M1A3 LIVORIA SANDWICHES, INC. Essay

992 Words4 Pages
Date : October 11, 2013
To : Brothers Sam and Paul Livoria
From : Dev Das
Subject : Strategic Review and Recommendations
INTRODUCTION
This report examines strategic alternatives that would help owners of Livoria Sandwiches Inc. gain competitive advantage in a growing market, achieve its profitability target and maintain its strong reputation of having a high quality and unique product in the industry. This report provides an analysis of the company’s current situation, identify strategic issues and analyze strategic alternatives. These also provide recommendations as to courses of actions the brothers should adopt to reach their goal, and proposed implementation plan.
CURRENT SITUATION
Stakeholders Preferences: * Go
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Expanding without franchising
2. Open Franchise Agreement
ANALYSIS OF STRATEGIC ALTERNATIVES
I. EXPANDING WITHOUT FRANCHISING
PROS
CONS
Develop product lines by introducing vegetable sandwiches (Appendix 4) shows an increase in cash inflow from 155% in 2013 to 319% in 2015
May cannibalized existing/old product lines which the company is being known for
Attracts customers with other preferences and may compete broadly in the industry by branching out in new locations
Requires additional training cost, space, business strategy and building customers recognition, hire professional help which may cause additional fund or used available line of credit
Established and maintained more suppliers that would provide more options and huge discounts in large orders
May affect existing quality standard of the custom-made sandwiches
Discover more hidden opportunities from existing operations, by adding value to the product, and improve training the staff

Financial Assessment if expansion without franchising:
a. Total CM% increase from 2012 52.93% to 60.50% in 2015 (Appendix 3)
b. Total profit show a positive increase from 18% in 2013 to 31% in 2015, far reaching the brothers’ preference of $1.1 M in 2015, Appendix 3 showed $1.4 M net profit
c. Return on investment assuming initial cash balance net of the minimal requirement ($20,000) was use to introduce new line of menus showed a remarkable result of 21% ROI in 2013 to 249% return

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