Westlake Lanes Harvard Case Solution & Analysis

Family Owned Business

The particular capability of the company is not very valuable as it does not have a proper governing structure that could make decisions for the organization. Due to the lack of management rules, the employees of the company do not have knowledge about their job description and their role in the business.

The particular capability is not rare as there are many small companies operating as family owned. Similarly, the particular capability is neither costly to imitate nor non-substitutable. The company cannot exploit the particular capability as this approach is limited and does not involve an organic organizational structure which is very essential for the modern business to succeed. Therefore, the particular capability has been placed in the first row which is a competitive disadvantage for the company and also results in below average returns.


As mentioned, the location of Westlake Lanes bowling alley was located amongst the best place in the downtown which was a competitive edge. This competitive edge was gained due to the presence of the company since 30 years. The particular capability is valuable and as well as very rare. A good location is hard to get which makes it very rare, thus, it is also costly to imitate or to buy a similar location in the current situation where the prices are high. The capability of location is also non-substitutable as there is no substitute for providing alternative for good location. Furthermore, the capability can also be exploitable which refers to the good offering of services by the company. Therefore, the capability has been placed in the fourth row where the company would have sustainable competitive advantage and above average returns.

Bowling League Market

The targeting of bowling league customers have remained company’s good strengths to earn profits. As Givens’ grandfather was also an avid player of bowling in his time, this gave an edge to develop loyal customers. The particular capability is valuable for the company, but it is not something very rare. The particular capability is neither costly to imitate and nor non-substitutable. Furthermore, the capability cannot be exploitable and hence, it is placed in the second row.

Loyal Employees

The employees were loyal to the company as they took care of the company in the absence of Givens’ grandfather, and also where there was no one for guidance and directions. These employees lacked certain amount of skills, but they were honest with the company. The particular capability is valuable and also rare. Since employees cannot be gained through money or any other material things, therefore, it is not costly to imitate but it is the culture of the organization which makes certain employees. Moreover, it is non-substitutable and can further be exploited by the company. Hence, it has been placed in the third row with temporary competitive advantage and average returns.

Financial Analysis

Gross Margin

The term refers to the earning of the company after the cost of goods sold is deducted from the amount so that it could be used to cover other expenses. The gross margin of 82% in the year 2009 makes it a very healthy ratio as it means that the company earns 82 cents for each dollar of revenues. This also refers to the statement that the COGS for the company is pretty much low. The trend shows that it has been increasing since 2007.

Current Ratio

The current ratio determines the company’s ability to repay their current debt. This also refers to the ability the company possesses to pay back their financial obligations. The current ratio of the company had decreased from 1.3 in 2008 to 0.4 in 2009. This refers that the company’s ability to pay back current debt has decreased which remains a negative indication for the company.

Debt to Equity Ratio

This particular term measures the financial leverage of the company which helps identifying which part of the company’s equity and debt is used to finance assets. If the company possesses a figure of greater than 1, then it is considered as the company is focused on financing its assets through debt which does not indicate a healthy financial strength. However, if the figure lies below 1, then it is considered that the company uses equity to finance majority of its assets which is good for the company. The debt to equity ratio has jumped from 1.2 in 2008 to 4.2 in the year 2009 which is all time high for the company which indicates very poor financial health. The jump to figure 4.2 could be the result of the loan which was taken by the company’s board of about $100,000 in the late 2008................................

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