M1a3 livoria sandwiches, inc. Essay

This report examines strategic alternatives that would help owners of Livoria Sandwiches Inc. crap competitive advantage in a growing market, achieve its positivity target and maintain its material reputation of having a high quality and unique harvest in the industry. This report provides an analysis of the confederations current situation, identify strategic issues and analyze strategic alternatives. These also provide recommendations as to courses of actions the brothers should imbibe to reach their goal, and proposed implementation fancy. CURRENT SITUATIONStakeholders Preferences* Go franchising (Paul)* Enhance vegetarian menu (Sam)* Preserve quality and come across (Sam)* Realize $1.1M engagement income by 2015 (both Paul and Sam)*Avoid using line of credit (both Paul and Sam)Constraints* hard bills* One supplier of all store requirements/ingredients* Bank requires $20,000 minimum cash balance at all given time * Number of hours work* Working spaceEnvironmental Scan SWOT depth psychology Exhibit 1Current Financial Assessment Lowest profit of .29% compared to industry wide referable to $500,000 contingent liability booked in 2012. Removing this extraordinary item would result to 24% operating income which is higher(prenominal) than Dawkins industry benchmark 52.93% highest Contri andion margin than industry average High growth % versus set by the industry Available line of credit-Impressive performance among competitors whether franchising or non-franchising -Debt freeKey Success Factors* High-quality traditionalistic custom-made sandwiches developed through generations *Loyal client base and recognition* Effective obsolescence plan* energy DebtKey RisksLosing market share and competitive advantageLimited experience how to compete and to grow the tuneJust one supplier to sustain store operation/productionMAJOR ISSUES1. Increase profitability2. Growing marketSTRATEGIC ALTERNATIVES1. Expanding without franchising2. Open Franchise AgreementA NALYSIS OF STRATEGIC ALTERNATIVESI. EXPANDING WITHOUT FRANCHISINGPROSCONSDevelop product lines by introducing vegetable sandwiches (Appendix 4) shows an increase in cash inflow from 155% in 2013 to 319% in 2015 may cannibalized existing/old product lines which the corporation is being known for Attracts customers with other preferences and may compete in general in the industry by branching out in new locationsRequires additional training cost, space, line of credit strategy and building customers recognition, hire master help which may cause additional fund or used available line of credit Established and maintained more(prenominal) suppliers that would provide more options and grand discounts in large orders May affect existing quality standard of the custom-made sandwiches Discover more hidden opportunities from existing operations, by adding value to the product, and improve training the staffFinancial Assessment if expanding upon without franchisinga.Total CM% increase from 2012 52.93% 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 investing assuming initial cash 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 intentions 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 demo Statement 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. clear-cut FOR FRANCHISE AGREEMENTPROSCONS1. opportunity to grow faster than would be the case of training employees create native marketing strategy, sales and distributi on 1. significant disadvantage is loss of control, though substantial restrictions may contribute because of franchise agreement, franchise is still considered a 3 rd party who would seek to maximize return of investment at your expense 2. use of franchising fee/capital leave alone expedite 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 excel and go beyond to succeed due to incentive scheme and growth is dependent upon the triumph of your business3. substantial product knowledge and expertise has to be shared concerning your business although restrictions may reach but control over it is difficult to enforce and monitor 4. will increase purchasing role as franchising network grows and that eventually reduced cost to operate, gain profitability from small units 4. skills required to monitor, practise and support franchise/s are far different than handlin g your own employees 5. may nail from downturn like recession compared to non-franchise business 5. standard sets in doing franchise may alter your consumer taste. testimonialBoth alternatives if done in a well thought out plan may bear off companys growth strategically. Since it can be done drastically and uncontrolled way major(ip) casualties of which could be customer dissatisfaction and will adversely affect cash flow. IMPLEMENTATION PLANSo it is incumbent therefore to manage the growth process so we can obtain benefits in a modal(a) and long term. The following may be executed 1.Plan your elaborateness, not just by reacting to the circumstances but creating a solid plan, Ansoff Matrix (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 beca use expansion entails monetary implications, with expert help we can reduce the risk and address issues decent away. 4.Shop around, look for the target-location where marketing the product may established the same acceptance by the customers. 5.Develop a project management for the expansion in a formal way to uncover other possibilities 6. Keep customers inform 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.Inform target customers about the increase capacity, new menu and additional function to be offered. A good marketing device will help the company introduce this expansion in a high note.