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Westlake Lanes How Can This Business Be Saved Case Solution
Shelby Givens faces a huge challenge with the declining sales and the increasing costs of Westlake lanes. She prioritized cost-cutting above all and increased the revenues by 6% by decreasing costs. However, this revenue increase was not because of an increase in sales. The future of the company was faced with several alternatives that included selling it, expanding it or keep the operations as it is. The expansion had further two alternatives out of which improving the kid’s facilities was recommended because of the higher attractiveness generated by marketing to the kids.
Following questions are answered in this case study solution
What problems does Shelly Givens face when she begins work at Westlake Lanes in March 2010?
What advice would you give her to help her prepare for her first day?
By the end of the case, what actions has Givens taken to address the issues raised in the above question?
Which of Givens’s actions were appropriate? Were any inappropriate? What other actions might Givens have taken? Consider organizational, marketing, operations and financial actions.
Do you agree with Givens's prioritization of the challenges?
Is Westlake a viable business? What is the required number of customers per day for Westlake to achieve breakeven in March 2010?
By the endpoint of the case, the business is cash-flow positive. How should Givens evaluate whether to build, sell, or liquidate the business? What information does she need to make this decision?
What is your assessment of the alternative opportunities that Givens begins to consider at the end of the case?
Case Analysis for Westlake Lanes How Can This Business Be Saved
1. What problems does Shelly Givens face when she begins work at Westlake Lanes in March 2010?
The first problem that Shelby faces at the beginning of March 2010 was the high level of costs. In the beginning, in 2009, the company had high levels of unpaid debt that led to the development of the cost-cutting strategy. Some costs had been increasing year over year. With no substantial increase in revenues, the increase in costs such as healthcare insurance had to be cut. There existed some services that were not essential to the business. These services also cost the company a lot despite being unimportant to it. Also, the company was in contract with other companies that got renewed automatically, and there was no thought given to it. This meant disadvantages in some contracts. Also, some services were being utilized from service givers charging a premium from the company. These problems surfaced in 2010 after Shelby was done dealing with the problem of unpaid services.
2. What advice would you give her to help her prepare for her first day?
It was stated that Shelby was overwhelmed with the problems on her first day. She was not aware of the proximity of many problems, and this put her in a situation to sort out things on her first day. She was left to understand the operations on her first day including financials, employee morale, sales and marketing, and other operations. She should. I have prepared for her first day by understanding the financials of the company. This would include many other operations of the company, their expenses and the revenues generated by these operations. Since finance was a supporting function to all other functions, it was the most important one to help Shelby prepare for her first day.
Shelby graduated in March 2005 and joined in June 2009. Before joining, she should have studied the financials of the company. This understanding was gained after she joined the company that left her in a chaotic situation.
3. By the end of the case, what actions has Givens taken to address the issues raised in the above question?
Givens adopted a cost-cutting strategy. This strategy included all functions of the business including employee costs, extra costs for premium services, fixed costs, and other miscellaneous costs. She also renegotiated some contracts that had been kept on a renewal every five years without considering the benefits that could be gained out of renegotiation. The cost-cutting in insurance was 13% and that of the fixed costs was 8%. Also, utilizing government rebates allowed them to invest in the maintenance of light bulbs reducing electricity costs by 30%. Also, the high level of unpaid bills was resolved by talking to the vendors who reduced their bills because of the family relationships with them. This cost-cutting allowed Givens to increase the revenue for the company. The sales also had to be increased because the market opportunity was great and it could be exploited. However, this was a problem that had to be solved backed by these actions that Givens took.
4. Which of Givens actions were appropriate? Were any inappropriate? What other actions might Givens have taken? Consider organizational, marketing, operations and financial actions.
Givens focused mainly on cost-cutting to increase revenue, there was no focus on increasing the sales of the company and no strategies formed for this. The increase in revenue was not because of the increase in sales, but because of the cost-cutting. Once the costs were cut, there was no other option to increase the revenue by cutting further costs. Therefore, if the company were not changed, and kept moving at the same pace, there would be no improvement in the financial figures. She needs to convince to board member to let her try the expansion strategies rather than just focus on cost-cutting. She reduced the advertising expenses in the search for more cost-efficient ways of advertising including the internet and email.
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