Introduction& Problem Diagnosis

            This management report attempts to perform a business analysis for one of the existing restaurant/tavern owner who is considering the opportunity of investing in a new system called as BrewPub. This BrewPub would craft the beer for the restaurant customers in-house. The case provides us with the turn key system characteristics. There are about 9 products which would be produced by the BrewPub facility and these would be sold to the customers either through retailers within the restaurant or through the wholesalers. The business owner wants to know how to enhance the value of the business by incorporating certain functional strategies within the BrewPub operations.

            This report is structured by first highlighting the goals and objectives of the new business opportunity and then the business strategy for the next three years has been stated. Finally, the core functional strategies for the two of the most influential areas for the business have been formulated along with the implementation plan and recommendations. Conceptual study has been conducted based upon the range of different decision support tools which are sensitivity analysis, break-even analysis and the decision trees(Lainema, 2003).

Goals & Objectives

            The overall goals of the company are to become more competitive in its regional market and to enter into a new but related business area. In order to achieve this goal for the company, the owner of the company is capitalizing on the regional and the national trends which have always show a high degree of interest in the specialty beers and the craft beers. The long term goal for the company is to achieve a competitive edge by providing its customers with craft beer products in-house.

            The objectives of the company would be short term and for the next three fiscal years the company will want to generate higher contribution from each of its products and also contribute to the overall profitability of the company. If we look at the pro forma financial statement which have been prepared for this business after the investment and implementation of the BrewPub plan then it could be seen that the business does not generates profits in the first two years of operations and it is in year three that the business generates a profit.

Business Analysis (Conceptual Study)

            Since the business has not generated good profits and the cash balance by the end of year 3 is negative. Therefore, a conceptual study needs to be conducted for the core business functions in order to devise specific functional strategies for improving the profitability for the business and generating extra sales and cash flows for the business in the planned first three years of the business(Jackson, 2000).

Business Strategy

            The business strategy for the next three years for the operations of the BrewPub is shown in the excel spreadsheet which is based on a number of the estimates from the industry and assumptions. The aim of the business is to generate profit from the $ 150,000 investment in the BrewPub operation. All the fixed costs, marketing costs, employees salaries, loan payments, depreciation and utility expenses have been assumed as shown in the excel spreadsheet pro forma financial statement.

            The selling prices for all the 9 products of the company along with its sales volume have also been estimated based upon the industry estimates. Based on these numbers, the contribution margin, profitability and cash flow position has been computed for the period of the next three years.The current figures show that the investment plan for the next three years lacks in most of the functional areas and there are many improvements which could be made to the functional areas of the business such as marketing management and innovation and technology management(Joshi, 2006)...................

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