Lake Superior Lodge

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6. Brainstorm Solutions-

Alternative 1

Sell the Motel before having the number tenth loss.

Alternative 2

Get a loan and use it to renovate the motel

Alternative 3

Invest in marketing and develop a strategy to attract more people without renovate the motel.

Pros:

Selling the motel will

Give them enough money to start any other business that might not require big investment to run a safe business with profits.

They wont be spending money into a non-profit business.

Pros:

Lake Superior Lodge owners will be able to renovate the motel and keep the business running offering more amenities and targeting different segments. Also, it will give them the chance to compete fairly against its competitors and big chain hotels surrounding the area.

Pros:

Developing a marketing plan will save time and money for the owner of the motel. However, this strategy also have a cost that need to be covered by the owner and it need to be a very aggressive plan to regain previous visitors and new comers.

Cons:

Ambiguity when it comes to know if the business would have been profitable or not with the investment of $175.000.

Selling an old family business.

Giving the opportunity to other person to take into the business.

Losing the amazing view provided by the Lake Superior Lodge.

Cons:

The owner will have to pay the debt in order to start making profits.

If the motel with the renovations is not profitable then the owner will face a very disgusting experience with the bank or any other loan agency.

Cons:

The motel will look the same as it is in this moment. It could not bring more people.

It could also still not attract other segment of people such as younger of family groups.

Money spent with no advances or changes in finance.

7. Select Solutions –Decision Criteria-

Alternatives

Decision Criteria

Cost

Time

Ease of Implementation

Customer Satisfaction

- Sell the motel

$1.230.231

1 - 3 years

Considered medium-hard

Medium

- Get a loan from the bank

$175.000

Immediately

Considered easy with good credit/ hard with bad credit.

High

- Marketing plan

$80.000

Immediately

Considered Easy

Low

8. Action & Implementation Plan-

Action & Implementation Plan:

Indicate the Action who will implement it? When? Cost Impact?

Immediate Actions: The owners of Lake Superior Lodge will implement the action plan, the decision will be held immediately and the cost will be based on the loan given by the bank, which is going to be $175.000 plus the interest rate offered by the bank prior acceptance.

Short Term Actions:

Starting the implementation of the new amenities, which include acclimatized swimming pool, cable, modern décor, hiring session for room service, and finally expansion of the motel offering more rooms and providing older rooms with better packages such as family room, and more options for clientele when it comes to room selection (queen, double, king beds).

Long Terms Actions:

Long term action are based and projected to pay the financial loan provided by the bank, start earning profits after the loan is paid and use part of these profits to keep improving the motel with more amenities and also for maintenance of the property.

9. Additional Content-

- What are the assumptions that you are making?

The only assumption made in this case is the cost of selling the motel, which is calculated in a scale of 1 to 5 based on the revenue earned as per the last year provided (2012) $410.073 times 3 = $1.230.231

- What crucial information or data is missing the case in order to solve it optimally?

Ratios are not given properly in order to obtain financial information regarding Lake Superior Lodge assets, revenues before and after taxes, shareholders equity, debt, etc

10. Conclusion

Explain and elaborate how your recommendation, action and implementation plan has addressed the main issue of the case.

My recommendation will be to get a loan from the bank for a reasonable amount that will cover the Lake Superior Lodge needs to get the amenities needed to compete with surrounding competitors and have a fair challenge. The action will be handle immediately once the money is loaned from the bank. Amenities like pool, cable, room service and more rooms intended to accommodate family trips will be added. The combination of free parking, free high-speed internet and the stunning view with the new amenities will attract

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