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Individuals and businesses Low switching cost for customers Customers are attracted by low price with high quality standards high 2. Supplier Power Who? Labour, food and drink providers Low cost of switching suppliers 3. Substitutes High number of substitutes such as restaurants, hotels, motels, bars Substitute products entry is high Maintain customer satisfaction and comfort creates low room for substitutes There isnt any switching cost related to substitutes high 4.

Barriers to Entry Government License is required Huge capital investment is required for setting up a geographically spread budget pub chain Distribution channel access The cost of switching is pretty minimal High entry barriers due to maintain and supplying quality food and drink to customers high 5. Industry Competition Fixed costs are high and price margin is low Switching cost of customers is low Maintain quality and service is a major threat and cause of concern There are thousands of competitors from independent pub to national chain pub. high S. W. O.

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T analysis Strengths Hugh Tudor is a well-known, well connected individual, he could easily use this to his advantage to market the pub if he chooses to take over Used to be office manager in large company, has experience in a management position physically fit and active, may benefit in this type Of work environment pub is ocated in a town that has a rapidly growing population (recent arrivals are reasonably prosperous individuals) Market for bar/pub industry has shied away from hard liquor and big noisy environments, to smaller, more intimate neighbourhood pub.

Beneficial in this case Has significant amount of own money to invest into the pub Pub profits were once above the industry average, shows promise if he can manage it well Weaknesses Sales have been on gradual downward trend since most recent owner took over Hugh Tudor will be going $90,000 into debt while in retirement age His ank manager does not believe it is a good investment This particular industry is very competitive with high risks Pub will require a lot of work, with no guarantee of high return Opportunities Go through with renovations, give company a ‘facelif to attract new customers and please loyal ones If managed well, could be quite financially rewarding Sponsor the hockey and soccer leagues that he is currently an executive of, will help advertise Use participation in local charity and fundraising event to help advertise Continue to rent apartment above pub for extra income Th reats

High risk industry, very competitive industry The Leeds Livery may be known for limited selection of beer since recent owner reduced offerings on imports, potential dingy reputation? Historical Fi nancial Analysis The Leeds Livery operates as a pub and is in a particularly high risk, highly competitive industry. In its earlier years, the pub managed to earn profits above the industry average. But in recent years, The Leeds Livery has shown a gradual downwards trend in regards to its profits. The pub has had a 15% decrease in sales from 2008 and 2003 (the last years in operation with the last two owners). While sales were down, cost of goods sold increased 3. % and the gross profits managed to decrease 19. 3% in the above mentioned years. Total expenses have increase from 48. 8% in 2003, to 51. 3% in 2008. Identification of Alternatives 1. Disregard The Leeds Livery and invest his savings with the bank at guaranteed annual interest rate while actively participating in the community service club to avoid an uninteresting retirement life 2. Invest in The Leeds ivery and personally take in charge of managing the business 3. Invest in The Leeds Livery and hire an expert manager to operate the business 4. Hold on to his savings and look for investing in a more secure and stable business than The Leeds Livery Analysis of Alternatives 1 .

Investing the savings at guaranteed annual interest rates with the bank: Hugh is at an age where borrowing debt for investing into a business that offers no guarantee of profits is probably not a good idea. He can invest his savings with the bank at guaranteed annual interest rates that will provide him with a secure income combined with his pension. The Leeds Livery operates in a competitive and unstable industry and it has failed to fain ttractive profits in the recent past years. There is a lot of work required to increase the profitability of the business which might give Hugh a hard time especially when he is borrowing money to invest in the business.

Following are the pros and cons of this alternative: pros Cons Close to no risk of investment loss There will be no magnified profits with the savings account Earnings from investment together with Hugh’s pension will provide him a secure income Hugh’s desire to manage a business will be unmet No need of borrowing money that saves the risk of debt accumulation at his ge The opportunity of earning potential profits with The Leeds Livery will not be availed Annual interest rate is guaranteed at 5%, no risk of unstable returns during low interest environment The Leeds Livery is a high risk and competitive business, there is no guarantee of profits Hugh will get enough time to commit to the service club and fund-raising activities to remain active 2. Investing in The Leeds Livery and managing the business himself: Hugh has been looking for a small business that can provide him with an interesting managing experience, this alternative offers the opportunity to test his anaging abilities but it comes with a great amount of risk such as debt accumulation and business loss. The Leeds Livery is not a secure investment being in a competitive industry and there are chances of loss in the first few years of operations due to the significant damage the business has gone through with Bilkmores strategies.

Following are the pros and cons of this alternative: The business has a potential of earning good profits There is not guarantee of earning profits and financial rewards Hugh used to be an office manager, that provides him with necessary management skills equired to handle a business With Bilkmore’s aggressive strategies, the business has been damaged significantly Hugh is physically fit and active to contribute his time and energy to the business management Hugh will have to borrow debt while in retirement age With growing population and history of exceeding the industry average, the business offers good chances of comeback The business operates in a high risk industry and brings in the concern of potential losses Sales have been on a gradual decrease in the past years, that indicates a need of applying efficient business management techniques .

Investing in The Leeds Livery and hiring an operational manager: As discussed earlier, that the business has faced a gradual decline in the profits in the recent past years, it requires efficient operational strategies to drive profits. Hiring an expert for this cause offers good chances of profitability but indicates dependency on an individual. Following are the pros and cons of this alternative: Expert management of the business The hired manager will 100k for incentive in the business and probably a high salary Availing the opportunity of earning potential profits The business operates in a high risk industry and brings in the concern of potential losses.

There is not guarantee of earning profits and financial rewards With growing population and history of exceeding the industry average, the business offers good chances of comeback With Bilkmore’s aggressive strategies, the business has been damaged significantly Hugh will have to borrow debt while in retirement age The business strategies and operations will totally depend on the manager, hence there is a high risk Of dependency on an individual for business profits 4. Searching for a better business investment: Hugh’ s desire to participate in a challenging entrepreneurial experience can be worth waiting if he conducts a market research to find a business that is safer to invest his savings in.

Following are the pros and cons of this Pros Offers likelihoods of finding a better business to invest in Limits the risk of investing in an unstable business like The Leeds Livery Risk of loss can be minimized with a secure business The search may be time consuming and there is no guarantee of success Hugh can use his active capabilities to conduct a market research for finding he secure investment The Leeds Livery will not stay as an option for long in case of not being successful in finding the desired secure business Recommendation: We recommend Hugh to invest his savings with the bank at guaranteed annual interest rates as it will provide him additional income with minimum risks involved. This alternative will save Hugh from the possible risk of business loss and debt accumulation at his age. Hugh can use his time to actively participate in service club events and fund raising activities, this will provide him with interesting time-out during retirement.

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