INTRODUCTION
The report evaluates the Livoria Sandwiches Inc. strategic alternatives, makes recommendations and proposes implementation plan in order to achieve its net income target of 1.1M by 2015, resolve short-term cash shortage and gain market share.
CURRENT SITUATION
Vision. “Livoria will be the first choice of Dawkins residents who are seeking a variety of high-quality fresh sandwiches at reasonable prices.”
Mission & Core Values. “We are the highest-quality sandwich shop in Dawkins because of our legendary sandwich-making processes and our commitment to using the highest-quality ingredients.”
Stakeholders Preferences
Paul:
- Need to grow
- Franchise
Sam:
- Expanding menu – vegetarian line
- Maintaining control
Both:
- 1.1M net income by 2015
- No additional borrowing
Constraints/Targets:
- Labour (no further staff hiring)
- Bank requires a minimum cash balance of $20,000 on hand at any given time
- Existing Space
- Available cash
- 1.1 million in net income by 2015
Financial Assessment:
Livoria 2012 financial performance is higher than average industry benchmarks:
- Contribution margin of 53% versus 43%
- Operating profit of 24% (if excluding onetime extraordinary item 500,000 contingent liability) versus 19%
- Growth rate 5.4% versus 1.2%
Company has no debt and has an available line of credit.
SWOT
Based on SWOT (see Appendix 1) analysis next key elements have been identified:
Key Success Factors:
- Established brand in high quality traditionally custom-made sandwiches
- Restaurant’s location and decor
Key Risks:
- Ingredients supply disruptions
- High competition growth
STRATEGIC ISSUES AND ALTERNATIVES
To achieve company’s goal of 1.1 million in net income by 2015, without borrowing from existing line of credit and meeting cash flow demands, Livoria is considering two options:
- Expand menu by adding vegetarian line
- Start franchising Livoria brand
