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Westlake Lanes

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Westlake Lanes is far from being one of Raleigh’s and the United States leading marketers of bowling. Shelby Givens, the new appointed general manager of Westlake, wondered if the company was on the right path. The imperative issues facing the general manager were, its sales revenue, expenditures and accounts payable were up, and the prolonged global recession worsened the situation. At the passing of its owner Sugar, the board of directors at Westlake assigned the job of the general manager to Shirley Smith who lacked the knowledge, skills and attitude needed to take on the role. These elements of the learning outcome (KSA’s) have to be aligned with the companies strategic goals to have to be effective. Change is another factor that has stalled the company’s growth. Due to there being resistance to change, there is no driving force for new customers. Westlake Lanes also required strategic management which would have been of great help in the short and long run, for the purposes of its accounting, marketing, strategic decisions, delegation of jobs, just to mention a few. Lastly, employees lacked the motivation to have to perform well in enough. Hence not committing themselves to their jobs. Internal analysis – VRINE Model

The VRINE model is a tool used to show that competitors in an industry have different resources and capabilities, and that having to change them is difficult. A company’s capability to use its resources to create goods and services that are valuable to its consumers is linked to its value chain. The VRINE model is therefore used to assess the value chain, addressing the following: value, rarity, inimitability, non-substitutability, and exploitability as a basis for competitive advantage. Is it Valuable?

Shelby Givens, the general manager of Westlake Lanes is valuable employee and resource to the company. The set-up of the company in itself is not valuable. This is because, the company is unable to use its resources or capabilities. Thereby, not enabling it to take advantages of opportunities or fend off potential competitors. It has not been adequately designed to accommodate its communities growing population and current demographics. The business model is valuable since it is based long-term partnerships throughout the value chain. Although, it has adopted more of a reactive strategy rather than a proactive strategy and because of this, it is not valuable. Westlake’s incapability to strategically allocate its resources also makes it not valuable. In addition, knowledge being an imperative aspect of a company is not being used to help in revitalizing its growth. The failure to have to carefully allocate resources and capabilities has made Westlake quite invaluable. Is it Rare?

The value chain of Westlake is not rare. Westlake was unable to implement quality control systems, had slow growing standards, and invested little to nothing in consumer branding and innovation. The marketing strategy of Westlake for food services is not rare, since Westlake is one of the many businesses in its area providing food to its customers. Although, having taken an initiative to invest in paper advertising, many other businesses have adopted this strategy and are outperforming Westlake. Between 2008 and 2009 advertisement decreased by 54.045 percent, which placed the company at more of a disadvantage and giving leeway to new entrants. Westlake integrated a supply chain with traceability where all food, drink products and other resources can be traced back to its suppliers. Its incompetency to differentiate its products, market and cost leader strategies gave the company less of a competitive advantage. Is it Inimitable?

It is very effortless for competitors to have to imitate the value system of Westlake lanes. Understanding and duplicating its system would be uncomplicated for competitors. This is because, Westlake Lanes has been unable to put in limits to imitate resources and capabilities such as time, high costs, and casual ambiguity. Another consideration would be employees low self efficacy and lack of motivation. Hence, potential competitors would be unlimited in their ability to acquire Westlake’s employees. Is it Non-Substitutable?

It would be very simple to substitute the value chain system of Westlake. Other competitors can achieve the same results by using alternative resources or capabilities that mimic the benefits of Westlake. They can do this by using well advanced technology and chances of this are high if they have enough capital, and have sky-scraping stamina even though a significant amount of time is required to have to do so. These competitors could achieve customization by making available various products of its own signatures in accordance to consumer desires. Critical to customization is a consumers ability to freely select from numerous products. Is it Exploitable?

Westlake has been unable to exploit its systems through quality, branding and innovation. They originally started out as one of United States finest bowling structures, due to there being a vast number of bowlers from early 1950s into the 1970s. Yet there was no brand to differentiate them from the 5349 bowling centers. A branding platform could have been developed around its name. The sentiment of the brand could have been used all around the United States and Raleigh in marketing, public relations programs and activities. This limited Westlake form exploiting its brand further. Business was not good for Westlake for a long time, but the death of Dane Sugar in 2008 put a strain on its growth advancement. Westlake’s decline reflected its inability to innovate and meet the demand of its community’s changing demographics and technology. As stated in the case on the news paper business article, Westlake lacked the exploitative capability, especially in its organizational analysis, organizational design, development, and implementation of its products and marketing processes. It has limited cash reserves that cannot bring sufficient market pull and product quality. Analysis of Internal Environment

The VRINE analysis clearly shows that Westlake has a valuable system in the sense of its brand name, but lacks rarity in its system that is easy to imitate and substitute. The combination of resources and capabilities, and the strategy of quality, branding, and innovation have clearly shown that the value system is unsuccessful. Although Westlake has been able to some extent exploit its system, further exploitation in its current market would be beneficial. This will put it at more of a competitive advantage as well as gain more customer base as well as bringing in customers from nearby cities. External Analysis – Porter’s Five Forces

Degree of Rivalry
In the bowling industry the degree of rivalry is fairly high since Westlake faces a number of large bowling centres in the United States. The industry is currently faced with price change, due to advancements in technology and economic instability. When the United States and other countries first began entering the bowling industry, it resulted in a start to create higher levels of rivalry for the industry most especially in the United States. The exit barriers are concentrated, since to sell off this type of a business and equipment for bowling is stagnant and may be difficult, but there is also a chance that the building could be used to produce other types of goods and services. Since many of the top competing companies are similar in size, it also indicates a high level of rivalry in the industry. It is fairly difficult to differentiate the bowling industry, the only way to do this is through strategic planning and developing new trends. Of which can be expensive and very few of the competitors in the industry can really afford to do this. The bowling industry is slowly growing, making rivalry likely to happen because the only way the company can gain revenue by taking its competitors customers. Threat of New Entry

To compete on the large scale with companies such as Westlake the threat of new entries would be low and at the same time somewhat high. To have to enter an arena such as this one research has to be made to enable its owner compete effectively. Although, those wanting to start up would have to put in a lot of time and investment to have to be able to compete on a national scale. It would require a considerable amount of time for the business to actually become productive, and would require lots of capital investment to purchase enough resources and right knowledge set, with the right kinds of people, at the right place and time for the entire process to work effectively. To start up an individual bowling alley would still require time and investment but on a smaller scale and this could be possible, though an individual owner competing against companies like Westlake wouldn’t compete well. Individual bowling centres would only be plausible if they were trying to join Westlake, or a company like Westlake in its designated region. Supplier Power

As a supplier of bowling, Westlake has some supplier power because it is the only operating bowling industry in Raleigh which differentiates it from other businesses in the city. By offering low quality products, as well as a differentiated product, Westlake is able to ask for premium prices for their services, but lacks the standards and procedures to implement this strategy. Buyer Power

It is also difficult to determine the degree of buyer power present in the industry. I understand that even though the industry is currently faced with challenges it is somewhat in a competitive market. This indicates buyer power may be present, and this power may be able to innovate and market products easily. Westlake buys its food and beverage products from other companies and it is therefore easy to determine the extent of their buyer power in this regard. Threat of Substitutes

With much knowledge to the actual extent of products offered it is easy to know what could be seen as a substitute for Westlake’s products. Essentially, any products similar to what they provide could be seen as a substitute. An exact list of substitutes are easy to provide without any further specified data on its product line. Therefore, threat of a substitute could be high just depending on what could be offered and what products could be seen as substitutes. Substitutes can be the kid friendly video and arcade games and a designated private party space to compliment the bowling centre. Conclusion

While there is a fairly high degree of rivalry in the bowling industry Westlake holds a considerably sturdy position because it is the only bowling centre in its location, even though having three other competitors in nearby cities. This could allow the business to develop a degree of supplier power and reduce the efforts of buyer power on its business. Overall, it is hard to determine all the aspects of this industry’s external environment due to lack of external information in the case. There is a degree of moderate threat of new entrants. Financial Analysis

Prior to 2010, from the six years of financial data presented in exhibit 2, I found that the company was performing badly, with a continuous downward trend from 2005 to 2009. Between the years 2004 and 2005 net income decreased by 61.6817 percent and there continued to be a gradual decrease in sales, gross margins and net income throughout the course of the years. The current assets from 2006 to 2009 were as follows: $50,900, $31,044, $32,610, $13,257; and current liabilities were as indicated in exhibit 3 of the case. Hence, the current ratio and quick ratio are the important ratios to measure the market liquidity and ability of a business to meet their liability. The financial data in exhibit 3 of the case is used to draw upon the ratios.

With that being said, Westlake’s quick ratio and current ratio have been decreasing overtime. The increasing liability is as a result of new business ideas, passed accounts payable and debts that have accumulated over the years due to the lack of efficient systems for record keeping and knowledge base to keep track of Westlake’s financial status. Westlake’s debt to its creditors have increased because it used the funds to invest in the business events and its restructuring. Total debt to equity ratio suggests the company’s financial leverage by dividing its total debt by shareholder’s equity. The total debt to equity ratio from 2006 to 2009 were as follows: 1.0981, 5.1379, 1.2371 and 4.1571. The figures go to show that most of Westlake’s assets are financed by debt and the rest is financed by money invested by its shareholders. The persistent fluctuation of the debt ratio and its continuous stay above 1.00 places the business at more of a risk.

However, the debt should be used to finance the new operations. This way the company could benefit from an increase in total company value. Return on equity (ROE) is a measure of how well a company has used reinvested earnings to generate additional earnings. Westlake’s ROE from 2006 to 2009 declined raising concern more especially due to the fact that the business has been in operation for years. It goes to show that money that has been invested has not been put to effective use. The company’s profitability has depreciated over the past four years while, net profit margin also declined progressively over time which goes to show the company’s inability to convert its revenues into profits. Finally, return on investment ratio indicates how effectively a company uses its capital to generate profits. Westlake’s return on investment has dropped significantly over time. Westlake should take this as a signal to start being more aware of its operation systems. Conclusion

In conclusion, according to the above analysis, the financial position of Westlake is currently unstable. All ratios have shown reason to be concerned of the operations of the business over the years. The overall performance suggests that the company has limited ability in business operating, innovating of new products and is also faced with slow liquidation of assets when needed.

Comprehensive Summation of Analyses
Westlake is currently in a fragile position in the bowling industry. They have valuable and rare resources which are fairly inimitable and hard to substitute in terms of Shelby Givens competencies and strategy. This therefore gives them a strong competitive advantage in the industry. While they are in an industry with rivalry Westlake does not do a good job of differentiating themselves from their competition, and creating a strong brand image. The company’s prolonged resistance to change it organizational strategy and design gives accessibility to rivals and new entrants. They are performing appallingly financially, which restrains them from investing in resources and capabilities that would be of great benefit the business. The weak market position and competitive advantage they have created are to the company’s disadvantage as they move forward and look to innovative ways to sustain the business.

Decision criteria:
Some of the main criteria that the alternatives need to consider are:
* Increase profitability
* Effect of product quality
* Time and ease required to implement
* The degree of investment required to implement
* Involvement of board and its employees
Alternative 1: Make changes to Current Activities
The first alternative Westlake could pick would be to re-evaluate its current activities. Part of this strategy would include implementing their two new strategies. These two strategies will aid revitalizing the company’s growth and also bring in a larger pull of demographics who in turn bring in profits. Hence, increasing Westlake’s sales and enabling it to reinvest some of its profits and later paying off its loans. Currently Westlake has investments which have decreased their liquidity but could increase their growth if they pay off. Financial aspects of these investments were discussed earlier in the financial analysis, with ratios to support them in Appendix A.

Pros * Predictable trends, familiarity with the market and industry. * Patenting the two strategy products could contribute to growth on the operational, organizational and individual levels. * They are already the leading marketer of kiwifruit worldwide * Company structure is good. Growers are content. Already very successful| Cons * Westlake may not meet its goals, due to unforeseen circumstances that may hurt it severely financially, could be risky * Investments may not pay off for the business, and the business could lose an unimaginable amount money.|

Westlake having to carefully analyze its business strategy and aligning it with its strategic goals will enable it have a stronger financial core. (See Appendix B) Alternative 2: Introduce signature foods

My second alternative would be to introduce signature foods that could be made by a subcontractor or they could have their own employed cooks. Only they would save more if they had the work subcontracted due to them being a smaller company. This could require time in terms of carefully implementing a business plan as well as it being a costly process, which could hurt existing accounts, but beneficial in the long run. The whole idea of signature dishes is very innovative and may appeal to its current customer demographics. They will have to be consistent with the development and ensure products are of high quality. Pros * Very innovative * May appeal to children and adults who have tried the pizza that’s already offered and are looking to try something different * Could have lower price and better taste, and they could make higher profit.|

Cons * Very high cost to implement and sustain * High marketing costs, new marketing will need to be done * Could require a lengthy process to develop and implement a variety of specialties and testing them before placing them on the menu.| Based on the forecast revenue of 2010, if Westlake launched new food speciality products, with 93% increase in sales, $30,000 average market research and 6% of revenue spending on promotion and advertising, Westlake will have positive excess funds of $484660.36. As seen from the result, the firm would do well if it kept it specialties. (See Appendix B) Recommendation

Since Westlake wants to maintain the business and has set fairly high goals, it needs to use a strategy that will allow them to expand and grow their business the most. The company is going in the right direction, but could benefit from a mixture of the alternatives. Therefore, I recommend Westlake continues to develop and implement strategies that appeal to its shareholders, and current demographics, as well as proceed with advertising within its community. Differentiating its food products would give Westlake a higher potential to increase its profits and reduce the level of debt. They could better cater to new demographics if they can come up with a new specialities of food that would be appropriate to sell to these groups of people, at lower costs and with a taste that people would appreciate; this would build on their competitive advantage. The development of new foods could help build on the company’s value and rarity, they would also be able to meet the demand of new markets, and by licensing the products, they would increase the rarity and inimitability.

Part of their advertising should also be focused on educating customers on health benefits of the foods offered. This would help them reach more health conscious markets, giving them an advantage over competitors who aren’t spending as much to advertise and might not be advertising the health benefits. Most especially because, most foods sold at gaming centres are not healthy, thereby making people not eat or buy them. Overall, this recommendation has a chance of improving Westlake’s performance and gives them a better chance of achieving their long term goals and increasing their competitive advantage. It will allow them enter and penetrate new markets with innovative and price conscientious foods that could appeal to mass crowds in nearby states, as well as advertise to draw in the health conscious crowd and cater to their needs. Implementation

Short-term – Begin Looking for Replacements
The hiring process for the marketing manager position for the sales and marketing department may be a long one, so it is important that Westlake Lanes begins looking for candidates as soon as they are ready to commit to the recommendation. As seen before, hiring someone to manage the sales and marketing can come with bias, so I think that this new manager should be an outside hire. Givens may look for candidates from other companies she believes to have the most potential, or be best qualified. This hiring process should take no longer than 2-4 months to complete. After a suitable candidate is selected to replace Shirley Smith, they will then have to be trained, and brought up to speed on day to day operations and any special projects. The newly hired manager should be up to speed and resuming all of Smith’s previous duties no longer than 4 months after they’ve been hired. Other employees will also have to be hired for customer service purposes. Mid-term – Implementation of New Marketing strategy and design of the company After the development of Westlake’s new marketing strategy, it would gradually start being implemented into the market place.

This may be an effort to raise awareness of the brand and make it something that can be recognized anywhere in nearby states. The new advertising should be started in Raleigh. With this strategy, Westlake will continue to grow the amount of customers in its current market. Towards the end of this period, approximately a couple of months to a year in, Westlake may begin to experiment with their new marketing strategy and begin executing it in their market. In what can be considered a short time frame on a scale of 5+ years, Westlake will see the effectiveness of its new advertising almost immediately with increased sales volumes most likely being observable in the first or second quarter of the second year. Long-term – licensing and Product Development

Westlake needs to continue to implement its strategies, but should also test them before effectively placing them in the business plan. A research could be carried out to see on how much customer are willing to spend, so they are able to place a price on products. Westlake will need all information available regarding customer preferences to reduce risk and maximize profits. Westlake can ensure leadership in the bowling industry if it maintains its marketing and advertising strategies.

Practicality of the Plan
The above plan is quite feasible, as the time range gives room to be very flexible. The first major undertaking, hiring a new manager, will be somewhat restrictive and may have some negative blowback on the company, until the new marketing manager is able to completely take over the sales and marketing departments. Contingency Plan

If the recommended plan fails, or they are unable to complete it due to investments required being too high, their best option is to sell the business. If after the first year, it is evident that too many resources were spent on hiring the new manager, then it will have to be at the discretion of Givens whether or not to go ahead with the implementation of new marketing strategy during the second year. The investments in the marketing and redesign of the company should be done at a time that will strain the company as little as possible.

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