FORTUNE 500 Advice:
Starbuck’s Schultz Assesses Student Business Plans

Fancy having one of the world’s superstar CEOs give feedback on a business plan cooked up by you and your group-mates at CEIBS? What if we threw in a professional Hong Kong-based camera crew and CNN producer to create a slick 3-minute video of your plan to catch the CEO’s eye?

These were the terms enjoyed by the winners of the CEIBS MBA Business Plan Competition in preparation for the November 2 filming of CNN’s The Boardroom Master Class, starring Starbucks CEO Howard Schultz. In October, all MBA students were invited to submit business plans for review by MBA Dean Lydia Price and Marketing Professor Rama Velamuri. Seven groups entered the competition, and four were recommended to CNN producers for the final decision, and two groups were chosen to present their Business Plan to Howard Schultz on air.

The first winning plan, developed by MBA 2006 classmates Annie Wang, Weifang Chen, Karl Leung, Fabio Mercurio, plus presenter Rachel Zhang, developed a family entertainment concept called The Pit Stop - a chain of one-stop leisure-and-education facilities for multigenerational Chinese families. The goal is to create a single entertainment destination that appeals equally to parents, grandparents, and children.

In presenting the plan via 3-minute video (filmed at a bowling alley), Rachel Zhang stressed that upper income Chinese families are eager to find a single location that can entertain an entire extended Chinese family. Zhang told Howard Schultz: “The Pit Stop is a combination of sports, education and entertainment. … We think there is no such concept in China, especially for the family.” The biggest challenge, she acknowledged, would be to keep the place filled during weekdays.

In responding to the video, Schultz first congratulated the group on its “big idea”. Addressing the problem of keeping the facility full during weekdays, he had the following advice: “The cost structure of something like this has an overhang where there is a big burden during Monday through Friday. ..It’s a weekend business.” Schultz advised the group to expand the business into a line of products he knows well. “You need a lot of food and beverage to go along with the activities,” he said. “Now, all of a sudden you’re in the leisure business and you’re in the food and beverage business and that’s a lot to take on in a start-up. But I think the core idea of leisure and focusing on families and children is spot on.”

The second winning Business Plan came from MBA 2006 students David Garcia, Jim Hsieh, Lily Li, Leon Yuan, and presenter Brit Simon (exchange) with the concept China Smiles. This plan focused on setting up a chain of dental clinics across China, providing international standard dental services.

"There is absolutely a tremendous need for this service,” Simon told Howard Schultz in his video, which he filmed while seated in a dentist’s chair. “There are only 60,000 dentists to serve the [China] market, that’s just not enough.”

To meet one of the key challenges to the plan - attracting enough qualified dentists - the group plans to focus on attracting entrepreneurial senior dentists to join the enterprise (by offering ownership and revenue sharing) and to focus on training younger dentists.

Schultz said the group had identified an “untapped” and “emerging” market, and that he expected strong demand for both basic dental care and more sophisticated cosmetic services. He suggested that the United States could be a source of both qualified dentists (“there are a plethora of dentists in North America”) and of venture capital money, commenting that many U.S. dentists would be interested in joining the venture. “You have identified something that I think is really significant and a big opportunity,” said Schultz. He also suggested that the group “focus more on the cosmetic side than on pure dentistry … get people to recognize that you can improve their smile, their looks - and that it’s not painful.” In terms of brand building, Schultz suggested that China Smiles start by promoting a consumer friendly product such as teeth whitening via inexpensive trials. His closing remarks were a clear endorsement. “I love the idea,” he said. “I really do!”