Annual Report Project - Phase IV for ACC2010

Principles of Accounting I:  ACC 2010
Annual Report Project – Phase IV

Company: Willamette Valley Vineyards, Inc.

Based upon the information you’ve collected in the first three phases; assess your company’s major strengths and weaknesses.  You will want to address this analysis in terms of investment potential (would this company be a worthy stock investment, reasoning?), profitability, financial flexibility and social responsibility.  Please limit your response in this phase to no more than two typed pages.

Financially, Willamette Valley Vineyards, Inc. (WVVI) is an investment worthy company.  According to WVVI’s financial reports, they are performing increasingly well throughout the years and making beneficial financial and operational decisions.  However, Willamette Valley Vineyards, Inc. is also changing some personnel and operational procedures which may be cause for caution.

This company still appears to be stabilizing as there are some wild financial fluctuations reported; however these fluctuations generally result in a desirable outcome.  For instance; according to the Statement of Cash Flows, between 2009 and 2010 WVVI had a reduction of net income of $319,662 or 43.07%.  Between 2010 and 2011 WVVI had an increase of net income of $445,947 or 108.29% which makes up for the reduction between 2009 and 2010.  In 2010 diluted earnings per share were 8 cents per share and in 2011 they increased to 18 cents per share.  So while they could have been more profitable by maintaining a steadier net income throughout three years, it appears that they are back on track after the poorly performed year of 2010. 

WVVI accredits the 2011 performance to several key factors, including an increase in gross profit, decreased expenses and increase in income tax expense.  They cite the increase of gross profit accounting for 4.0% of the favorable change in income from operations and decreases in expenses accounting for 96.0% of the favorable change. (2011 10K – Item7 – Page 27/91).

Another major contribution to this favorable change might be that WVVI has changed some of their operational procedures.  According to the Willamette Valley Vineyards, Inc. 2011 Form 10K report (Item 1 Business – Page 13/91), WVVI has ceased performing their own wholesale distribution under the name Bacchus Fine Wines and have entered an Exclusive Distribution Agreement with Young’s Market Company of Washington, LLC.  This agreement should result in lower operating costs and higher revenues.  Unfortunately, since this agreement was made in September, it will probably take some time before the benefits are seen on the financial reports.  However, there is a previously unreported $250,000 in the 2011 year from Current portion of distribution agreement receivable (1.03% Total Assets & 9.19% Net Cash from Operating Activities) which is due to this agreement.

One note of caution would be the liquidity of Willamette Valley Vineyards, Inc. stock.  The filed 2011 10K states (Item1A. Risk Factors – Page 23/91) “Our common stock is thinly traded, and therefore not as liquid as other investments.  The trading volume of our common stock on NASDAQ is consistently “thin,” in that there is not a great deal of trading activity on a daily basis.  Because the average active trading volume is thin, there is less opportunity for shareholders to sell their shares of our common stock on the open market, resulting in the common stock being less liquid than common stock in other publicly traded companies.”  With this information, we would advise investors interested in WVVI to not expect immediate results from their investment.

Another note of caution would be a Reuter’s article describing the termination of R. Steven Caldwell as the Chief Financial Officer (CFO) of Willamette Valley Vineyards, Inc.  This termination took place on May 4, 2012 and was reported in the company’s Form 8-K.  Neither the 8-K nor the Reuter’s article explain the reason for the termination which leaves room for speculation.  WVVI’s CEO, Jim Bernau will be serving as the interim CFO through the filing of the 2012 First Quarter 10Q.  The CFO position is being converted to a Controller who will also serve as the Company’s Chief Accounting Officer.   This change in operations may benefit Willamette Valley Vineyards, Inc., however, it could just as possibly disadvantage the company.  In the 2011 Form 10k (Item1A. Risk Factors – Page 19/91) the company declares that a “Loss of key employees could harm our reputation and business.  Our success depends to some degree upon the continued service of a number of key employees.  The loss of the services of one or more of our key employees, including the President, Winemaker, and CFO, could harm our business and our reputation and negatively impact our profitability…”

In 2011, Willamette Valley Vineyards, Inc. also lost Head Winemaker, Forrest Klaffke, who passed away in December after a three year battle with cancer.  As a result, Don Crank, who has been with WVVI for eight years, has been promoted from assistant winemaker to head winemaker.  WVVI believes this change will have no effect on the quality of their wines.  We believe that this change might be reason for caution.

Willamette Valley Vineyards, Inc. shows increasing profit and sustainability throughout the years.  With regards to the 2010 and 2011 financial statements alone, we would recommend investment with this company.  However, in light of the recent loss of “key employee”, CFO, R. Steven Caldwell, “key employee”, Head Winemaker, Forrest Klaffke, and the “thinly” traded stock, we would highly recommend postponing an investment decision until future review of Willamette Valley Vineyards, Inc.  We have the opinion that there is too great a chance that these changes may negatively affect company performance at this time.  We recommend allowing sufficient time for Willamette Valley Vineyards, Inc. to incorporate these changes and make internal adjustments before deciding to invest with them.

Annual Report Project - Phase III for ACC2010

Principles of Accounting I:  ACC 2010

Annual Report Project – Phase III

Company: Willamette Valley Vineyards, Inc.

1)    Did the company pay cash dividends during the current year? No
a.    If so, how much per share? N/A
b.    Does this represent an increase, decrease or no change from last year? No change

2)    How many years of information does the Income Statement have? 2 (2011 & 2010)
a.    The Balance Sheet? 2 (2011 & 2010)
b.    The Statement of Cash Flows? 2 (2011 & 2010)

3)    Identify the amounts that your company reported for each of the following:
a.    Current assets: 2011: $14,767,960, 2010: $13,755,567
b.    Accounts receivable: 2011: $1,058,312, 2010: $1,264,966
c.    Property, plant, and equipment: 2011: $7,300,737, 2010: $6,243,990
d.    Goodwill and other intangible assets: 2011: $4,456, 2010: $4,456
e.    Long-term liabilities: 2011: $6,031,870, 2010: $3,901,830
f.    Current liabilities: 2011: $1,821,177, 2010: $2,301,447
g.    Contributed capital: 2011: N/A, 2010: N/A
h.    Retained earnings: 2011: $7,800,934, 2010: $6,943,179
i.    Treasury stock: 2011: N/A, 2010: N/A
j.    Cost of goods sold: 2011: $7,944,635, 2010: $9,679,414
k.    Operating expenses: 2011: $860,945, 2010: $517,655
l.    Taxation expense: 2011: $514,926, 2010: $273,351

4)    Does the income statement disclose any of the following? No  If so, how much?
a.    Extraordinary Item: N/A
b.    Accounting change: N/A
c.    Discontinued operations: N/A

5)    List the item and amount of the major source of cash inflows from the investing and financing activities sections during the year:
a.    Investing Activities: Payments received on note receivable: $53,104
b.    Financing Activities: Borrowings on long-term debt: $1,400,000

6)    What method(s) of depreciation does the company use? Straight-line basis over estimated useful lives as follows:
a.    Land Improvements: 15 years
b.    Winery building: 30 years
c.    Equipment: 3 – 10 years (depending on classification of the asset)

7)    What method(s) of inventory valuation does the company use? First-in, First-Out (FIFO)

8)    Ratio analysis – calculate the following ratios (show your workings):
a.    Asset Turnover:
Net Sales/Average Total Assets =
15661905/((24286727+21770200)/2) =
15661905/(46056927/2) =
15661905/23028463.5 =  0.68 times

b.    Profit Margin: 
Net Income/Net Sales =
857755/15661905 = 5.48%

c.    Return on equity:
Net Income/Average Stockholders’ Equity =
857755/((16433680+15566923)/2) =
857755/(32000603/2) =
857755/16000301.5 = 5.36%

d.    Return on Assets:
Net Income/Average Total Assets =
857755/((24286727+21770200)/2) =
857755/(46056927/2) =
857755/23028463.5 =  3.72%

9)    Does the company successfully use financial leverage? Yes
a.    Why?

The company’s current ratio is 8.11 to 1.  This means the company has $8.11 for every $1 of current liabilities.  That means they are capable of paying current debt.

Current Ratio: (current assets vs. current liabilities)
Current assets/Current liabilities =
14767960/1821177 = 8.11 to 1 ($8.11 current assets for every $1 current liabilities)


The company’s acid test ratio is 24.54 to 1.  This means that the company has $24.54 liquid assets available to pay off every $1 of current debt.

Acid-test ratio: (current assets available to pay current liabilities)
Cash+Current investements+Accounts receivable/Current liabilities =
3411292+0+1058312/182117 =
4469604/182117 = 24.54 to 1 ($24.54 current liquid assets for every $1 current liabilities)


The company’s debt to equity ratio is .47 to 1.  This means that they are capable of paying off their debts (both current and long-term).  The company is equipped to pay for the loans and interest from which they have borrowed.

Debt to equity ratio: (risk of bankruptcy)
Total liabilities/Stockholders’ equity =
7853047/16433680 = 47.78% ($0.47 liabilities for every $1 stockholders’ equity)


The company’s times interest earned ratio is 7.32.  This means that the company is capable of paying their interest expenses 7.32 times.  This is more than enough to pay interest expenses.

Times interest earned ratio: (interest payments vs. ability to pay)
Net income+Interest expense+Tax expense/Interest expense =
857755+217037+514926/217037 =
1589718/217037 = 7.32 (7.32 x amount needed for interest expense)

With these ratios we can determine that Willamette Valley Vineyards, Inc. is fiscally responsible and does not borrow money for which it cannot pay.  We can also determine that the company is clear from danger of bankruptcy and should the company close its operations today, it would have the resources to pay its debts.

Homework #10 for MGT3000

1.    Identify and briefly describe the four steps of the feedback control model.

1)    Establish standards of performance – Managers set quantifiable standards for service or production goals (increase production, increase sales, reduce accidents, etc…) depending on the service the industry provides.

2)    Measure actual performance – Managers regularly review reports of performance standards.

3)    Compare performance to standards – Managers determine if actual performance meets, exceeds or falls short of standards and interpret deviation.

4)    Take corrective action – Managers determine course of action to correct deviation from standards.

2.    Describe the difference between a balance sheet and an income statement.

A balance sheet is a snapshot of a company’s financial position in regards to assets and liabilities at a specific point in time.

An income statement is a summary of a company’s financial performance for a given time interval.

3.    Compare hierarchical control with decentralized control.

Hierarchal control is monitoring and influencing employee behavior using rules, policies, hierarchal status, written documentation, rewards and other formal mechanisms.  This control method assumes that people are incapable of self-discipline and cannot be trusted.  The consequences of this method are employees who follow instructions and do only what they are told, employees feeling a sense of indifference toward work, and high turnover rates or absenteeism.

Decentralized control is when an organization fosters compliance using culture, group norms and a focus on goals rather than rules and procedures.  This control method assumes people work best when they are fully committed to the organization.  This method results in employees who take initiative and seek responsibility, employees who are actively engaged and committed to their work, and a low turnover rate.

4.    What are the positive and negative contingency factors associated with TQM?

Positive Factors:
•    Tasks make high skill demands on employees
•    TQM serves to enrich jobs and motivate employees
•    Problem-solving skills are improved for all employees
•    Participation and teamwork are used to tackle significant problems
•    Continuous improvement is a way of life

Negative Factors:
•    Management expectations are unrealistically high
•    Middle managers are dissatisfied about loss of authority
•    Workers are dissatisfied with other aspects of organizational life
•    Union leaders are left out of QC discussions
•    Managers wait for big, dramatic innovations

Homework #9 for MGT3000

1.    Explain the difference between formal and informal organizational communications. How is each important for organizational management?

Formal communication, which consists of downward, upward and horizontal communications, follows a hierarchy within an organization.  Informal communication, which consists of personal networking, the grapevine and written communication, coexists with formal communication but often skips hierarchal order.

Formal communication is important because it transfers critical organizational data and information between departments and employees.  This information is useful in planning, implementing and organizing the organization to meet potential goals and cooperatively solve problems.

Informal communication is important because it is the primary means of spreading information within an organization.  This results in personal relationships across departments and the use of those resources to influence the accomplishment of tasks and solution to problems.

2.    Describe the difference between centralized networks and decentralized networks.

Centralized networks utilize one person of a group as a channel for communication.  All team members communicate through this designated individual.  This method generally results in faster decision making as it limits the number of people making the decisions.  This can be effective for larger groups and/or simple problems.

Decentralized networks utilize all members of a team or group and encourage open/free communication.  Decisions are made when all members of the group agree on a decision.  This can be effective for smaller groups and/or more complex problems.

3.    Define the concept of channel richness. What is the richest channel? Why it is so rich?

Channel richness refers to the amount of information that can be transmitted during a communication session.  The capacity of an information channel is influenced by three characteristics:
1)    The ability to handle multiple cues simultaneously
2)    The ability to facilitate rapid, two-way feedback
3)    The ability to establish a personal focus for the communication.

Face-to-face discussion is the richest medium for communication.  It permits direct experience, multiple information cues, immediate feedback, and personal focus.

4.    Briefly discuss the five styles that can be used to handle conflict.

There are five styles of conflict resolution.  Each style has its own level of assertiveness and cooperativeness:
1)    Competing is assertive and uncooperative.  This style should be used when quick and decisive action is vital on important issues or unpopular actions, such as during emergencies or urgent cost cutting.
2)    Avoiding is unassertive and uncooperative.  This style should be used when an issue is unimportant, when there is no chance of winning, when a delay to gather more information is needed, or when a disruption would be costly.
3)    Compromising is moderately assertive and moderately cooperative.  This style should be used when goals of both sides are equally important, when opponents have equal power and both sides want to split the difference, or when people need to arrive at temporary or quick solutions under time pressure.
4)    Accommodating is unassertive and cooperative.  This style should be used when people realize that they are wrong, when an issue is more important to others than oneself, when building social credibility, and when maintaining harmony is important.
5)    Collaborating is assertive and cooperative (win-win).  This style should be used when both sets of concerns are too important to be compromised, when insights from different people need to be merged into an overall solution, and when commitment of both sides is needed for a consensus.

5.    As a supervisor, you are concerned about the low level of productivity in your unit. Your subordinates seem to have an unwritten law concerning how much they will produce, and anyone who does more than that is going to be in serious difficulty with the group. Labor-management relations in this company have never been cooperative. Managers have always tried to get as much as they could from labor and are reluctant to give them much of a voice in the operation of the firm. Analyze this situation based on what you know about group norms and cohesiveness.

This scenario sounds like the team development isn’t entirely complete.  It seems that the labor team is on the storming stage while the management is on the performing or adjourning stage of team development.  Both parties have neglected the normative stage altogether.
The labor division seems to have formed their own cohesive team outside the parameters of management.  This is probably due to the fact that management has not established themselves as leaders or because the labor division collectively feels that management is incompetent or unfair.

Management will most likely find themselves in a position of negotiating with the labor division and both parties will need to come to a collaborative decision on how to move forward or having a shared goal.

Management could have avoided this situation (and can avoid it in the future) by being in frequent contact with the labor division, listening to the labor division and sharing goals, and establishing themselves as leaders who are concerned with not only performance, but the well-being of their labor division.

Annual Report Project - Phase II for ACC2010

Company: Willamette Valley Vineyards, Inc.

1)a) Basic Company Facts: 
• Formed in May 1988
• Sells varietal wines ($7 -$20 per 750ml bottle)
• 110 Acres of company owned land
• Two miles south of Salem, Oregon
• 791 Acres of vineyards owned, leased or contracted
• Owns Tualatin Estate Vineyards (125 acres) near Forest Grove, Oregon
• Leases 114 acres of vineyard land at the same location
• Makes wine at company owned Turner Winery

Complete Name of Company:
Willamette Valley Vineyards, Inc.

Stock Ticker Symbol:
NASDAQ:WVVI

NAICS (North American Industry Classification System) or SIC (Standard Industrial Classification Code:
NAICS: 312130  SIC: 2084

State of Incorporation:
Oregon

Headquarters Location:
Oregon

Independent Auditor:
Moss Adams LLP

Fiscal year-end of the annual report you are using:
December 31

Web Site:
http://wvv.com/

1)b) List the major product(s) your company produces or sells and customers to whom these products are probably sold.
• Willamette Valley Vineyards label (750ml bottles)
  o   Pinot Noir
  o   Chardonnay
  o   Pinot Gris
  o   Riesling and Oregon Blossom (blush blend)
• Tualatin Estate Vineyards label (750ml bottles)
  o   Semi-Sparkling Muscat
• Griffin Creek label (750ml bottles)
  o   Syrah
  o   Merlot
  o   Cabernet Sauvignon
  o   Cabernet Franc
  o   The Griffin (Bordeaux style)
  o   Viognier
• Target demographic
  o   Americans (57% drink wine)
  o   Ages 23 – 30 (also ages 30+)

1)c) Dollar Amount of sales/revenues (2011): 
$15,661,905

Dollar amount of assets (2011):
$24,286,727

Net Income (2011):
$857,755

Earnings per share (diluted)(2011):
$0.18

Would you classify your company as large? Explain.
We would classify this company as small in comparison to other publicly traded companies.  The net income is relatively low by comparison.  The other company we were looking into (Synaptics Inc. NASDAQ:SYNA) had a net income of $54,144,000.  They were recommended on Forbes top 10 small publicly traded companies.  So we figured if Forbes considers $54,144,000 small, then we could comfortably consider $857,755 small.

1)d) Total number of directors: 9

Composition of the BD by gender: Male: 7   Female: 2

How many directors are independent (have no official relationship/position with the company)? 7

How many directors are insiders (hold a position within the company)? 2

What was the source of your information? 
United States Securities and Exchange Commision website (sec.gov), Willamette Valley Vineyards, Inc. Form 10-K for the fiscal year ended December 31, 2011, Part III, Item 10. (http://www.sec.gov/Archives/edgar/data/838875/000119983512000142/willamette_12312011-10k.htm)

Would you say the BD is diversified?  Briefly discuss.
We would say that the BD is diversified, but probably not as much as it could be.  There are definitely more male than female directors and there are definitely more independent than insiders.  The BD could be more evenly dispersed between male and female, insiders and independent.

2) Recent Article about Willamette Valley Vineyard:

Willamette Valley Vineyard Announces Termination Of Chief Financial Officer-Form 8-K

Friday, 11 May 2012 11:04am EDT
Willamette Valley Vineyard reported in its Form 8-K that on May 4, 2012, R. Steven Caldwell was terminated as the Chief Financial Officer (CFO) of Willamette Valley Vineyards, Inc. (Company). Jim Bernau, Chief Executive Officer, will serve as interim Chief Financial Officer through the filing of the 2012 First Quarter 10Q. The Company's management is changing it's focus to include operational duties in the position and is converting the CFO position to Controller who will also serve as the Company's Chief Accounting Officer.

Reuters website: http://www.reuters.com/finance/stocks/WVVI.O/key-developments/article/2540501

Search Method: We used Google Finance to locate this article.   We typed in WVVI into Google Finance and on the right hand side; there are related articles and links.

Author: Reuters

Article Title: Willamette Valley Vineyard Announces Termination of Chief Financial Officer – Form 8-K

Name of periodical or website: http://www.reuters.com

Date: Friday, 11 May 2012 11:04am EDT

Significance: This article is both significant and interesting because shareholders will most likely react to the news that the CFO of a company is being terminated.  This shows unrest in the company’s internal environment and also may cause shareholders to sell their stock in the company.

3) Hypothetical Statement of Corporate Social Responsibility:

We feel that our organization’s main goal is to increase shareholder value.  We feel the best way to achieve this goal is to build a strong reputation for social responsibility.

The information given to our customers should be trustworthy.  The quality of our products should have superior quality.

Our employees are our representatives.  We should encourage and facilitate personal and professional growth.

We should only use suppliers who also believe in social responsibility and help them reach those standards.

We should give back to the community which supports us by keeping our water sources clean and being considerate of nearby neighbors.

We should build an internal culture of strong ethics.  This ethical culture should manifest itself in our employees and those they interact with.

Annual Report Project - Phase I for ACC2010

1) What is the name of the company you have chosen?  Willamette Valley Vineyards, Inc.

2) Which industry category does your firm represent?  Wine Industry

3) Write a paragraph describing how, and why, you chose your firm.  Short answer: they had relatively small numbers on their 10-K.   Long answer:  I looked through several companies before deciding on Willamette Valley Vineyards, Inc.  I decided that I would like some insight on an industry with which I am interested.  I then decided to look up publicly traded companies by state, starting with the least populated state, Wyoming.  Eventually, I ended up looking at publicly traded companies in Oregon where I came across Willamette Valley Vineyards.  After reviewing the numbers in their 10-Q and again in their 10-K, I knew I had found the right company for me.

Wallingford Bowling Alley Project for MGT3000

The Wallingford Bowling Alley

            Wallingford bowling ally is a 24-hour state of the art bowling ally that is looking for areas to increase their profitability.  The Wallingford bowling alley has opportunities to increase their margin as well as drive more daily sales.  We see an opportunity for Wallingford because they already have a profitable business.  By making the following advancements to achieve more business during slower times of the day they can seize this opportunity.  By putting more consideration into using labor hours more effectively, creating community partnerships, and taking advantage of beneficial organizations, Wallingford will see a considerable growth in their bottom line and an expansion of their brand and recognition.

Solutions for Growth

            The Wallingford bowling alley faces the opportunity to increase their profitability and simultaneously attain a larger return on investment.  Through a reengineering process Wallingford bowling alley will drastically improve profits through promotions and cost control.  There are several opportunities facing Wallingford that we will examine and analyze to determine the most effective course of action needed to achieve our goals.

            To help appeal to their consumers, Wallingford needs to enhance their image as well as their accommodations.  With the addition of customized bowling balls to fit the needs of their customers, Wallingford would be able to bring in a new market looking for these higher end products.  Also, by creating a more appealing menu to offer the residents of Wallingford they could potentially bring more customers that are interested in dining out.  This could also create a new customer base for potential marketing.

            After looking at the times at which they are doing business as well as the reported expenses we were provided, we believe that there is a huge opportunity to cut costs by closing the top half of the bowling ally from the hours of 1am until noon. The following is a chart showing the large amount of expense that labor takes up at Wallingford:

As you can see, about a third of Wallingford’s expenses come from payroll.  By making these cuts in available lanes they can decrease this payroll amount and increase their profits.  This will decrease utility costs, employee wages, and make the ally appear busier by having everyone bowling on one level during slower times. Say there are 3 employees needed to staff the upstairs when it is open; the average wage for an employee is $12 an hour.  If cut, that’s $72 a day and over 26 thousand dollars a year going straight to increasing the bottom line and decreasing overhead costs.

            As well as cutting labor to help increase the bottom line we can help eliminate the threat of revenue loss on Sundays due to church services.  Wallingford should offer discounted rates during times that church is in session.  By focusing on getting these customers in the door they could increase revenue during a slower time of the week.  The following is a current schedule of Wallingford.  The slower times are affecting Wallingford’s business and profits:

	Sunday	Monday	Tuesday	Wednesday	Thursday	Friday	Saturday
1am
2am
3am
4am
5am
6am
7am	Slow						Kid's League
8am
9am
10am
11am		Women's League		Women's League
12pm
1pm
2pm
3pm
4pm
5pm
6pm	Men's Bowling - 100%					50% Open Bowling
7pm
8pm
9pm
10pm
11pm
12am

            In order to take advantage of these slow times we saw an opportunity for the bowling alley to make some sales revenue.  Wallingford could offer local schools a discounted rate for large groups to use the bowling alley for field trips or for Physical Education classes.  This would give the bowling alley sales during slow periods and also gain interest for bowling in younger markets and hopefully a gain in future customers.

            Another opportunity is to join the Bowling Proprietors’ Association of America.  The BPAA is an organization focused on enhancing the profitability of their members through grants and a stronger purchasing ability.  The costs of becoming a member and loss of some administrative control create an opportunity cost for Wallingford but the long-term ability to be able to create programs with these grants would make up for the short-term costs.  This would allow Wallingford to cut down on operation costs through the added buying power supplied by the BPAA, and the savings in money would go to the increased profits.  Also, with the opportunity to receive grants from the BPAA, Wallingford would be able to start high school bowling programs to increase interest in the bowling ally.

            We felt Wallingford was not doing enough promotions to attract value conscious customers to their bowling alley.  In order to capture more sales during slower periods we feel that offering special promotions like a free game with the purchase of an entrée from the restaurant,  the rental of shoes would not be included in this promotion.  Not only would this get more bowlers in Wallingford, but it would increase revenue for the restaurant located at the alley.  This promotion would run from 10am to 2pm Monday through Friday.  Other promotions would be happy hour bowling from 4pm to 7pm where bowlers could get a discounted rate for games during this period.

            So far, we have only focused on capturing sales during slower mid-day hours, but not for late night.  The ability to be open 24 hours in a unique characteristic and sets them apart from a lot of other businesses.  In order to take advantage of these late hours, we felt like having a late night bowling special.  Bowlers who are up late would be able to take advantage of this opportunity.  Also, in order to capture sales from bar going groups, partnering with alcohol companies or breweries could capture some of their customers and would increase popularity with an under-utilized group.  These partnerships could also give Wallingford a cheaper form of advertisement and low cost or free labor from these partners.  Wallingford can really tap into a new market by taking advantage of these promotions and partnerships.

Top Two Solutions:

1)    Bowling Proprietors Association of America

The Bowling Proprietors Association of America is an organization focusing on creating wealth for their members and creating profits through grants as well as national buying power and sponsorships.

Strengths ·         Buying power ·         Sponsorships	Weaknesses ·       Memberships
Opportunities ·         Tournaments ·         Increased awareness ·         Grants	Threats ·         The presence of bars or nightlife in the area.

Strengths

            The BPAA allows their members to participate in numerous different buying promotions from office supplies to foods and drink.  These discounts could save Wallingford money and increase their bottom line.  The money that the BPAA could provide would help promote school partnerships by supporting transportation and other costs associated.  This could increase interest with kids 13-18 and create returning customers.  Increasing interest with this market influences other markets like parents of students looking for family activities.

Weaknesses

            The cost of the BPAA is a draw back. Like any premium membership there is a premium cost associated with it.  However, with these costs come also numerous benefits and increased profitability.  Membership costs would be offset by increased revenue and improved customer base.  Another weakness may be loss of some creative or administrative control.

Opportunities

            The partnership with high schools that the BPAA provides would cause an increase in high school tournaments being held at Wallingford.  This would bring in hundreds of people on an annual basis and increase profits for food, drink, and merchandise.

Threats

            Like in any business there are always substitutes for your consumers.  In this case substitutes for Wallingford would be movie theatres, bars, and community events.

2)    Cross Promotions and Partnerships

Cross promotions are a low cost form of advertising that gives the company high exposure and strong partnerships with local business and takes advantage of other company’s loyal customers.

Strengths ·         Low Cost ·         Low Risk ·         Low Labor ·         Business relationships  ·         High exposure ·         Community involvement	Weaknesses ·         Partnership conflicts ·         Transaction uncertainty ·         Competition ·         Lofty expectations ·         Partner promotions
Opportunities ·         Sponsored lanes ·         Free or discounted supplies ·         Sponsorships ·         New customer base	Threats ·         Customer opinion

Strengths

            The ability for Wallingford to utilize local businesses for co-sponsored events creates a higher exposure by advertising to new customers and creating high exposure.  In addition to higher exposure for Wallingford the use of their partners labor and products would help with labor cost and product costs.

Weaknesses

            The draw back of these partnerships would be the conflict of two or more differing opinions from two or more organizations.  There is also a certain level of uncertainty with these partnerships through not knowing the expectations of each others’ business practices.  These weaknesses could be harmful to the business practices of Wallingford but the opportunity to bring in a new customer base to the bowling alley is too big to not use this resource.

Opportunities

            One of the opportunities that are involved with these partnerships are sponsorships.  We believe that the addition of sponsored lanes would add an increase and draw in customers loyal to our sponsors which would bring in a new customer base.  This would be a new market for Wallingford and would bring new customers and profits to the bowling alley.

Threats

            There is a threat of customers who may be opposed to our sponsors and subsequently will not want to support the bowling alley.  Paying attention to the opinions of their consumers can give insight on to who Wallingford chooses to do their cross promotions with.  By implementing polls or surveys to their customers, they could find out what local business appeal to them and develop partnerships with them to create a more effective promotion and increased sales.

The Decision

            We feel like the best solution for Wallingford would be to focus on cross promotions, partnerships and strategic alliances.  We feel that this is an opportunity because they are not currently doing any program like this.  By focusing on this option Wallingford is able to penetrate untapped markets, increase marketing, actively engage the community and their business, and ultimately increase profitability. 

Evaluation

Wallingford could evaluate the success of promotions, partnerships and strategic alliances by measuring the increase or decreased customer count that promotions and partnerships supplied.  Wallingford could keep track of customer awareness by asking customers how they heard about the bowling alley.  After a trial period of six months we could come together with Wallingford management and evaluate the decision and the effect it had on increasing the profitability, customer flow and look for a decrease in slow times.