Abstract Maximizing shareholder wealth requires a decisive strategy and a well-developed plan. It allows an investor to consider financial statements and growth strategies in order to establish a course of action. Case in point, one major franchising international business bought a well-known global restaurant business. The risks and expected return by these two companies may affect its long-term future goals. A profitable electronics company may lose its primary supplier in a strategic takeover in the industry. In an effort to maximize shareholder wealth, companies must develop a strategy for every maneuver and position in its respective market. Strategies for Maximizing Shareholder Wealth Trapped …show more content…
Applebee’s International, Incorporated Applebee 's is an American casual dining restaurant, head office located at Overland park, Kansas. Applebee has embraced neighborhood culture, providing high-quality food and drinks in a friendly and informal atmosphere. Applebee 's mantra is to serve food to the consumer in a faster and affordable price. IHOP, which franchises nearly all restaurants, said it hoped to employ the same strategy with the newly acquired Applebee 's. “We believe we have an opportunity to re-energize the brand and get franchisees, employees and guests all sort of thinking about the brand in a different way,” Julia Stewart, IHOP 's chairman and chief executive officer, said. How IHOP Benchmarking Relates to Lester Electronics Lester Electronics and Shang-wa face many challenges and issues that are similar to IHOP. For instance, employees and management at Applebee’s, Shang-wa, and Lester Electronics are concerned about the change because of uncertainty of what the future holds. Employees and management at Applebee’s and Shang-wa are comfortable with the way their operation runs and afraid of any major changes, which is not unusual because mergers or buyouts can create fears and concerns among employees. Evaluate Internal and External Growth Strategies Moreover, Applebee’s has certain ways when it comes to dealing with their suppliers, franchise owners, employees, and vendors; IHOP can and most likely will change
The organizational structure of the Cheesecake Factory demonstrates how organizational function, and organizational design can lead to having a successful franchise. “The company operates 150 upscale casual dining restaurants under the “Cheesecake Factory “brand“ (Datamonitor, 2011). The company utilizes point of sale cash register system to maintain financial and accounting controls in restaurants (Datamonitor, 2011). The company is known for the variety of flavors in cheesecakes, and also offers a wide selection of food to choose from in their daily menu’s.
When a certain point is reached regarding a company’s success, a set of different opportunities arise and partnerships may unfold. However, with every possible strategy available, risks and benefits also come into play; without discarding any of them beforehand, every option is a strong candidate until a final decision is made. In this case study we will analyze the current business strategy pertaining
Risks factors can also be related to franchises and the acquisition of Applebee’s. Concentration of Applebee 's franchised restaurants in a limited number of franchisees subjects IHOP to greater credit risk. Franchisees generally are not "limited purpose entities", making them subject to business, credit, financial and other risks. IHOP Corp. business strategy may not achieve the anticipated results for Applebee’s. The significant costs that they incur in connection with the acquisition may not be offset by cost-savings in the future. IHOP may fail to realize the anticipated benefits of the acquisition as a result of risks associated with integrating the business of Applebee 's with their existing business. IHOP may be unable to generate sufficient cash flow to satisfy their significant debt service obligations, which would adversely affect their financial condition and results of operations. IHOP believes the Applebee 's
Trader Joe’s is a leading firm that is taking over the supermarket industry. The company completely altered the idea of a traditional supermarket and turned it into a whole new experience for consumers. Through Trader Joe’s strategic planning, they’ve paved a way for consumers to have high-quality products while paying low prices. Trader Joe’s provides fewer products that are health-conscious, unique and privately labeled. Trader Joe’s has utilized this, secrecy, employee job satisfaction, culture and starting trends to its advantage. Within its industry companies are divided into different strategic groups. Aldi, similar Trader Joe’s strategic planning, is apart of the cultured-discount neighborhood market. This firm continues the low-stock, less-waste, small store, and low price method. A Walmart express used a hybrid strategy that made it a cross between a grocery, pharmacy, and convenience store. Tesco is the third that falls with small neighborhood markets strategy and focused on organic products, similar to Trader Joe’s. As the company grows and expands, there is caution in change of Trader Joe’s processes. With growth, there comes new management and employees which can alter the way a specific store is ran and there is worry of change in the stores normal procedures. Change that doesn’t follow the process could ultimately result in a downfall, so this can be considered a key challenge to watch in the future. Increased bureaucracy is additionally a
The organizational structure of the Cheesecake Factory demonstrates how organizational function, and organizational design can lead to having a successful franchise. “The company operates 150 upscale casual dining restaurants under the “Cheesecake Factory “brand“ (Datamonitor, 2011). The company utilizes point of sale cash register system to maintain financial and accounting controls in restaurants (Datamonitor, 2011). The company is known for the variety of flavors in cheesecakes, and also offers a wide selection of food to choose from in their daily menu’s.
Applebee’s Bar and Grill is a nice laid back scene that’s perfect for hanging out and getting good things to eat on a small dime. I recently visited Applebee’s located on Baseline and 24th street with some family and my time there was a little different than before. I’ve dined here very often in the past, but at one point I stopped going because their menu was disappointing and not appetizing. My most recent visit there were was a drastic turn for the good and made my night a success. They exhibited an overall great store environment with great staff and new menu with happy hour choices and main entrees.
In 2016, Applebee’s closed 46 of its locations. There are multiple factors that have contributed to this fault. They have failed to develop and keep its target market. Capturing both markets has caused misdirection to Applebee’s. The confusion of their position has proven to be costly. In 2016 $76M worth of new fire wood grills were installed throughout most locations. However, in the first year of its rollout, sales were down 4.2% overall. The buzz and excitement was not being successfully delivered to the millennial crowd. Simultaneously it too did not appeal to the Baby Boomers. Millennials value experiences over material goods. In efforts of trying to appeal to the millennial market, they have missed to maintain the relationship with the traditional root market, i.e., Baby Boomers. Their core competency became their core rigidity. The marketing effort that started in 2010 has failed. Sales were dismantled in attempts to capture the Millennial market, and were not being maintained from their Baby Boomer market.
According to Gitman, the goal of the firm, and therefore of all managers and employees, is to maximize the wealth of the owners for whom it is being operated (2009). The financial manager is responsible for acquiring sources of financing and allocate amongst competitive investment alternatives. The ultimate goal is to invest in projects yielding higher returns than amount of financing used to invest, so profits can be used satisfy claims and increase shareholder wealth. The issues facing financial managers are therefore to 1) increase sources of financing from investors and 2) increase shareholder wealth while maintaining a
“Financial Statements…provide key information for internal and external decision making.” (Horgren, et al., 2015). Through analysis of the financial information of both JB Hi-Fi and Dicksmith, I have found that investing within JB Hi-fi would be a more profitable and beneficial for shareholders. Moreover not only does JB hi-fi’s financial information (Appendix 1) show that return on Shareholder’s equity is close to 48% of each dollar
In today’s highly competitive market, the continuous changes that are occurring in the social, politic and economic environment create serious challenges in the corporate world. Corporations cannot afford to do business as usual if they want to remain in the game and be successful. In order to achieve their goals and objectives, they need to evolve, adapt, learn and apply different new strategies that will help them secure long-run success and performance. Among those strategies, we are going to discuss ten of them and their advantages in connection with corporation’s goals and objectives.
Strategy formulation has been acknowledged as one of the most crucial factors of ensuring the long-term growth of the business. However, the manner in which strategy is formulated, and most importantly, the nature of the strategy chosen for the company determines its future position in the marketplace (Grant, 2005).
This case gives comprehensive coverage of a firm’s decision to start an initial public offering but also to go through the process of going public. TRX is a company managing travel-and-data processing activities for its clients. Its target market has significant transaction volume in travel agencies, travel suppliers, large corporation and credit-card issuer. Regarding its service offerings, it focuses on transaction processing, data integration and customer care. Its fortune tied to the overall health of travel industry. TRX generates a lot of revenue but less profit. Trip Davis, Chief Executive Officer of TRX, Inc. decided it was time to raise capital in order to fund the growth of the company. His main focus was to accomplish a strategic recapitalization of TRX. This case gives a brief history about several events from the company’s incorporation in 1999 through the completion of an IPO in September 2005. The main goal is to raise capital but there is also a consideration of another reason for going public. In November 1999, they tried to go public but the IPO was never finalized. After the failed IPO, Trip Davis and TRX president decided to focus on strategic investors in order to raise $20 million convertible into equity at $11 per share. In 2004, he believed that Sabre, Inc. one of the largest strategic investors was not working for the best interest of the company. He took into consideration three possible capital raising options: IPO, private placement of equity, or
is one of Canada’s top hoteliers in the mid-market, owning interests in 16 hotels in Canada and the United States. Furthermore NGI is in ownership of 2,200 rooms in 17 hotels across Canada and the United States. The Company is expert in all facets of the hotel business, from marketing to building to management. Focused on creating the best return and value for all stakeholders, Northampton’s market-sensitive strategy is to acquire or build hotels that provide great value and superior accommodation. Gratefully, NGI excels in this sector by offering services that exceed expectations while still posting industry-leading margins. Besides acquiring and developing undervalued and underutilized hotel assets, NGI also provides superior overnight accommodations at mid-market prices. This has been done through aggressive marketing, re-branding and ongoing hotel upgrades.
2. Maximization of Shareholder wealth: Investment decision is linked with strategic and tactical business decisions and therefore need to achieve desired long-term objectives. The most usual objective being the maximization of shareholder wealth.
Nevertheless if companies operate in weak markets and fail to create growth and profit the concept of maximization of shareholder wealth is also an opportunity for self-regulation and security against threats for a company. This approach is in particular useful for safeguarding against difficulties arising from wrong or misguided leadership within a corporation. Shareholders of a company have the strongest interest in a company’s success because they often invest a lot of capital in the business and require revenues for their deposit (Moore, 2002). As a matter of fact, they become more