Conceptual Study

QUESTION

What is the Rationale for Investing in a New BrewPub?

Conceptual Study by the Owner of an Existing Restaurant/Tavern (Based on a running case and a business simulation package)

Read the Business Running Case: The decision-making process in evaluating the rationale for investing in a new BrewPub (preparation for a conceptual study by the owner of an existing restaurant/tavern)

Learn how to use a business simulation package, specifically developed for this course, in combination with selected decision support tools covered in this course.

Possible Points: 8

Task 3-0 (A3/Part 1): Structure and present your paper in the form of a Managerial Report, with a cover page, table of content, main body, appendices. Recommended length of the main body of Part 1 (without the preparatory and appended parts): 15 pages APA format. (max 1 points)

Task 3-1 (A3/Part 1): Based on the business simulation ‘Strategies and Decision Support in Organizations’ and the business running case, define and present the overall goals and objectives from the business owner’s point of view. (max 2 points)

Task 3-2.1 (A3/Part 1): Formulate your preparation for a decision making based on a research of the following areas of your study — Marketing Management, Financial Management. (max 2.5 points)
Task 3-3.1 (A3/Part 1): For each one of the functional areas apply at least two from the introduced and discussed in this course decision support tools (e.g. Decision Tree Analysis, Sensitivity Analysis, SWOT Analysis, PESTEL Analysis, Break-Even Point Analysis, What-If-Analysis, Optimization Analysis, Risk Analysis, others). (max 2.5 points)

ANSWER

Managerial Report: Rationale for Investing in a New BrewPub

Cover Page:

– Title: Rationale for Investing in a New BrewPub: A Conceptual Study by the Owner of an Existing Restaurant/Tavern

– Name of the Owner: [Your Name]

– Date: [Date]

Table of Contents

1. Introduction
2. Overall Goals and Objectives
3. Preparation for Decision Making

    3.1 Marketing Management

    3.2 Financial Management

4. Application of Decision Support Tools

    4.1 Decision Tree Analysis

    4.2 SWOT Analysis

    4.3 Break-Even Point Analysis

5. Conclusion
6. References
7. Appendices

 Introduction

The purpose of this managerial report is to evaluate the rationale for investing in a new BrewPub. As the owner of an existing restaurant/tavern, the decision to expand into the BrewPub industry requires careful consideration of various factors. This report aims to analyze the overall goals and objectives, as well as conduct a comprehensive study using decision support tools from the fields of marketing management and financial management. By leveraging the business simulation ‘Strategies and Decision Support in Organizations’ and the provided running case, we will assess the viability and potential benefits of investing in a new BrewPub.

Overall Goals and Objectives

From the business owner’s perspective, the primary goals and objectives of investing in a new BrewPub can be defined as follows:

– Increase revenue and profitability: Expanding into the BrewPub market presents an opportunity to tap into a growing consumer demand for craft beer, which can drive higher sales and ultimately improve the financial performance of the business.

– Diversify the business: Adding a BrewPub to the existing restaurant/tavern can diversify the product offering, attract a wider customer base, and create a unique selling proposition in the market.

– Enhance customer experience and loyalty: By providing a distinct beer brewing and tasting experience, the BrewPub can elevate customer satisfaction, foster loyalty, and encourage repeat visits.

– Capitalize on market trends: The rising popularity of craft beer, particularly among younger demographics, presents a favorable market trend that can be leveraged for long-term success.

Preparation for Decision Making

 Marketing Management:

To prepare for decision making in the realm of marketing management, the following areas should be researched and analyzed:

– Market Analysis: Conduct a thorough assessment of the local market to understand the demand for craft beer, identify target customer segments, evaluate competition, and determine market size and growth potential (Bennett et al., 2010).

– Consumer Behavior: Study consumer preferences, trends, and purchasing patterns related to craft beer consumption. This will aid in developing effective marketing strategies and positioning the BrewPub to meet customer expectations.

– Branding and Positioning: Define a unique brand identity for the BrewPub, highlighting its distinct offerings and ambiance. Position the BrewPub as a premium craft beer destination, differentiating it from competitors in the market.

 Financial Management:

In the realm of financial management, the following aspects should be considered in the decision-making process:

– Financial Projections: Develop detailed financial projections for the new BrewPub, considering factors such as initial investment, operating costs, pricing strategy, sales volume, and revenue potential. This will help determine the feasibility and profitability of the investment (Financial Management, n.d.).

– Funding Options: Explore various funding options, such as self-financing, bank loans, or attracting investors. Assess the financial implications and risks associated with each option.

– Return on Investment (ROI): Calculate the expected ROI for the investment in the BrewPub, considering both short-term and long-term perspectives. Evaluate the payback period and potential for generating sustainable profits.

Application of Decision Support Tools

 Decision Tree Analysis

Utilize decision tree analysis to evaluate different scenarios and their potential outcomes. Assess the probability of success or failure for each decision path, considering factors such as market conditions, customer demand, competition, and financial performance (Watkiss et al., 2014). This analysis will aid in identifying the optimal decision strategy for investing in a new BrewPub.

 SWOT Analysis

Perform a SWOT analysis to assess the internal strengths and weaknesses of the existing restaurant/tavern, as well as the external opportunities and threats in the BrewPub market. This analysis will help identify key areas for improvement, potential synergies, and risks that need to be mitigated.

 Break-Even Point Analysis

Conduct a break-even point analysis to determine the level of sales volume required to cover all costs and reach the break-even point. This analysis will assist in understanding the minimum sales targets necessary to make the investment in the new BrewPub financially viable.

Conclusion

Investing in a new BrewPub can offer several advantages for an existing restaurant/tavern owner, including revenue growth, diversification, enhanced customer experience, and capitalizing on market trends. By conducting thorough research and utilizing decision support tools, such as decision tree analysis, SWOT analysis, and break-even point analysis, the owner can make an informed decision regarding the investment. It is crucial to carefully evaluate the marketing and financial aspects to ensure the feasibility and long-term success of the new BrewPub venture.

References

Bennett, C., Graham, I. D., Kristjansson, E., Kearing, S. A., Clay, K. F., & O’Connor, A. M. (2010). Validation of a Preparation for Decision Making scale. Patient Education and Counseling, 78(1), 130–133. https://doi.org/10.1016/j.pec.2009.05.012 

Financial Management. (n.d.). Google Books. https://books.google.com/books?hl=en&lr=&id=JxyaDgAAQBAJ&oi=fnd&pg=PA2&dq=+Financial+Management:&ots=PG0eYKmcxy&sig=vn9lkwUBOxZOo1puA1JMM1_5mnI 

Watkiss, P., Hunt, A., Blyth, W., & Dyszynski, J. (2014). The use of new economic decision support tools for adaptation assessment: A review of methods and applications, towards guidance on applicability. Climatic Change, 132(3), 401–416. https://doi.org/10.1007/s10584-014-1250-9