Business Decision-Making
Take Over3
Franchising..4
Increasing Investors5
Keep the Business as it is.5
Business Decision....6
References7
Introduction
Businesses operate in an environment that is regulated by the government and sometimes the government can make some policy changes that will affect either positively or negative. For instance, a recent change in government policy has affected the operations of Lemon Dessert & Café. Lemon Dessert & Café is a small scale restaurant located in the Stratford Shopping Mall in London. The restaurant sells mainly Asian food varieties. It is the only restaurant selling Asian cuisine within the Mall. The business is currently in its fifth year of operation and has been doing well until the fifth year when it has registered a reduction in profits by 12%. The reduction is attributed to the recent changes in government policies that have affected small businesses and also increasing competition within the industry. The prevailing circumstances have compelled Lemon Dessert & Café restaurant to explore available options that can help salvage the situation and ensure that the business has a sustainable long term future. The available options are evaluated below.
Takeover
This option involves selling the Lemon Dessert & Café restaurant to a well-known and established company. The company has offered to pay the amount of money invested in the restaurant less five percent due to the situation in the restaurant. It claims that the restaurant will lose more profits in the future due to changes in government policy and high competition. Accepting the offer means the closure of the restaurant business for the owner. The table below uses SWOT analysis to evaluate this option.
Franchising
Franchising will involve paying a franchise fee to one of the leading restaurants in the UK so that Lemon Dessert & Café can use its name and logo as a branch to conduct business. Lemon Dessert & Café restaurant will have select four of the leading restaurants in the UK and out the four consider being a franchise of the one with the cheapest franchise fee. Four of the leading restaurants in the UK that can offer franchise include; Pure Health, Shake away, The Flamin' Chicken, and go Grill. They charge a minimum of £50,000 for the franchise fee, and they are the cheapest of the leading restaurants (Franchise Direct, 2016). The franchising option provides an avenue for Lemon Dessert & Café to use Pure Health’s name and logo to continue operating. The table below presents a stakeholder analysis for this option.
This is the third option that Lemon Dessert & Café has to consider. This option involves admitting more investors to the business to raise money for expansion and gain more stability in the long run. This option, however, will limit the restaurant owner's control in the business as well as have the profits shared with the new investors. The table below demonstrates how different factors in the industry affect Lemon Dessert & Café operations if it increases investors using the PESTLE model.
The last option available to Lemon Dessert & Café is to leave the business as it is and continue operations without adopting any of the above options.
Business Decision
After evaluation of the four options, the conclusion reached is that the third option will be the best for future growth and stability of the business. Option one is not viable because the owner is not interested in selling the business. He needs to continue owning it. Franchising is expensive and will increase operational cost thereby reducing profits. The last option will lead the business into its closure when it starts making losses (Blenko, Mankins, & Rogers, 2016). Admitting more investors will bring more fresh ideas to the business and funds to expand operations and increase profits. The expansion will also benefit more stakeholders and make the business more competitive.
Reference
Blenko, M., Mankins, M., & Rogers, P. (2016). The five steps to better decisions. Bain.com. Retrieved 9 May 2016, from http://www.bain.com/publications/articles/the-five-steps-to-better-decisions.aspx
Franchise Direct, (2016). Restaurant Franchise Opportunities. Franchise Direct UK & Ireland. Retrieved 9 May 2016, from http://www.franchisedirect.co.uk/foodfranchises/restaurantfranchises/235?sort_by=investment
Franchise Direct, (2016). Start a Pure Health Franchise Business, Health Food Franchise Opportunity | FranchiseDirect.co.uk. Franchise Direct UK & Ireland. Retrieved 9 May 2016, from http://www.franchisedirect.co.uk/foodfranchises/pure-health-franchise-08914/
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