Key Issues
The future of Westlake Lanes seems uncertain even though the company has generated its first month of profits over two years. Westlake Lanes’ board has to repay the loans that were issued by the company 16 months before. Therefore, the company needs to track alternatives in deciding the best solution for the repayment of funds and devising strategies for the future sustainability of the company. Shelby Givens, the general manager of the company is also worried to devise further strategies if the loans could not be repaid. Shelby Givens had to pursue with a decision along with the backing of board’s consensus that either the company shall target that involves families with kids, or the company shall target single young professionals.
Analysis
Porter’s Five Forces
Threat of a New Entrant
The threat of a new entrant is moderate in the industry as there are many opportunities for the new companies to enter the market. However, since the existence of Westlake Lanes in relatively good location and a 30 years of experiences in the particular market has created brand loyalty for the company which would unlikely to diminish at the moment. The company has demonstrated strong brand loyalty for recreational and league customers which would be difficult for the new entrant to gain a healthy market share. Although due to the poor financial condition of the company, company faces a likely threat to be overtaken by new entrant that could exploit company’s weaknesses.
Threat of a New Substitute
As Raleigh is included amongst the top ten high growth cities of the country, this proposes many new substitute businesses for companies in the city. Since there are not many competitors in the market, however, substitutes play a major role in affecting other businesses. There is a long list of activities of indoor games which however, does not compete directly with the bowling alleys but they are more cost effective for customers and are more enjoyable than bowling. Therefore, the threat of a substitute is rated high for the particular industry.
Competitive Rivalry
Since Westlake Lanes is the only company present in the downtown location, therefore, the company faces a low competitive rivalry in the industry. However, it is important to consider the impact of substitutes and other low-cost activity businesses for the company. There are also other bowling alleys in Raleigh, but they are far away from Westlake Lanes which reduces the threat of a competitive rivalry.
Bargaining Power of a Supplier
Since Westlake Lanes requires many suppliers to run its bowling alley business which includes bowling equipment, bowling shoes, food and drinks, and many others. However, Givens have managed the suppliers on the basis of cost efficiency as identifying suppliers that have the highest quality supplies at a lower price. Therefore, bargaining power of a supplier is relatively low because the company has the ability and options to pick an alternative supplier based on cost efficiency. It is comparatively easier for the company to shift to any other supplier which reduces the bargaining power of a supplier.
Bargaining Power of Buyer
Even though the company has maintained high brand loyalty for their recreational and league customer, but a competitive pricing offered by the company’s substitutes have increased the competitiveness in the industry. As the company increased the rent price on bowling shoes, there had been a significant decrease in the customer traffic and the purchase of food and drinks. This results in a strong bargaining power for the industry. The low cost activities and pricing in the industry have affected the customer traffic and a decrease of 3% in the total revenues for December.
VRINE Analysis
Long History
The long history of the company is valuable for Westlake Lanes as it has been operating since 30 years. Due to its long existence, the company has managed to achieve loyal customers which in turn are very profitable for the company. The particular capability is also rare as in the current business environment; it is difficult to retain customers. However, the particular capability is not costly to imitate but it remains non-substitutable. Competitors of Westlake Lanes cannot easily substitute the particular capability as it requires long hard effort to deliver excellent service quality at regular intervals. This capability also remains exploitable as it can exploit loyal customer base to start new activities. However, since there are many competitors to offer competitive pricing on different activities.................................
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