...Date: Jan 4, 2013 To: Paul Livoria and Sam Livoria From: Dev Das Introduction Livoria Sandwiches needs to achieve growth in sales to reach $1.1 million in Net Income by 2015 while paying off its litigation payment of $500,000 by May 2015 and back taxes of $22,500 by Q1 2013. This report will analyze the two options available namely diversifying the menu or converting the business to a franchise and identify the alternative that will achieve growth targets and meet payment obligations. Financial Assessment Livoria Sandwiches has a good underlying business model and financial performance in 2012 except for the litigation charge (See Appendix 4). Contribution margin % was 53% compared to the industry’s 45%. This means Livoria’s costs of labour and materials as a percentage of sales are lower than the industry. As well, sales grew by 5% versus industry growth of 1% meaning that Livoria has taken market share from its competitors, an indication of the high quality of the sandwiches. Operating income % excluding the litigation charge is 24% compared to the industry’s 18%. This indicates that fixed operating and manufacturing costs as a percentage of sales are also lower than industry averages. Analysis of the issues and the related alternatives Alternative 1: Diversify menu in existing locations Pros: a) Maintains the tradition and quality of sandwiches b) Customers like the layout of the restaurant and its unique decor c) Takes advantage of the fact that Dawkins has the...
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...To: Paul Livoria & Sam Livoria, Livoria Sandwiches Inc. From: Dev Das, CMA Subject: Strategic Evaluations and Recommendation – Livoria Sandwiches Inc. Date: December 30, 2011 Introduction The purpose of this report is to evaluate Livoria Sandwiches’ (henceforth, Livoria) current strategic and financial situation and select a best alternative for Livoria sandwiches to attain $1.1 million in Net Income by 2014. This report includes a current situational analysis (Appendix 2 – Present Menu and Appendix 3 – Pro Forma Income Statement), analysis of strategic alternatives, a recommendation and a conclusion. Situational Analysis (see Appendix 1 for supporting SWOT Analysis) Since commencing operations in January 2001, Livoria Sandwiches has been offering an assortment of quality custom-made sandwiches in Dawkins. With a family-oriented atmosphere and a customer focused mission/vision statement the company distinguishes itself in making quality sandwiches by focusing on high-quality ingredients, freshness and quick sandwich-making process. In 2011, Livoria achieved 53% contribution margin and a 5.4% sales growth surpassing the industry average. By 2014, Livoria plans to reach $1.1 million in Net Income. However, due to space limitations and labour constraints (Appendix 5), the company has to make a decision based on two strategic alternatives to reach this goal: ...
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...Date : October 11, 2013 To : Brothers Sam and Paul Livoria From : Dev Das Subject : Strategic Review and Recommendations INTRODUCTION This report examines strategic alternatives that would help owners of Livoria Sandwiches Inc. gain competitive advantage in a growing market, achieve its profitability target and maintain its strong reputation of having a high quality and unique product in the industry. This report provides an analysis of the company’s current situation, identify strategic issues and analyze strategic alternatives. These also provide recommendations as to courses of actions the brothers should adopt to reach their goal, and proposed implementation plan. CURRENT SITUATION Stakeholders Preferences: * Go franchising (Paul) * Enhance vegetarian menu (Sam) * Preserve quality and control (Sam) * Realize $1.1M net income by 2015 (both Paul and Sam) *Avoid using line of credit (both Paul and Sam) Constraints: * Cash * One supplier of all store requirements/ingredients * Bank requires $20,000 minimum cash balance at any given time * Number of hours work * Working space Environmental Scan : SWOT Analysis Exhibit 1 Current Financial Assessment - Lowest profit of .29% compared to industry wide due to $500,000 contingent liability booked in 2012. Removing this extraordinary item would result to 24% operating income which is higher than Dawkins industry benchmark - 52.93% highest Contribution margin than industry average ...
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...Date : October 11, 2013 To : Brothers Sam and Paul Livoria From : Dev Das Subject : Strategic Review and Recommendations INTRODUCTION This report examines strategic alternatives that would help owners of Livoria Sandwiches Inc. gain competitive advantage in a growing market, achieve its profitability target and maintain its strong reputation of having a high quality and unique product in the industry. This report provides an analysis of the company’s current situation, identify strategic issues and analyze strategic alternatives. These also provide recommendations as to courses of actions the brothers should adopt to reach their goal, and proposed implementation plan. CURRENT SITUATION Stakeholders Preferences: * Go franchising (Paul) * Enhance vegetarian menu (Sam) * Preserve quality and control (Sam) * Realize $1.1M net income by 2015 (both Paul and Sam) *Avoid using line of credit (both Paul and Sam) Constraints: * Cash * One supplier of all store requirements/ingredients * Bank requires $20,000 minimum cash balance at any given time * Number of hours work * Working space Environmental Scan : SWOT Analysis Exhibit 1 Current Financial Assessment - Lowest profit of .29% compared to industry wide due to $500,000 contingent liability booked in 2012. Removing this extraordinary item would result to 24% operating income which is higher than Dawkins industry benchmark - 52.93% highest Contribution margin than industry average - High...
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...M1A3 The vision and mission statement of Livoria Sandwiches is for them to maintain their strong reputation amongst their current loyal customers for quality while maintaining a unique product. In providing a supply of a different product, Livoria is competing to some degree using a differentiation strategy which will allow Livoria to charge a premium on their products, and allow them to be competitive based upon the perceived difference they have from the rest of the market segment. The key stakeholders preferences include exploring possible franchising, enhancing their vegetarian menu with an ultimate quantitative goal being to have a $1.1M net income by 2015. Within these key stakeholder preferences, both Paul and Sam would like to maintain a focus on preserving their high quality and continue to avoid using their line of credit. The weaknesses and constraints of Livoria Sandwiches operations at this point in time are a limited supply of capital, specifically cash, which is negatively effected by both the back taxes and the requirement to have $20,000 as a minimum cash balance at all times. The lack of cash is even more so negatively effected due to the $500,000 liability that must be paid by 2015. Another operational constraint for the business is that they rely completely on one supplier for all of their store ingredients. The heavy reliance on one supplier and the consequences of this is displayed by the fire at Food Terminal, and the difficulty in securing a supplier...
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...Subject: Review of Strategies for Livoria Sandwich Inc. Fiscal Year 2013 – 2015 To: Paul and Same From: Des Cas, CMA Date: Dec 31st, 2012 Introduction This report gives recommendations to Paul and Sam, founders of Livoria Sandwiches (LS) Inc for fiscal 2013 to 2015. LS own two stores selling custom-made Italian sandwich in Dawkins. Vision statement is “Livoria will be the first choice of Dawkins residents who are seeking a variety of high- quality fresh sandwiches at reasonable prices.” Mission statement is “We are the highest-quality sandwich shop in Dawkins because of our legendary sandwich-making processes and our commitment to using the highest-quality ingredients.” Situational Analysis The following are facts important to LS analysis. * Paul and Sam aims for 1.1 Million Net Income in 2015. * LS maximum 6 employees. * LS must maintain $20,000 at the bank. * Must pass city quarterly health audit. * Paul purpose franchising alternative and highlighted eggplant sandwiches strong forecasted growth. * Sam purpose vegetarian menu expansion and highlighted strong vegetarian sandwich demand due to health concerns and customer’s concern over limited sandwich selection. * Key success factors are highlighted in LS vision and mission, which is making high-quality fresh sandwiches with highest-quality ingredients. * Tax at 20% payable on March 31 of the following year. Tax audit found $22,500 in payables due 2013. * Refer to Appendix 1...
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...It was 2:00 a.m. and Paul Livoria sat in the corner stall of his restaurant staring out the window into the parking lot. His brother Sam was in the kitchen cleaning up after a very long day. Paul felt very restless, partially because of the seven cups of coffee he had had, but mostly because he was feeling very overwhelmed. He thought to himself, “Running these two restaurants shouldn’t be so complicated.” At age 46, maybe it was time for a change. The Birth of Livoria Sandwiches Inc. Brothers Paul and Sam Livoria founded Livoria Sandwiches Inc. as a Canadian Controlled Private Corporation (CCPC) in December 2001, but began operations in January 2002. Both brothers had worked for Link Motor Company in the City of Dawkins (a major city of 275 sq. km) in one of its manufacturing plants. Paul was a truck production supervisor and Sam was an automobile line worker. Unfortunately, in 2001, both brothers were laid off as there was a huge decline in the automotive sector. With the severance packages they received, Paul and Sam opened up their first store. Both of them have no formal business training and many decisions have been made through “trial and error.” After five years of positive growth, Paul and Sam decided to open up a second location in a high-traffic area in Zone 1 (five kilometres away from each other) in Dawkins. Below is a map of the city: © 2013 The Society of Management Accountants of Canada. All rights reserved. ®/TM Registered Trade-Marks/Trade-Marks are owned...
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...MODULE 1, ASSIGNMENT 3 September 12, 2013 Topics: Performance Management, Financial Management and Financial Reporting Overview In this assignment, candidates get a chance to apply all the steps except for steps 6 and 9 in the Steps for Approaching Business and Corporate Strategy to a small business case. As mentioned previously, these steps provide candidates with a systematic approach for addressing a case involving business-level strategic issues. Applying this approach effectively is one of the important competencies that candidates will learn in the CMA Canada Professional Programs. The starting point for solving a business problem is to analyze the current situation and identify the problems that need to be addressed. A major component of the situational analysis is to take a close look at the environments within which an organization finds itself. One of the methods commonly used in such an environmental analysis is “SWOT” (an acronym for Strengths, Weaknesses, Opportunities and Threats), which considers the strengths and weaknesses in the internal environment as well as the opportunities and threats in the external environment. Candidates can refer to the required reading Situational Analysis Tools mentioned below for more information on how to go about doing a SWOT analysis. The next major step is to identify the issues and analyze various alternatives for addressing the major issues. In this case, a shortage of available cash is a major issue and needs to be addressed...
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