Memorandum To: Shelby Givens (General Manager) From: Subject: Westlake Lanes: How can this be saved Date: March 10th 2010 ______________________________________________________________________________ As you know your business Westlake Lanes is currently not performing up to the mark. I think there are a lot of steps we can take for the betterment of the business. There are many problematic issues with the business and I have identified some of the core ones-: • It feels old, no major renovation done in a long time • More machines need to be replaced, maintenance expense is on the rise • Since 2004, Revenues have fallen by 50% and healthy profit five years ago has turned into a loss • Not targeting the right demographics of …show more content…
This option still doesn’t take advantage of the growing population of the youth either. Option 4: Sell the business In this case the business can be sold without taking a loss. At the end of 2009 as per the data provided total liabilities are $154,208, assets constitute $191,303 and owner’s equity is $37,095. If we sell the business now, the shareholders can still make some money out of the venture and get out of the business before the situation exacerbates. The disadvantage of this option is a lost opportunity. The main threat of entering in the bowling business is the huge investment in the construction of the building and the lanes, which in this case is already there. The business is on a long-term lease and is paying relatively low rent. You will also be letting go of a 30-year-old brand that people recognize. Recommendation: My analysis shows that going for the Lounge option will yield the highest benefit. As per appendix A, we can attain dividends of $ 238,468 within one year of reopening of the lounge even by having average sales. The figure obtained here is the most realistic out of the three cases and yields a healthy return on investment. Raleigh North Carolina, which has grown at a very high rate in the last ten years, also has a huge youth population, which is our target market. The location
The Urban Bowling Lounge option is potentially quite lucrative; however, it is also arguably the
Throughout the years Westlake Bowling lanes performance level was reducing, Shelby Givens was appointed as the general manager in order to make the situation better and repay the long-term loans. Board faced the situation whether to sell the business and repay the loans (or) to continue its operations as Shelby Givens plans shows promising revenue in the future.
Keep using the old machine incurs higher cost(higher EAA) than replacing it with the new one. Therefore assuming sales are equal for both cases, when sales is smaller than 328338.07 and greater than 434036.67, Fonderia di Torino S.p.A should definitely replace the old machine with the new automated machine.
the company’s margins have shrunk by 10% in the past year due to rising costs and growing competition.
Due to the recession the company is experiencing a decline in profits, however, the business remains profitable. Potentially, the recession could continue and business may decline further. A proactive plan is better than being reactive in regards to addressing the declining profits. Layoffs are the quickest and easiest solution to the issue.
Given the net sales in 2011 is still higher than 2010, we can assume the problem is most likely with its operating cost management. On the other hand, HH’s assets turnover rate dropping 0.30 from 2010 suggests an inefficiency of generating more sales with its increased assets in 2011.
Using this business plan, even though the investment would be late, it would take another 3.5 years for WBL to break even, considering profit as $6100 per month (profit 359.1% of the monthly average in 2009) and an investment of $240,000.
Overall, the profit before tax of the Manufacturing Group decreased 13.24%, and the Retail Group decreased 10.77%, for a total decrease of 11.28%. In simple terms, expenses have increased, profits have decreased, and Harrington Collection hasn’t performed very well over the last several years.
Profitability ratios decreasing from 2005 to 2006 although the sales has increased substantially and the net income as well but not in the same percentage of increase due to the high reliance on debt as the interest expense increased as mentioned before.
| Westlake Lanes has been in existence for over 30 years and this makes it valuable because of the customers’ sense of trust and loyalty towards it and also because of its prime location in downtown close to lively neighbourhoods. Givens educational background and skills increases the viability of the business.
Over 30 divestitures in under 20 years in efforts to only keep business that would continue to add value
1. Statement of Problem: What are the problems being faced and the most important 3-4 decisions the company needs to make regarding the situation of the company in China.
On the other hand, Mega Corporation’s financials are going downhill. Despite having a strong balance sheet, there was a benefit pension plan that was hugely under-funded. The income statement was worse. Sales were nearly cut in half, due largely to the fact that foreign competition was squeezing out the margins. Profits and cash flow dropped even more than sales.
Any other competitor who accepts the offer by the wholesale customer could also affect the brand value and market share of West Lake.
OB10 has been incurring losses for two consecutive years. The loss is attributable to the high staff cost. In order to ensure OB10 has sufficient financial resources to continue its operation, measures to reduce cost as well as to increase revenue must be taken.