Business

Sara Sarasvathys Five (5) principles capture what she means by Effectual Reasoning or Effectuation, an entrepreneurial thinking that is the opposite of causal reasoning. Sarasvathy believes that entrepreneurs are entrepreneurial by following these five principles category of means principle, affordable loss, strategic partnerships, leveraging contingencies, and effectual logic (Sarasvathy, 20051-7).

As the Store Manager of the coffee shop, called Coffee Blooms Cafe I will apply effectuation in creating a new service for our customers. I happen to love reading books and I have a huge book collection in my private library at home. This is my category of means in which I begin from what I know and what I have. I observed that many of our customers would bring books with them in the coffee shop and read them while having their cup of coffee. I usually talk to them and we enjoy discussing the merits of our favorite books. I also noticed that some of the customers would look for books that are not available in the local bookstores but which I happen to own.

From there, I will ask them if they would like to have some sort of book exchange or rental in the coffee shop and I told them I would be glad to offer such a service. Their positive feedbacks will lead me to come up with a book rental and exchange service as a new service of our coffee shop. This is a good promotional strategy as well as it will attract more customers into our shop. The customers will let their books be rented or be exchanged with books available in our coffee shop. Our customers become our strategic partners.  To forge our strategic partnerships, a Book Club membership will collect annual fees and members will enjoy certain privileges over non-members. There will be affordable loss since I own most of the books that I will loan out to our customers as my form of goodwill for loyal customers who love reading books or the books are owned by our customers. In the process, I am able to minimize costs and can apply the affordable loss principle. This new service will be contingent on the availability of books and customers who love to read while having coffee. In order to leverage contingencies, I will link with public and private libraries, like university libraries and friends who have a good collection of books as a contingency when I will run out of books needed by our customers.  Lastly, to the extent that I am able to bring more customers to the coffee shop who bond together because of one common interest love for books, effectual logic is at work in this instance because I create a new service for the coffee shop in response to the needs of our customers. From there, we can build a new market of book lovers who are also coffee lovers