service and experience it is providing to
customers each day. Because they are not a highly marketed restaurant they need to keep
up the W.O.M. and repeat guests coming to the restaurant. The best way to insure quality
service is through Azia's employees. Azia hires managers who pay attention to detail and
will help out the wait staff and customers in whatever ways they see necessary to speed up
the service process or create a better atmosphere for that customer. Mr. Pham picks
managers based on people who want the restaurant to succeed and sees a lot of potential in
their ability to do so. Mr. Pham often walks around the restaurant and greets guests himself
and makes sure that everyone is as satisfied with the outcome of the full Azia experience.
36

37. Azia know that word of mouth is so hugely important to the restaurant so they try to treate
every guest as a food critique writing a review themselves.
37

38. Azia's Quality quot;Gurusquot;
Crosby Deming Juran
Definition of quality Conformance to A predictable degree of Fitness for use
specifications uniformity and
dependability at low cost
and suited to the market
Degree of senior Responsible for Responsible for 85% of Less than 20% of
management quality quality problems quality problems are
responsibility due to workers
Performance Zero defects Quality has many “scales”: Avoid campaigns to do
standard/motivation use statistics to measure perfect work
performance in all areas;
critical of zero defects
General approach Prevention, not Reduce variability by General management
inspection continuous improvement; approach to quality,
cease mass inspection especially human
elements
Structure 14 steps to quality 14 points of management 10 steps to quality
improvement improvement
Statistical Process Control Rejects statistically Statistical methods of Recommends SPC but
(SPC) acceptable levels of quality control must be warns that it can lead to
quality used tool-driven approach
Improvement basis A process, not a Continuous to reduce Project-by-project team
program; improvement variation; eliminate goals approach; set goals
of quality without methods
Teamwork Quality improvement Employee participation in Team and quality circle
decision making; break approach
down barriers between
departments
Costs of quality Cost of No optimum; continuous Quality is not free;
nonconformance; improvement there is an optimum
quality is free
Purchasing and goods State requirements; Inspection too late; allows Problems are complex;
received supplier is extension defects to enter system carry out formal
of business; most through AQLs; statistical surveys
faults due to evidence and control charts
purchasers themselves are required
Vender rating Yes and buyers’ No, critical of most Yes, but help supplier
quality audits useless systems improve
Single sourcing of supply Yes No, can neglect to
sharpen competitive
edge
Key Fully Applies Some Application Does not apply
38

39. C.) Degree of Fit between Current Situations/Strategies and Process Choices
Azia is currently experiencing a solid customer base and continuous business. This
points out that the current process choices they are using are working effectively. Azia's
focus is always on customer service, and the efficiency of the restaurants process is a major
component in a customers dinning experience at Azia. One of the most important current
strategies is the process of taking the order to getting the food/drink on the table for the
customer. Azia knows customers do not want to wait beyond a reasonable about of time
for their food/drinks. Azia has an efficient fast process of the wait staff taking the order
from the customer, typing it into the computer, the order prints out in the form of a receipt
for the bartender or chef and their are designated people behind the bar making drinks for
the house, and designated people in the kitchen to make appetizers vs. entrees and sushi
orders go to the sushi chef. Each of these workers get the orders ready as quick as possible
and it then is the responsibility of the wait staff to bring the finished product back to the
customer. Because Azia has specific duties for each of these employees fewer items are
forgotten to be made, nor do they take as long to be made. Orders are brought out as they
are ready and Azia only hires wait staff with previous experience, so they are quick to put
the orders in and get the food/drinks to their customer. Also the incentive of the tip from
the customer and approval from the multiple management out on the floor of the restaurant
keep the servers motivated to do their best.
39

40. D.) Azia's QFD Matrix
Each category of the QFD matrix was decided upon because they are critical to a
dining experience at any restaurant. We also spoke with management at Azia to determine
what they thought customers expected and based our categories off of their answers. From
our time visiting Azia and speaking with multiple employees, we were able to understand
what Azia provides within each category to create the rating shown below.
Azia
QFD Matrix
Correlation:
** Strong Positive
* Positive
- Negative
Restaurant Characteristics
Competitive Evaluation
X=Azia
Customer
Importance
M-Sat: 11am-
Customer
Staffing Employee Food Diversity A=La Belle Vie
Uptown 2am, Sun:
to
B=Cosmos
Training quantity
Requirements 3pm-2am (5 is best)
1 2 3 4 5
** -
Food quality 12
ABX
* ** ** *
Time of service 10
AB X
** ** **
Quality of Staff 10
ABX
*
Wide food selection 9
ABX
* * ** * *
Ambience 9
BX A
Prices 10
A BX
* * **
Hours 7
ABX
** **
Location 8
ABX
Importance
8 10 9 10 7 7
Weighting
Technical
Target Values
Evaluation
stay in top range of grading system, based on feedback surveys
(5 is best)
5 A BX ABX A ABX A Relationships:
4 BX A BX B ** Strong = 9
3 # Medium = 3
X
2 / Small = 2
1
40

41. E.) How Azia's Operations Could Be Improved
Azia is always looking for ways to improve its operations and allow its guests to
have an even better experience coupled with a higher level of customer service. Through
Mr. Pham's daily efforts to critique his wait staff and kitchen staff they are on a positive
track. He is always open to suggestions from guests, employees, and other restaurant
owners. Azia is improving everyday and is able to keep ahead of the competition because
of Mr. Pham's dedication and personal attention to the restaurant. I believe improvements
are minimal and are more of a case by case improvement. The one thing I have noticed as
a frequent guest of the restaurant is that the ink on some menus has worn and can be very
hard to read. Each time I point this out I am given a new menu, but the badly printed menu
should from that point be taken out of circulation. This may be an operational error as the
printer at Azia is not the best quality itself. My recommendation to Azia would be to invest
in a better printer and get the poorly printed menus out of circulation instead of just simply
dealing with the problem when a gust presents it to their attention.
41

42. Part IV- Systems’ Analysis
A.) Flow of Information
Sales/Marketing:
In the restaurant business, sales and marketing are of utmost importance. Getting
customers in to the establishment is the lifeblood of the business. Mr. Thom Pham
coordinates the majority of the marketing and uses his established connections to do so.
Mr. Pham will have brainstorming sessions with all the managers, the thought process
being that the more ideas from which to pull from the better. For ideas that get used Mr.
Pham has developed incentives. The main goal is to enlarge revenue to all parts of the
restaurant. Keep in mind that this establishment is divided into three main parts:
- The restaurant itself
- Caterpillar Lounge
- Anemone Sushi/Oyster Bar
These three different parts require separate marketing channels, and although there is some
bleed over, they generally reach out to different demographics. For the restaurant, Mr.
Pham uses traditional marketing highlighting its traditional elegance and world class dining
selections, along with a one of a kind experience. He does this via his web page, twin cities
reviews, and half page ads in trendy publications. For the lounge he markets to a younger
demographic and highlights the use of local DJ’s and the uptown nightlife, plus a full
service bar. For the sushi/oyster bar, the newest addition to the establishment, he highlights
that it is the best in the area and completely authentic. Mr. Pham takes a unique approach to
42

43. marketing, he feels that he always “wants to be something he is not right now” and is never
complacent, this is what fuels him and consequently his marketing strategy. Ultimately he
understands that the more people through the door the healthier the business will be. He
also understands that for certain day parts, this can be improved upon.
Mr. Pham doesn’t see flooding the airwaves as an effective way to get the word out
on any of the parts of the business. Rather he sees public relations and past experience as
vital marketing techniques. PR and charity events are the biggest techniques used, as they
get the name out there, which is the primary goal, establishing word of mouth advertising.
Thom stresses a “market by need” philosophy. Magazine reviews are also a positive source
of PR/Marketing, but he does not like the use of coupons or cut outs, as they project a
different image than he likes. The magazines he likes to get the name in are ones that
would be read by groups and would bring large amounts of people (examples in the awards
below). The website (aziarestaurant.com) offers insight into the restaurant for inquiring
minds with specific links for each individual part of the establishment, and several boasts
about recent awards/success/offerings:
- 2008 Silver Spoon Recipient: Top Three Fusion Restaurant
- 2008 AOL City's Best Date Spot Winner - Anemoni Sushi & Oyster Bar
- Open Tables Diner's Choice Hot Spot
- quot;Minneapolis Hot Spotquot; MPLS ST Paul Magazine 2008
- Bon Appétit Where to Eat 2003 & 2004
- Premier Sake Bar in Minneapolis
- City Pages 'Best Late Night Dining' 2005
- Food and Wine Special Mention 2003
- The Twin-Cities' Finest Waitstaff
- The Biggest Sake List in Minnesota
43

44. - Easy access to Metro-Area Hotels
- Enticing Happy Hour Features 3pm-6pm & 10pm-2am
- Valet Service Thursday through Saturday
- Colorful Nightlife Scene
- Ultra-Mod Lounge with DJs seven nights a week
- Full Menu & Dining Service 'til 2am
- A Gorgeous Summertime Sidewalk Café
One aspect the website could improve upon is a list of special events, dj’s, and
additional upcoming events. I feel that this could be covered in a short weekly newsletter
by Mr. Pham, and could help drive traffic. The site also could do a better job of stressing
lunch hours and specials.
Metrics the Azia team pay attention to for developing marketing plans are customer
frequency, size of groups, check size, and new vs. existing customers. Mr. Pham also
understands that his business sees the majority of his customers in the area and downtown
so he doesn’t throw away marketing dollars at customers that he can’t get saying, “fish
where the fish are biting”.
Forecasting:
Another important system that Azia incorporates is forecasting. This is an
exceptionally important aspect of the business, an integral component in running a
profitable and efficient company. Forecasting is used to help the management team
understand trends and growth in the business; this also helps predict product trends for the
future. Azia uses time series analysis to look at past data and find trends. Operating
decisions are guided by customer behaviors. As mentioned in the sales/marketing section,
44

45. important data is collected including check size, amount of drinks ordered, size of groups
by hour, and new vs. repeat customers, in addition to host of other important metrics. Using
these metrics is key for the short term because it gives an idea of staffing requirements and
product requirements, but it also helps reveal seasonality and hourly production, it also
helps for predictions for year to year. This is a useful tool for giving management an idea
of where the business is headed, helps them align the business accordingly, and reveals
whether or not change needs to be implemented. Forecasting decisions directly impact
operating costs and revenues.
Over the past two years Mr. Pham has seen sales increase 7%, and he has used the
tools at hand to see this and consequently forecast appropriately. He predicts future sales
growth. He currently sets 5% as a benchmark for sales growth to maintain business health.
Important projects have been developed that result in the increase in sales. The latest
project was the addition of the sushi/oyster bar, bringing in a brand new stream of revenue
without incurring much cost. They also recently tweaked the kitchen slightly to allow for
maximum efficiency. Another project that increased sales was a renewed focus on the
lunch crowd and toning the lunch menu. This resulted in a renewed marketing effort to the
lunch crowd, which includes business people looking for a classy place to spend their hour
off. While past trends are the largest indicator used when forecasting, a more subjective
and qualitative approach is used based on opinions/estimates. One example is the use of
different events in the caterpillar lounge which changes the amount of inventory needed.
They use this method to forecast short periods of time and new events because there is no
quantitative data from past years for predicting. Forecasting is necessary to reveal the
45

46. appropriate amount of staff for a given night to avoid too much staff, an unnecessary cost,
or too little staff, resulting in poor service. Management does not want to make a habit of
having staff on call or sending staff home early, as this may result in irritated employees in
an industry with exceptionally high turnover. Accurate forecasting also plays a major role
in inventory purchase (to be discussed later). In these difficult economic times, almost all
restaurants feel the squeeze as more people eat at home to conserve dollars; however,
although Azia has seen some reduction in traffic, they remain relatively steady due to the
demographic they serve.
Purchasing Inventory:
A restaurant without inventory is not a restaurant at all, so being in stock of the
most popular food and drink items is of utmost importance to Mr. Pham, and essential to
the health of the business. This is a very important system because it ties into everything
that a restaurant is. If inventory is low it results in employee stress and customer
dissatisfaction. There is generally a constant inflow/outflow of food inventory since it is a
relatively small kitchen with a lack of large amounts of storage space. There is more space
with the bars, both sushi and alcohol. Forecasting is used to identify trends for ordering
product, and identifies demand for new product. In terms of purchasing alcohol, two
companies are used. Azia does not use a local vendor, but rather a food dealer who they
order from 4-6 times a week depending on need. Inventory is spiked when special events,
outings, or banquets are expected. For these events, JIT delivery cannot work, and similar
to the toilet paper example from class, inventory must be ordered when a certain point is
hit.
46

47. For food supply, Azia primarily goes through Asian Foods. They will order mass
inventory to cover broad parts of the menu (i.e. mass quantity of chicken for multiple
chicken dishes). For sushi, Azia uses small and direct dealers (such as American Fish) on
the coasts that can deliver fast/fresh, because as Thom puts it, “experienced sushi people
can taste the difference”. For liquor, Azia uses JJ Taylor. Quantitative forecasting is used to
determine appropriate levels of food/drink inventory and shows what needs to be purchased
on a regular basis and what is more seasonal, certain drinks and sake’s for example.
Ordering is done on a weekly basis and can change weekly. The reason is because
Mr. Pham places cost/quality of food as paramount. If a certain dealer’s cost or quality is
increasing, a different vendor is selected. There is a certain point where Mr. Pham will not
sacrifice quality for a low price. He views quality food as a pillar of the organization and
also understands that dissatisfied customers will cost the restaurant money. It is important
that from top to bottom, everyone at the restaurant is aware of schedules for shipments,
including time/day shipments will arrive. First the suppliers are made aware of Azia’s
needs, and paid accordingly. Accounting is notified and purchases are recorded. The chef’s
are also acutely aware of delivery arrivals, since they are dealing with perishable products.
On that note, manager’s are in charge of making sure Azia follows all health and safety
ordinances. Thom sees this as an ethical issue, making a promise to his customer’s of a safe
environment and top of the line food. He also sees this as a cost effective issue, “In this
continuously litigious society, a lawsuit could be around every corner. We label everything
and are aware of all codes and ordinances to protect what we have built.” Naturally the
47

48. restaurant industry employs a first in first out system of inventory purchase, to protect
against wasted inventory. Another measure used by Azia to protect the interests of the
restaurant, is consistently cross-referencing liquor sales in the register against liquid in
bottles, to prevent free drinks being given. Each manager is in charge of ordering
necessities for the week because Thom entrusts his people under the belief that he has good
capable people in the right positions to make purchasing decisions. Chefs make the call in
terms of amount of food/sushi. Manager’s make the call in terms of alcohol and place
settings.
B.) Integration of systems
It is clear that these different systems are all related to each other, and all are
focused on the same thing, revenue dollars. Forecasting and purchasing systems are
directly related. Forecasting is used to estimate different levels of business for different
times of the week/year and inventory is purchased accordingly. Previous data trends show
how much alcohol is to be purchased for a given week. The forecasting methods use
previous data and determine the trends in the business. Seasonality, special events, and
holidays are some of the myriad of circumstances that play a role in forecasting and
inventory purchase. The brain trust in charge of forecasting must inform those making
purchasing decisions so they are aware of projected volume. There is a fine line with
purchasing and forecasting, inventory must e received early enough to meet operational
requirements, but late enough to ensure appropriate storage space and product freshness.
The environment is constantly changing, so attention to forecasting is imperative and will
be shown in the inventory.
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49. Marketing and forecasting/inventory are also correlated in that strategy is based off
of accurate sales predictions. This allows marketing dollars to be spent bringing in
customers when the restaurant needs them and not during already hot traffic days and
special events. This is also important to avoid over stretching the staff. Marketing is used to
predict customer wants, for example, certain seasonal dishes are planed at suitable times of
the year. On the other hand, increases in marketing must be made known to those making
forecasts so they can plan for promotions.
C.) Big Picture
The systems used at Azia are important to all parts of the company in distinct ways.
Sales/marketing, forecasting, and inventory purchases are all integral to an efficient
restaurant. There is a slim margin for error in this business, estimates and predictions must
be as accurate as possible to keep the business healthy. These systems must be working in
unison to keep Azia fit as a company. Forecasting predicts volume needed in the immediate
future. This allows for appropriate scheduling, inventory purchases, and marketing to keep
costs at a minimum. Having an accurate idea of business levels ensures organization and
flexibility, hallmarks of a successful business that provide a competitive advantage.
Constant deliveries keep costs low and provide inventory freshness which ultimately keeps
customers happy and coming back. Overall the best products at the best prices ensure high
profit margins. All three of these systems are tied to economic factors, which are beyond
Azia’s control, but must be monitored.
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50. D.) Strategic Perspective/Competitive Advantage
These systems are effectively incorporated with one another. Forecasting provides a
competitive advantage by being strongly tied to inventory management. Without proper
inventory levels, competitive advantage is hindered. It is crucial to never be out of product
or certain liquors, as this would result in the loss of business in the immediate future. The
location does not provide a competitive advantage in that there is not a large amount of
their key demographic; however there are not a large amount of similar options nearby.
The lack of storage space, which on the surface level would appear to be a disadvantage,
conversely is a competitive advantage, as it brings product in on time and keeps costs down
by reducing lost inventory. Marketing gives an advantage by highlighting the diversity of
Azia’s options. Special event marketing and PR are also important to sales/marketing.
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