Identify the component problems plaguing a seemingly moribund small business, addressing most functional areas.

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This case can be used effectively to help students explore implementation of a turnaround in a small, relatively simple business.

Learning Objectives

1. Identify the component problems plaguing a seemingly moribund small business, addressing most functional areas.

2. Evaluate potential solutions, at both the strategic and tactical levels, that are intended to create a turnaround, making the business profitable in the short term.

3. Examine the entrepreneurial impulse that drives certain business managers to go beyond turnaround to transformation, and study the strategic choices that such managers make along the way.

Features and Characteristics of the Case

This case might be described as a large drama enacted by few players performing on a small set. The case has a strong personal aspect: this is a family business that the protagonist (hero, or positive focus of the case) has known for much of her life.

The narrative was written in a manner that should help students focus simultaneously on small details and on larger environmental issues such as the demographics of bowling as a recreational sport (note the brief appendix on the history and trends of bowling centers in North America).

To promote an informed discussion, students are asked to seriously evaluate Shelby Givenss performance as Westlake Laness general manager, as well as provide solid analysis of what she should do next.

The case contains a fair amount of financial information for students to analyze, to both highlight the operating difficulties and identify the progress made by Givens and her staff.

Exhibits include a 2010 monthly and year-to-date income statement (Case Exhibit 1) and a five-year summary of Westlakes annual income statements (Case Exhibit 2). The student will find from this five-year summary that profitability had been declining since 2004 and that the business was essentially bankrupt, with a $23,420 operating loss in 2007, more than doubling to a $59,787 operating loss in 2009. The balance sheet contained in Exhibit 3 of the case indicates that Westlake Lanes was technically bankrupt by 2007.

It is only through additional contributionsnamely a $35,000 increase in debt from a credit line in 2007 and a board-funded $100,000 cash infusion in 2008that the business can continue to operate. Exhibits 1, 2, and 3 enable students to understand the financial condition of the bowling alley and determine the breakeven number of daily customers at a given time. Exhibits 4 and 5 show customer traffic snapshots and average spending.

One interesting question that arises from the January-February 2010 income statements is whether a turnaround has actually occurred, and at what level the business can be considered a success or a failure. Students should consider this carefully, while also realizing that a return of such a sick business to near profitability within nine months is an impressive accomplishment.

A second question is a major and complex issue in any turnaround, and the case of Westlake Lanes is no different. Would the provision of sounder financial footing lead to an enterprise sustainable over the long term, given the nature of the bowling industry and changing consumer tastes?

One of the key measures of Givenss performance is shown at the end of this teaching note in Exhibit TN-1. The daily breakeven customer count had to be 189 in 2010, as compared with 166 in 2008. Despite improvements in cost-cutting and pricing, daily breakeven remained out of reach on weekdays.

Assignment Phase 1


Students will need to fully read the case, and answer the following questions:

(1) What problems does Shelby Givens face when she begins her work at Westlake Lanes in March 2010? What advice would you give her to prepare her for her first day?

(2) By the end of the case, what actions has Givens taken to address the problems outlined in Question (1)?

(3) Which of Givenss actions were appropriate? Were any inappropriate? What other actions might Givens have taken? Consider organizational, marketing, operations, and financial actions.

(4) Do you agree with Givenss prioritization of the challenges?

(5) Is Westlake Lanes a viable business? What is the required number of customers per day for Westlake Lanes to achieve breakeven in March 2010?

(6) By the endpoint of the case, the business is cash flow positive. How should Givens evaluate whether to build, sell, or liquidate the business? What information does she need to make this decision?

(7) What is your assessment of the alternative opportunities that Givens begins to consider by the end of the case?

Each question will be thoroughly answered, with references to the case. The instructor will ensure that student responses demonstrate having read and understood the case.

Place your answers to these seven questions into the Case 2 dropbox.