Shelby Given, the granddaughter of founder of Westlake Lanes has taken over as general manager of the company which has long been running in losses. There are several difficulties that the company is facing with respect to functioning of organisation, management of finances and the operational activity of the business. The external threat to the business is not from its competitors but from the recreational hang outs that are in the neighbourhood of the company and the customers have limited leisure time to check out these places.
Ambience of the place was poor and was completely outdated. By the time Givens took over the company it was sitting on huge debts to the banks that were overdue and the finances were poorly documented. Also, the employee morale was down and there was no accountability because of poor job description. Items that were offered in the place were bland and regular and comparatively expensive.
Maintenance costs have increased over the years and the machines were nearing their expiry period. There was no mechanism in place to track the customers and time spent to offer better customer services and employees paid little attention to the customers and often engaged in personal work in the office hours. Advertisement expenses were high and were mostly relied on the print advertisements and were ineffective. Shelby Given faces the critical situation of revamping the business by mid-2010 or else may sell the business breaking the legacy that was carried for years.
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Table of Content
Westlake bowling lanes is a family owned business in North Carolina situated close to lively neighbourhoods and restaurants which is running in losses for two years. Shelby Givens, the granddaughter of the founder of Westlake lanes, Dane sugar. She graduated from a highly rated business school and also had experience of working in Westlake lanes as a copy writer besides working as a creative director for a boutique advertising agency in New York City. She is conferred the responsibility of bringing Westlake lanes out of losses which is struggling with declining sales and increasing costs. Shelby Givens faces a critical situation that if profitability is not attained by mid-2010 then Westlake lanes would be sold for a loss.
Soon after assuming the responsibility as General Manager the situation when compared to the days of Dane Sugar was COMPETITION: Shelby Givens realised that the real competition to Westlake isn’t other bowling alleys, but other recreational activities like soccer practise and happy hour that competed for customer’s limited leisure time. BOWLING: Bowling is running out of fashion among the teenagers and college going students who were primarily the targeted customers. DEMOGRAPHICS and the CITY : Raleigh is one of the fastest growing cities in the United states and the city has blossomed in the recent years. The median age of the population of Raleigh was 31.9 and those aged between 25-44 accounted for one third of the population. ORGANISATIONAL PROBLEMS:
1) Lack of Job description in the organisation which lead to chaos and reduced the accountability in the employees of Westlake lanes. 2) The Leadership of Givens was received with scepticism and fear whether she would sell the company or fire the employees in the due course by mid-2010. 3) The employees of Westlake lanes were not confident of the business and many feel that it is outdated and does not cater to the contemporary customers. 4) Since the employees lacked the motivation to work there were no initiatives and innovation taking place in the organisation and the status quo was maintained since the days of dane Sugar. 5) Employees often felt that there was no enough work and the job was routine.
6) The role of the board was passive and they did not take interest in the way the business was running and there was infrequent communication from the board members. 7) Most importantly, the business lacked the vision and mission for the company and how it wants to position among its customers. 8) Lastly, the role of Givens with relation to Westlake lanes was more than just professional and she had the responsibility of carrying down the legacy. FINANCIAL PROBLEMS:
1) Expenses were not segregated and were lumped into a general “supplies” category which made it difficult to analyse the fixed and variable costs that the organisation incurred. 2) There were huge loans from banks that were overdue for payment 3) Unnecessary expenses like payment for services like carpet cleaning were over charged. 4) The premiums on health insurance was increased by 8% adding to already huge fixed costs on which the business was running 5) Declining sales lead to a fall in revenues by 40% compared to previous year. 6) Accounts Payable were 50% higher than the estimate given to her by the board. 7) Advertisement expenses which included thrice-weekly print advertisements were high. OPERATIONAL PROBLEMS:
1) Repairs and maintenance costs increased after late 1990’s and three machines were expected to soon expire by the end of 2010. 2) League commitment was dwindling in the recent past years. 3) The ambience was outdated and a renovation and services were badly needed. 4) Hours of operation were not in alignment with the leisure time of the customers. 5) Quality of food was poor and there were hardly any changes in the menu. CHANGES THAT WERE BROUGHT IN BY GIVENS:
1) She held meetings with vendors and convinced them to waive penalties and institute payment plans with no cost. 2) She tried to uplift the morale of the team and held ice breaking sessions. 3) She cut fixed costs by 8% and had plans to save another 8% in 2010. She also saved 30% in electricity bills. 4) She along with bullock did an anonymous demographic survey to collect credible data to plan things accordingly. 5) She tried to connect with customers and prospective customers by organizing leagues etc. 6) She cancelled unnecessary contracts that were getting renewed automatically. 7) Givens increased price of league , lane and shoe rental by 20%. 8) She fired bullock because she was her inappropriate behaviour in the organisation. 9) She made Sinclair look for new vendors for food.
10) She changed time slots and tried to improve the business.
How to increase the profitability and revamp the business?
Kid’s Arcade: Positioning the business for family and kids as recreational outlet Professionals: Positioning the business for league players and teenagers Continue with whatever Givens is doing: targeting both the family and league players Selling: Sell the business
CRITERIA FOR EVALAUATION
Financial forecast for the month of March by reducing expenses and increasing sales
EVALUATION OF OPTIONS
Kid’s Arcade: This option would require a further investment of $200K-300 and requires higher advertising expenses and the Management is not sure if it properly understands what the kids want. Professional Bowling Outlet: Since they have already invested a lot to procure the liquor license but made no use of it, the company can actually target league players and college students and introduce liquor which can increase the sale and uplift the business Continue with Whatever Givens is doing: Sustainability is a major issue and the business should continuously look how to increase the sales and since the threat for the business is not actually competitors but other recreational outlets present near by the organisation needs to innovate. Selling the business: Givens is emotionally attached to the business and was entrusted with the responsibility of revamping the business and moreover the business started running in profits RECOMMENDATION
It is recommended that the company positions itself as a recreational outlet for league players and college students and redesign the menu to the interests of its targeted customers by making use of the liquor license and by introducing happy hours depending on the current attendance of customers. Advertisement through radio is the best way to market about the place as print ads were not helping much. The margin for eatables and liquor was very high, so she can afford to lower the price of these products to increase the revenue by improving volume of sales ACTION PLAN
Introducing Liquor in the hang out place to attract customers Increase the working hours to late in the night.
Marketing about the place through radio and conducting free league competition. Increasing accountability in the Organisation and connecting with the employees personally. Changing the food menu to include what the near-by restaurants are offering.