Sugar Bowl

TABLE OF CONTENT
Question 1..............................................................3
Question 2..............................................................3
Question 3..............................................................4
Question 4..............................................................5
Question 5..............................................................6
Question 6..............................................................7
Appendices...........................................................10

Question 1
Prior to evaluation of the offer, we must first list down the financial objectives of Shelby Givens.
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Make Interest payments to lenders

Business loan repayment in 2015
Study loan repayment through 25% equity stake.

For the evaluation of offer, lets first analyze if she has been in line to meet the set financial
objectives. If found in line with the objectives, then later is the need to decide if the proposed
offer is worth the business or not.
In Q4, 2011, the club posed Net Income of over $230k while the next quarter has over $170k of
Net Income earned. Keeping the figures in mind, it can be easily presumed that the Net income
of such an amount is sufficient enough to contribute a share of $100k to Retained earnings each
year. This way, the business will have the required sum in Retained earnings at the time of loan
maturation.
Though indicated figures, it is worth keeping the business because it tends to pose incredible
indicators of growth in the long-run.

Question 2
The reading in Q1, 2012 indicate that the business has lagged behind in attracting private events
as the revenue not accounting for the Private Event patronage exactly matches the total revenue
earned during the quarter. For this issue to resolve, there is felt a need to have means for constant
inflows. Therefore, Givens has figured out two different alternatives for strategic partnership to
streamline the inflows and enhance profitability in the business. . Of the available alternatives,
the one that provides the club with enhanced profits in a short-run as well as in long run is to be
considered the most viable option.

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As we estimate the profits from a Bowling league option, we assumed that the profits on drinks
is 50% of price since they are told to have high contribution margins after Dec,2011. The
calculations estimate that the weekly bowling league for 8-weeks would generate $46,080 in
profits after 25% reduced catering cost.
The Zulu option would register $7,515 in profits for a period of 6-month. The calculation
assumes 25% of the total bowling capacity engaged during the show and its inflows are
considered revenues rather than opportunity cost because the club is used to of catering only 120
patrons on Wednesday, showing already less turnout and unoccupied bowling lanes.
From the available alternatives, bowling league option has a greater scope for the business in
monetary terms as well as in its complementary relationship with the nature of the business.
Therefore, its being considered the most viable option of the two in short run as well as in long
run, citing the possibility of 50% repeat customers.

Question 3
Before the negotiations, Givens must analyze what the deal can help her achieve. Based on the
growth pattern and foreseen future prospects for the business, she should try to achieve at-least
the discounted value of all the estimated benefits and prospects. These prospects include the
assumption that the business can successfully secure a contract similar to bowling league option
in all the upcoming quarters. It also assumes that the event planner holds the capacity to book
around 7 private events amounting to an average of $5,000 after it efficiently reserved 7 events in
no more than 2 months of induction in the club. Based on the stated assumptions of the best
possible scenario and after incorporating the effect of all the future prospects, the club has an
estimated Net Present value of over $21Million.
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In order for her to convince the investor for such a hefty sum of money, she must bring into his
knowledge all the employed strategies that can yield substantial benefits in the long-run and also
include in negotiations an effective plan to secure more of the private events from the industry.

Question 4
As evident from the thorough study of the case, Givens has certainly implemented tight cost
controls and operational efficiency strategies. She is found to have taken strict control of current
operations to figure out rooms for correction and maintained firm focus on strategic growth
agenda (Strategic partnership alternatives) for the business.
The customer base is mainly comprised of young professionals and graduates in their 20s and
early 30s and large groups or HR managers for private events. In order to target the youngsters
segment, Givens has focused largely on leveraging the urban lounge concept and created a
compelling and conductive environment. To further add up on its growth and ensure that patrons
regards the legacy of this club, Givens have to come up with something that focuses the
increased market share in the long-run with continuous building-up of Sugar bowls bowling
legacy. For this, she can hold a 6-week free of cost how-to-bowl classes for teenagers on
Mondays and Tuesdays where they will be allowed to bowl two games a day for 6-weeks. This
would promote Sugar Bowl as a metaphor for bowling promotion and enhance the chances for
increased market share of loyal customers. A promotion to give-away a free 6-month
membership to the winner at the end of competition will help spread the word of mouth. This
campaign can be titled Bowlers youngSTAR which depicts the very nature of its target class.

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Question 5
1. If no private events are scheduled for Mondays and Tuesdays, the lounge will have
savings of $2440 on Mondays and $3020 on Tuesdays. The calculations are based on
readings from Q1 2012 where no income has been contributed from private events. The
flow of patrons on Mondays and Wednesdays compared to the entire week stands at 5%
and 7% respectively.
2. Assuming there are no private events on Mondays and Tuesdays, the club; if closed, will
lose around $5252 each Monday in revenues and $2812 in profits. Similarly, it is
expected to lose a sum total of $6500 in revenues and $3480 in profits each time it shuts
operations on Tuesdays.
3. A private event, if conducted on Monday or Tuesday, would add a substantial amount in
revenues depending on what amount of event(s) is booked. For a general consideration,
we predict an event of average amount of $5,000. A corresponding profit of almost 14%
net profit margin amounting to almost $700 from a single event would credit the Income
account of Sugar bowl.
4. As for acquiring a not-veteran advice, I wouldnt suggest closing down on Mondays and
Tuesdays since that would overall result in losses, and the monetary calculation may not
be possible for now. But this would certainly make Sugar Bowl lose a market share in
times when competition in the nearby vicinity tends to increase.
5. Another option that Sugar Bowl can think of implementing is an offer to avail a certain
percentage of a discount on any Monday or Tuesday of the same month in which the
patron has visited the venue earlier. Other incentive that can attract reluctant customers is
the provision of discounted deal of $430 for a group of 10 people who can enjoy 3 hours
at Sugar bowl, 1 drink and 1 tapas plate each. This would generate revenue of $430 for 10
individuals in just 3 hours. On the other hand, 10 people collectively are a big number to
attract on any Monday or Tuesday as is obvious from the past figures. These individuals
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would otherwise generate $480 if they enjoy similar facilities as listed in the deal. The
discount is no more than a discount of 50% off the drink, but this would help attract a
bunch of 10 on a rainy day. (calculation exhibit attached)

Question 6
A. Before March 2010 operations of Westlake, the company was most likely following
the Differentiation focus strategy of Porters Generic Strategies since the business
then was too small and have limited market offerings, sufficient enough to cater to the
needs of niche market. They would have no competition in the closest vicinity and
that made their market offering a unique way to rejoice.
After complete restructuring of the business model, Sugar Bowl now targets a larger
segment of the market while maintaining low-cost standards through tight cost
control measures that allow for the club to have higher profit margin with offerings
made at average market prices. This indicates the adoption of Cost leadership
strategy by Porter.
B. Positioning myself in place of the General Manager, it is undoubtedly with Givens
ultimate commitment to achieving goals that triggered her to take decisions
sometimes very spontaneously and standing by them with confidence. She seemed to
have not shaken up with disturbing indicators, negative situation, and substantial
losses due to delays. Rather, she built upon those adversities with confidence and
hired a new member to assist her in handling with and tackling those challenges.
C. During Q1 2012, Givens focused hardly on sales of private events and the
implications can be seen clearly from the financial outlays of this quarter. The
company failed to secure any private events in this period and this is confirmed when
revenue of the period with taking into account the earnings from private events equals

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that of the total revenue of the quarter. This shows lag in business farsightedness a
weakness that prevented Givens from seeing implications when exploring other
option.
Her noticeable strength was Determination to quite lead the business efficiently
through numerous downfalls and remained targeted to achieving her financial goals.
D. Success is the measure of how adequately the business meets its forecasted outcomes.
In the present case, Sugar bowl has exceeded the forecasted revenues for the 4
quarters of operations. The loan terms were subjected to change if Sugar bowl failed
to generate $1,000,000 in Revenues for the operating year. This amount equals 70%
of the projected revenue as stated in the case study. Therefore, the total projected
revenues would be $1,428,570 ($1,000,000/70%) which are well taken over by
$2,142,180 amount in revenues for the 1st operating year. This shows that targets are
well achieved and Sugar Bowl is successful. The indicator proves an incredible
success story of Sugar bowl.
E. The only recommendation for Givens is to formulate a strategy that well targets the
private events organizers and HR- officials. Having private events on Mondays and
Tuesdays can only help stabilize the inflows and be a compelling reason to avoid
shutdowns on these two days.
F. To follow the recommended options, Givens has to have a team targeting sales of
corporate events and general private events. The target segment has to be addressed
with an offering that is competitive in price, unique in terms of the services offered
and appealing for the customers.
This may include give-away for every patron once the event heads to closure for no
additional price. The give-away would remind the patron of its enduring memories
from the visit and establish a tie of joys with the club in general, making repeated
visit a most probable thing.
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Appendices
Question 1 & 3

Question 2

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Question 5

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