Finance Case Analysis
It is out of the question that one of the main ingredients of a thriving business is a drastic difference between low costs and high efficiency. Many companies tend to regard that as a matter of a wide range of external factors, and even the matter of good luck. In fact, it is not necessarily so.
Dependence of the performance on the costs can be regulated by clever decision-making. It should be noted that decisions are focused on the internal processes of the company, and very often these decisions are not of a global or major character. Any company is a system. That is why everything is mutually related and connected in it.
The Barmore's understand it and therefore, deepen into each aspect of organizing their hotel business. One of the problems is the most eligible choice of light bulbs for the hotel rooms. The objective is the same: to provide customers with the best rooming and have the minimum of costs. It is necessary to mention that the choice will be grounded on some additional factors.
Therefore, the Barmore's are facing a strategic problem. They have to identify the relation which sets the balance between efficiency and costs. In other words, the problem is to make the right decision and change the right aspect of their business. To be more exact, making a decision does not mean only the most suitable choice of light bulbs.
Moreover, it is necessary at least to predict customer flow in the following season, and the average amounts of electricity used per stay at the room. These factors also make an impact on the choice of light bulbs. Actually, this is the root of the problem. What is more important, the bulbs that work for a long period or the ones, which are better in quality but are to be changed more frequently?
Consequently, there is one more issue: to take into consideration the further dealing with the chosen type of light bulbs. It is necessary to develop a plan of the frequency of changing them, the amounts to be purchased regularly, and the rates of electricity usage.
As any strategy is regarded as a succession of certain actions aimed to achieve or obtain something, tactics are to be considered as the actual performance of actions outlined by the strategy. Taking it into account, it is to be said that the Barmore's have to decide in what way they will solve the problem.
In other words, the problem is what the Barmores should actually do. It includes several solutions and actions, as to which partners to choose, how many bulbs to purchase for the first try, how long should it be, whether it is worth finding some investments or not, and what effect it can make on the hotel. It is necessary to add that the Barmores are already in two minds about the last point.
According to the advice of analysts of the real estate investment trust, the hotel can get a 10% discount for capital investments. In contrast, the most peculiar feature of it is that the return on investment is also 10%. The tactical problem which the Barmores are facing is whether to accept this investment or not. In case they fail, 10% of the return on the investment will affect the business considerably.
Therefore, taking into consideration the problems described above, it is necessary to specify the issues about them.
First of all, it is necessary to mention all aspects which can influence the outcomes. Actually, they are the following: the choice of a certain type of light bulbs to be purchased; the estimated stream of customers in the following season; the average use of electricity, and an approximate length of work of light bulbs.
All these aspects have to be considered and opposed to each other. In such a way, the most important aspect will be singled out, and more attention will be relevantly paid to it.
Speaking about the tactical issue, it is necessary to identify possible outcomes of being invested, and results of independent development of the hotel. The main objective of it is at least not to harm the business as a whole. That is why it is necessary to design a plan for both variants and make sure that it will work exactly in the same way as it is designed.
Solution Proposal 1
First of all, the strategic problem is to be solved. As there are a lot of aspects to be taken into consideration, it would be reasonable to create a special scheme, which reflects relations between all enlisted aspects. Further, by the scheme, simple software is to be designed. It will make calculations and compare them to the previous ones. It may seem to be a very sophisticated way out of the situation, but in this case, it is better to rely on non-human intelligence.
Moreover, in case of being invested, the hotel will cover the costs spent on the development of the software.
Also, the model for further work with a particular type of bulbs can be created. Taking into consideration the final proportion between aspects enumerated before, it will be possible to design the model. What is more, it is possible to do it with the same software. The only difference is that variables will change their position and relations to each other.
Solution Proposal 2
In fact, the solution of the tactical solution is grounded on the strategic one, respectively. As the solution to the strategic problem requires the use of specially designed software, it will definitely need some financial support. That is why there is no point to deny the suggested investment.
Moreover, there are no risks for the Barmores. The software will definitely make available information at least clear, and due to the sound experience of the Barmore's they will make the right decision. Speaking about other tactical issues, it is necessary to say that they depend on the strategy model as well. In other words, all tactical actions are grounded on the strategy.
To be more exact, the strategy is to be depicted by a certain model which, according to computer calculations, will be designed as well. Consequently, the core of success is based on the qualitative software design. Needless to say that it requires good funds. That is why the denial of investments is out of the question.
Finally, as the Barmores are going to improve their rooming service, they have to take into account every single detail. In this case, the object of the discussion is the appropriate lighting of the rooms in the hotel. The Barmore's have to choose a certain type of light bulbs. For starters, they have to identify what is more important: the quality of light or the lifespan of one bulb. Taking this and other factors into consideration, it is proposed to design software, which will allow creating a certain model.
This model is to depict a particular strategy, which is also based on the identified relations between a wide range of internal factors. Consequently, the tactics, or performance of the strategy, will be grounded on its own model, which will be created as well. As the software will require some funds, the investments are to be accepted.
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