The Question:

1. From Munday’s standard market report checklist, select any other four categories,
such as population (A1), hotels (B2), or restaurants/nightclubs (D), and provide three
subcategories that should be evaluated. (See item C1 (airport) for a guide.)
2. Which is the highest rated of the four European cities under consideration, using the
table above?
3. Why does Hard Rock put such serious effort into its location analysis?
4. Under what conditions do you think Hard Rock prefers to franchise a cafe ?

The Answer:
1. Demographics (local,city,region,SMSA), with trend analysis
a. Population of area :
a) Gender & age distribution: Hard Rock cafe usually attract certain ages
(young and middle ages) more than other ages, and attract men more
than women.
b) Population density: when it is high in the location being studied, that
means the probability of getting more and more customers is better
and vice versa.
c) Population growth rate: when it is high, that means the probability of
getting more and more customers is better and vice versa.
b. Economic indicators:
a) Gross Domestic Product (GDP): it is better to make an investment in a
country that has high GDP.
b) Unemployment rate: when there is a high unemployment rate, that
means Hard Rock cafe can get more workers for less wages and
salaries and vice versa.
c) Inflation rate: when it is high or getting higher, that means costs will
increase.
c. Political risk:
a) New legislations
b) Expropriation of assets by the government.
c) Acts of war and military coups.
d. Real estate market:
a) Real estate’s values
b) Listing prices
c) Number of real estates available for rent and sales

2. The steps of factors rating method:

a. We weigh each factor by its importance at this time for each city under
consideration. For instance: the Demographics factor in city A is 70, the
importance of this factor at this time is 20%, therefore the weighted factor is
70 x 20% = 14.
b. We sum all the weighted factors for each city, and the city with the highest
score is the one we choose for our next location.

Applying these steps in this example had resulted in choosing city A to be the place of our
next cafe, after being the highest rated city (80.5) among the four European cities under
consideration.
 3. Choosing the location of where to place the next Hard Rock cafe is a very important
decision that requires (before selecting) a lot of location analysis for several critical
reasons. First of all it is a long term decision that is made relatively infrequently, and
once committed to a certain location, many resources and cost issues are difficult to
change. It also has a significant impact on fixed and variable costs which are key
factors in increasing or decreasing the profit of any company or firm.
It is also important because it determines many specifications that shape the way the
company operates and affects many upcoming decisions such as:
a. The relationship with suppliers.
b. Types of employees that location is going to provide for the company
(skilled-not skilled, educated-not educated, etc)
c. Types of customers that the company is going to try to attract which is also
related to the types of market research, marketing strategies, and marketing
plans.
d. The conditions of the legal, political, and economical environment that the
company is going to work under.
4. When there are various risk factors and differences in social norms, preferences,
business practices and employment law, (As a Hard Rock Cafe franchise you have
the flexibility to shape and mold your own cafe to suit local market conditions. Go
After the business you want.). For rapid expansion without an enormous outlay of
capital. For achieving fast market penetration.