Westlake Lanes Bowling

Introduction

Westlake Lanes Bowling is a bowling alley established in the early 1970s by Dane Sugar in Raleigh, North Carolina. This 16 lane, Ten-Pin bowling alley had a steady set of both casual customers who came to Westlake for birthday parties and family bowling, and the more competitive bowlers. As of recent, the profitability of the bowling alley has ranged from fluctuating year to year, to points where no form of profit appeared. This, added with the untimely death of Mr. Sugar, the Board of Directors (comprised by a majority of Mr. Sugars relatives) have decided to give a chance to Shelby Givens, an English graduate from the University of Virginia. Ms. Givens (Mr. Sugar's granddaughter), has decided to take on the position to help garnish some profits for the company. However, she does realize in order for profits to be obtained, changes will have to be made. Therefore, she must create a cost effective way to help obtain profits, while still maintaining low costs.

Key Issues

There are several key issues that Shelby needs to overcome. One of the biggest issues is that there has been almost no profit coming into the business. For the past two years, profits have been in the negatives, except for this past month when Shelby had to make quick decisions to help keep the business stay afloat for at least the following month.

Another key issue is that a $100,000 loan had been given to the company for renovations from Mr. Sugar. In addition to this, several bills have been unpaid, and the payables are 50% higher than expected. Westlake Lanes Bowling has to make a decision in the next Board of Directors meeting in order to determine whether they can stay afloat through a possible change in design (being either a kid-friendly environment or a posh lounge), keep trying to continue the business, or sell the business.

Internal Analysis

In order to fully understand the internal environment of Westlake Lanes Bowling, a VRINE analysis should be done. After analyzing all aspects of the business internally, it is clear to see that while the equipment is important, the employees are the most important part of the business. For the following analysis, it must be assumed that the employees discussed are the full time employees.

VRINE Analysis:

Are the employees valuable?

The employees are very valuable to the company, as they are the ones that operate the business at all times. If these employees were not present in the company, many of the day to day functions would not be completed. Another trait of value enforced by the employees is that a majority of the full-time staff have an extensive knowledge of all the equipment used within the vicinity. This means that they will be more aware of the problems that may arise and could also have solutions to help remedy the situation.

Are the employees rare?

While it could be argued that good employees would be common to find, it is very difficult to find good employees that have as much experience with the operations of Westlake Lanes Bowling, making them very rare. Gary Spalding (Maintenance), Shirley Smith (Back Office) and Daniel Sinclair (Cook) all have had a long career with Westlake, with tenures ranging from 10 to 23 years with the company. The three of them also deal with the major aspects of the business, reiterating the point mentioned before about how they may be able to fix situations that may infrequently appear.

Are the employees' inimitable/non-substitutable?

The employees working at Westlake Lanes Bowling are definitely both inimitable and non-substitutable due to the fact that the pay they are working for is lower compared to the amount the company would have to pay for new employees doing the exact same stuff. Raleigh is a blossoming city, with nearly one-third of its households having an annual income ranging from $50,000 to $100,000. The people currently working at Westlake full-time have annual incomes that range from $24,000 - $40,000, which is significantly lower than what the average income is for the city right now. If Ms. Givens were to get rid of these employees and hire brand new people with the same amount of experience, the salary she would have to pay would be significantly higher than what she would be paying now.

Are the employees exploitable?

The employees are definitely exploitable due to the fact mentioned before that they have an extensive knowledge of the equipment and utilities used in the building. An example of this would be Mr. Spalding's ability to resolve several maintenance issues by him, ranging from plumbing to maintaining the building to code regulations. Mr. Spalding also knows the lifespan of both the scoring technology and the display screens, making it easier for Ms. Givens to purchase new equipment before the old equipment expires.

External Analysis

After performing the VRINE analysis, it is clear to see that Ms. Givens has a good internal resource that would help build her company. In order for her to determine if she has a business that can handle a growing industry, an external analysis needs to be completed. For this case, the Porter's 5 Forces Model will be sufficient to determine if this is plausible.

Porter's 5 Forces Analysis:

Competitive Rivalry

The United States holds the largest number of bowlers (about 70% of the entire industry), with a total of 5350 20 lane bowling centers across the country. The industry is highly fragmented, as only a few bowling alleys are in each city. As a whole, the industry has grown significantly, however in recent years their numbers have started decreasing. This could be due to the fact that bowling league participation has been on a decline since the 1980s and the two markets focused on are the kids (16 and under) which make up 15% of the market and the urbanites (16 - 54) which make up 52%.

Threat of New Entrants

It is relatively easy for people to enter the industry, as the high costs associated with the business are related to the technology, such as the scoring system and the lanes. This cost can be mitigated with the fact that they have a life expectancy of 30 years, and the probability that distributors can subsidize costs with deals is very likely.

Buyer Power

When it comes to buyer power, the consumer has a powerful presence, as they