Question

Here is a typical situation for an entrepreneur: You are planning to open a coffee shop in one of two areas in your local community. Conduct a secondary data search on key variables that would allow you to make a logical decision on what area is best suited for your proposed coffee shop. What external sources of information would you use to find this information?

Identify 2 key variables and 2 external sources.

Answer 1

Secondary data is the data which is already collected by some other person or institution. Secondary data is not first-hand information as it is already collected by some other member. Before opening a coffee shop, owner have to search about the factors given below:

1. Less competition : Person has to open coffee shop where there exist less competition in the market. Otherwise, it become very difficult for new ship to earn good profit or attract customers. Community where their exist less competition in the market is favourable to open new coffee shop.

2. Able to cover huge population : Coffee shop must be open in that area where citizens have taste and preference for coffee. Community where there exist larger share of population is best to open a coffee shop.

3. Profit earned by firms already operating : Owner have to search about the earning of firms which are already operating in the area. If these firms sales are good and earn some good profit then, new firm can plan to open its firm.

4. Cost should be less : A firm has to search about the cost of setting its shop i.e. rent which they have to pay for the land, availability of workers, etc. These costs are primary for any firm as these expenses affect the profit of the firm. So, community where rent is low, workers are easily available is favourable to open coffee shop.