Strategic Management For Competitive Rivalry

Internal Analysis

Strengths

• Loyal and experienced employees
• Good customer service
• High reliability for service

Weaknesses

• Lack of technical upgrades
• No coordination and communication among employees
• No specific organizational goal

Opportunities

• New information system
• Technical upgrades
• More varieties and quality of food

Threats

• Competitive rivalry
• Poor quality supplies from loyal suppliers
• High amount of loans

SWOT Conclusions

In the SWOT analysis, it has been found that the company’s main strength lies in the loyal and experienced employees who also have previous experience of serving the customers well. Furthermore, they have significant opportunities if they upgrade their technical setup and information system but face challenge from competitive rivalry as well as lack of proper suppliers. In addition, they have high loan values that they need to repay immediately. 

The location of Westlake in the downtown reduces the buyer power. In the town consisting of only 404,000, there are only three bowling alleys in downtown and hence, this is a very unsaturated market for bowling alleys like Westlake.

Westlake has the option to consult various suppliers for procuring food and drinks for their lounge. However, they have some specific suppliers that may not provide the best quality food and drinks always.

Westlake faces a lot of threat from new entries in the existing market especially in terms of economy and services. Initially, when Westlake was first setup, there were only a few bowling alleys around the place and there was no significant threat of new entry. However, with time more and more new bowling alleys grew up with better technical setups, ambience, food quality and variety, prompt customer service and others. In the near future, more technically advanced bowling alleys will grow up in the area resulting in further decline of Westlake’s business unless suitable upgrades are made.

There is a high threat of substitutes because of the location of the business. In the downtown area, Westlake is constantly fighting for the customer pool and moreover, new technically advanced bowling alleys with better ambience, food (quality and variety) and customer service will easily substitute Westlake in near future if suitable steps are not taken.

At the current situation, Westlake is not ready to start competitive rivalry with other bowling alleys and unless further positive changes and upgrades are made, the company will slowly lose out to the rivals and will eventually need to be shut down. 

Political – From the analysis of the case study, it has been found there are no political influences directly on the company although the drop in revenue may have been due to stiff competition from other nearby bowling alleys that are backed politically.

Economical – Local economy has significant influence on the business of Westlake as it is mainly based on a downtown area of town consisting of roughly 400,000 people. It has been found that the operational costs increased significantly whereas the revenues fell during the period of 2004 to 2009.

Social – Social factor is the driving force of the sustainability of Westlake. The main target of all nearby bowling alleys is the young customers who spend a lot of time in bowling and eating in the lounge.

Technological – Westlake has till now has not emphasized on the development and upgradation of the available technology; the existing technical setup was installed in the 1980s and are still run with some periodic maintenance.

External Analysis

Environmental – The business of Westlake has been more or less unaffected by any environmental factors. Further, it has low impact on environment except for the power consumption and dissipation of smoke during cooking of dishes.

Legal – The legal obligations and costs for Westlake are low due to the small size of the organization. Some legal obligations they need to follow are health and safety guidelines, trade license and alcohol license among others.

From the PESTEL analysis, some of the main external factors have been highlighted that have effects on the business of Westlake. It can be concluded from the table that the PESTEL elements had some direct or indirect effects on the current condition of Westlake and the negative effects highlight the lack of suitable steps taken by the company managers to improve the business with changing times.

Over the years from 2006 to 2009, the return on equity of the company has decreased from 52% to -250% and along with it, the debt to equity ratio has increased from 0.73 to 2.93 in 2007 then decreased to 1.17 next year and again increased to 5.36 in 2009. Finally, the current ratio started from 1.38 and decreased consistently to 0.06 in 2009.

It has been identified from the analysis that the alley can be upgraded into either a trendy alley serving alcohol for the adults or a child friendly space where no alcohol will be served and the children will have their own play area. The decision criteria for the two proposed options are as follows.

The two possible and practical options for the company are as follows.

Adult Lounge with Bar – This is one practical option where as an adult lounge can be setup with a bowling alley as well as restaurant cum bar area where the adult population can enjoy. The advantage of this option is that although the customer count may get limited but there will be high amount of revenue from the sales of food, alcohol and bowling tickets.

Child Friendly Alley – Another practical alternative is setting up a child friendly bowling alley where the child can also participate in the games and there will be no alcohol to be served in the lounge. This option will help gain more customers but the revenue will be limited. 

The child friendly alternative will attract people of different ages, especially the young professionals who are interested in playing bowling. Furthermore, the child friendly environment will also prevent alcohol consumption and create a peaceful and friendly environment inside the alley. Further, the two alternatives are compared as follows.

Some of the proposed recommendations are provided and justified as follows.

Upgrade Information System – The company must upgrade the existing information system in order to provide better customer service as well as advanced methods for serving the customers (for instance, digital tokens for playing, card payments, online subscription and premium benefits, etc.).

Develop Mission and Vision – The company must develop a mission and vision statement that will help the employees target specific achievements for fulfilling the missions of the company.

Financial Analysis

Half Yearly Appraisals – Appraisals are required in order to acknowledge the employees for their hard work and achievements within the company.

Change Suppliers – The company should find suppliers with better quality products and cheaper prices in order to reduce operational expenses.

The detailed action sequence is shown as follows.

Analysis (Long Term) – To analyse the existing situation at Westlake using analysis tools like Porter’s Five Forces, PESTEL, etc.

Develop (Long Term) – To develop, upgrade or install new information system by installation of new hardware, software and subscribing to cloud computing

Technical Overhaul (Long Term) – To develop the exteriors and interiors of the building itself (interior furniture, room decorations, wallpapers, paints, etc.)

Mission and Vision (Short Term) – To develop specific new mission and vision statement for the company (should be based on enhancement of business, setting certain targets and better ways to satisfy customers)

New Financial Plan (Short Term) – To develop new financial plan and manage investments, loans, payments and others

New Business Strategy (Long Term) – To develop new business strategy that will have certain targets to increase customer base, gain competitive advantage over the rivals and increase annual revenue and profits

Communication Plan (Short Term) – To prepare better communication plan for the stakeholders by scheduling periodic meetings, verbal communication and providing regular daily progress report to the organization owner  

The action plan must be controlled in order to prevent scope creep and over expenses. Suitable monitoring must be done by the manager and other related stakeholders should report everyday to the manager regarding the progress of the action. The contingency plan to be followed is explained below.

Sponsor – In order to prevent any further losses due to loan, the company should choose sponsors instead who will fund for the project as per the requirements and terms and contract.

Communication – During execution of the action, the employees will need to communicate with each other in order to avoid any contingency that may occur during the project.

Conclusion

From the entire analysis, it can be concluded that Westlake Lanes has already lot of promise in the market with the able management of Shelby Givens. However, there are several internal and operational problems due to which, the company is facing serious consequences. These problems can be solved by actively upgrading the entire alley including its information system, customer service, food and ambience. The benchmark should be set of a high quality that will help them establish high competitiveness in the market such that the newcomers in the business do not gain immediate market share.  

References

Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage. Retrieved from: https://books.google.co.in/books?hl=en&lr=&id=UnYWfXigU4UC&oi=fnd&pg=PP1&dq=Eden,+C.,+%26+Ackermann,+F.+(2013).+Making+strategy:+The+journey+of+strategic+management.+Sage.&ots=FDw93yB-Zw&sig=udSUVOhIFhBmnJxsMNooXqDyy5g

Hill, C. W., Jones, G. R., & Schilling, M. A. (2014). Strategic management: theory: an integrated approach. Cengage Learning. Retrieved from: https://books.google.co.in/books?hl=en&lr=&id=Qy8aCgAAQBAJ&oi=fnd&pg=PP1&dq=Hill,+C.+W.,+Jones,+G.+R.,+%26+Schilling,+M.+A.+(2014).+Strategic+management:+theory:+an+integrated+approach.+Cengage+Learning.&ots=o9kGShQUwu&sig=YC7Uaqt201k9iHWhs_xPW5DJIDQ#v=onepage&q&f=false

Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a digital strategy. John Wiley & Sons. Retrieved from: https://samenvattingen.student.utwente.nl/images/c/cc/SMOI_2002_Samenvatting_Peppard.pdf

Peteraf, M., Gamble, J., & Thompson Jr, A. (2014). Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education. Retrieved from: https://101.99.50.98:8080/dspace/handle/TVDHKT/28327

Rothaermel, F. T. (2015). Strategic management. McGraw-Hill Education. Retrieved from: https://dspace.elib.ntt.edu.vn/dspace/bitstream/123456789/7607/1/Frank%20Rothaermel-Strategic%20Management.pdf

Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd. Retrieved from: https://s3.amazonaws.com/academia.edu.documents/51201224/Operations_Strategy_B.pdf?AWSAccessKeyId=AKIAIWOWYYGZ2Y53UL3A&Expires=1513157001&Signature=jC4AkqzW8n%2FCz5wmXKtvQPoTJnM%3D&response-content-disposition=inline%3B%20filename%3DOperations_Strategy_Second_Edition.pdf

Wheelen, T. L., & Hunger, J. D. (2017). Strategic management and business policy. Pearson. Retrieved from: https://fratstock.eu/sample/Solutions-Manual-Strategic-Management-Business-Policy-Globalization-Innovation-Sustainability-14th-Edition-Wheelen.pdf

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