M1a3 livoria sandwiches, inc. Essay

This report examines strategic alternatives that would abet owners of Livoria Sandwiches Inc. discover agonistic advantage in a growing market, achieve its winningsability identify and maintain its strong reputation of having a high quality and quaint product in the attention. This report provides an analysis of the familys electric current situation, identify strategic issues and analyze strategic alternatives. These also provide recommendations as to courses of actions the brothers should adopt to reach their goal, and proposed implementation plan. CURRENT SITUATIONS subscribe toh grizzlyers Preferences* Go franchising (Paul)* call forth vegetarian menu (Sam)* Preserve quality and stop (Sam)* Realize $1.1M net income by 2015 (both Paul and Sam)*Avoid using line of credit (both Paul and Sam)Constraints* bullion* One supplier of all store requirements/ingredients* Bank requires $20,000 minimum silver balance at any given time * Number of hours die* Working spaceEnvironm ental Scan SWOT Analysis discover 1Current fiscal Assessment Lowest profit of .29% compared to industry wide due to $500,000 contingent liability booked in 2012. Removing this frightful item would result to 24% operating income which is higher than Dawkins industry benchmark 52.93% highest Contribution margin than industry average High harvest-home % versus bunch by the industry Available line of credit-Impressive performance among competitors whether franchising or non-franchising -Debt freeKey Success Factors* High-quality traditional custom-made sandwiches developed by generations *Loyal client base and recognition* Effective obsolescence plan* nada DebtKey RisksLosing market share and competitive advantageLimited work through how to deal and to grow the businessJust one supplier to give store operation/productionMAJOR ISSUES1. Increase profitability2. ripening marketstrategic ALTERNATIVES1. Expanding without franchising2. Open Franchise AgreementANALYSIS OF STRATEG IC ALTERNATIVESI. EXPANDING WITHOUT FRANCHISINGPROSCONSDevelop product lines by introducing vegetable sandwiches ( appurtenance 4) shows an increase in exchange inflow from 155% in 2013 to 319% in 2015 May cannibalized existing/old product lines which the company is being known for Attracts customers with other preferences and may compete broadly in the industry by branching out in naked locationsRequires surplus training cost, space, business strategy and building customers recognition, guide professional help which may ca intention additional fund or used available line of credit Established and maintained more than suppliers that would provide more options and huge discounts in large orders May equal existing quality standard of the custom-made sandwiches Discover more clandestine opportunities from existing operations, by adding value to the product, and improve training the staffFinancial Assessment if amplification without franchisinga.Total CM% increase from 2012 52.9 3% to 60.50% in 2015 (Appendix 3) b. Total profit show a positive increase from 18% in 2013 to 31% in 2015, far reaching the brothers preference of $1.1 M in 2015, Appendix 3 showed $1.4 M net profit c.Return on investment assumptive initial exchange balance net of the minimal requirement ($20,000) was use to introduce new line of menus showed a remarkable result of 21% ROI in 2013 to 249% return in 2015, Appendix 3 d.Cash budget projections with new line of products showed increase cash inflows from $556K (2013),$869K (2014) and tremendous increase of $2.3 M by the end of 2015 Appendix 2 e. Appendix 4 showing disputation of Cash Flow present a positive economic growth, from $423K cash inflow generated in 2013 155% increase in cash to $1.9M in 2015.Calculating IRR for the next 3 years showed 478% return. II. OPEN FOR FRANCHISE parallelismPROSCONS1. opportunity to grow faster than would be the case of training employees take a shit internal marketing strategy, sales and distri bution 1. significant disadvantage is evil of control, though substantial restrictions may apply because of privilege agreement, franchise is even considered a 3 rd foundery who would seek to maximize return of investment at your expense 2. use of franchising fee/capital will aid growth/network of the company than finding one for the business 2. part of your profit is use to utilized to promote your franchise/s 3. franchising motivates franchisee to go by and go beyond to succeed due to incentive scheme and growth is dependent upon the success of your business3. substantial product knowledge and expertise has to be shared concerning your business although restrictions may apply but control over it is difficult to enforce and monitor 4. will increase get power as franchising network grows and that eventually reduced cost to operate, gain profitability from small units 4. skills required to monitor, coiffure and support franchise/s are far different than handling your own emp loyees 5. may boom from downturn like recession compared to non-franchise business 5. standard sets in doing franchise may alter your consumer taste.RECOMMENDATIONBoth alternatives if done in a well thought out plan may manage companys growth strategically. Since it can be done drastically and irrepressible way major casualties of which could be customer dissatisfaction and will adversely pertain cash flow. IMPLEMENTATION PLANSo it is necessary therefore to manage the growth process so we can obtain benefits in a medium and long term. The following may be executed 1.Plan your expansion, not just by reacting to the circumstances but creating a solid plan, Ansoff hyaloplasm (Exh 2) can be a helpful tool in creating this roadmap. 2.Dont over expand, which is one of the biggest danger in growth phase. A 3 to 5 year projections plan capacity is doable and allow additional 10% capacity over and above that for challenging times.3.Get professional financial advice because expansion ent ails monetary implications, with expert help we can reduce the jeopardy and address issues right away. 4.Shop around, look for the target-location where marketing the product may accomplished the same acceptance by the customers. 5.Develop a project management for the expansion in a formal way to uncover other possibilities 6. sustainment customers informed about expansion plan and what to expect, when disruption may take up and how will the company will deal with it. 7.Announce the completion of the expansion. declare target customers about the increase capacity, new menu and additional work to be offered. A good marketing device will help the company introduce this expansion in a high note.