Chapter Five: Strategic Planning

TheWallingfordBowlingCenter
Agroupoftwelvelifelongfriendsputtogether$1,200,000oftheirownfundsandbuilta
$6,000,000,48lanebowlingalley,nearNorfolk,Virginia.Twooftheinvestorsbecame
employeesofthecorporation.NedFlandersworksfulltimeasGeneralManagerand
JamesAhmad,alicensedCPA,servesasControlleronaparttimebasis.
Thebeautiful,moderndayfacilityfeaturesamultilevelspaciousinteriorwith
threerowsof16lanesontwoseparatelevelsofthebuilding,afullservicebar,asmall
restaurant,agameroom(pool,videogames,pinball),andtwolockerrooms.Thefacility
sitsonaspaciouslotwithplentyofparkingandroomtogrow.
ThebowlingcenterislocatedinthesmallbluecollartownofWallingford.There
isnodirectcompetitionwithinthetown.Thesurroundingcommunitiesincludeawide
rangingmixofethnicgroups,professionals,middletouppermiddleclassprivate
homes,andapartmentandcondominiumcomplexesrangingfromsinglestoyoung
marriedcouplestoseniorcitizenretirementunits.Nearly200,000peoplelivewithin15
milesofWallingford.
Thebowlingcenterisopen24hoursperdayandhasastaffof27partandfull
timeemployees.Afterfouryearsofoperation,thepartnersfindthemselvesfrustrated
withthelowprofitperformanceofthebusiness.Whilesalesarecoveringexpenses,the
partnersarenothappywiththeendofyearprofitsharingpool.Themostrecentincome
statementfollows:
Sales

$1,844,000

CGS

315,000

GM

$1,529,000

Chapter Five: Strategic Planning

Operatingexpenses
Mortgage
Depreciation
Utilities
Maintenance

$1,466,000
$460,000
95,000
188,000
70,000

Payroll

490,000

Supplies

27,000

Insurance

136,000

Taxableincome

$63,000

Taxes

19,000

Netincome

$44,000

Thebowlingcenteroperatesat100percentcapacityonSundaythroughThursday
nightsfrom6:00P.M.untilmidnight.Twosetsofmensleaguescomeandgooneachof
thosenights,occupyingeachlanewithmostlyfivepersonteams.Bowlersfromeach
leagueconsistentlyspendmoneyatboththebarandrestaurant.Infact,themensleagues
combinetogenerateabout60percentoftotalcurrentsales.
Thebowlingcenteroperatesatabout50percentcapacityonFridayandSaturday
nightsandonSaturdaymorning.TheFridayandSaturdayopenbowlingnightsinclude
mostlyteenagers,youngcouples,andleaguememberswhocometopracticeingroupsof
twoorthree.TheSaturdaymorninggroupisakidsleague,ages10through14.
TherearefourladiesleaguesthatbowlonMondayandWednesdayafternoons.
BusinessisextremelyslowatthebowlingcenteronMondaythroughFridayand
Sundaymornings,andontheafternoonsofTuesday,Thursday,Friday,Saturday,and

Chapter Five: Strategic Planning

Sunday.Itisnotuncommontohavejustthreeorfourlanesinoperationduringthose
timeperiods.
Theownershavetakenacloselookatthecostsideoftheirbusinessasawayto
improveprofitability.Theyconcludedthatwhilethetotaloperatingexpenseof
$1,466,000mightappeartobehigh,therewasinfactlittleroomforexpensecutting.
Atarecentmeetingofthepartners,JamesAhmadreportedontheresultsofhis
threemonthlonginvestigationintotheoperatingcostsideofotherbowlingalleysand
discoveredthattheWallingfordBowlingCenterwasverymuchinkeepingwiththeir
industry.Jameswentontoreportthatbowlingalleyswereconsideredtobeheavyfixed
costoperationsandthatthekeytosuccessandprofitabilityliesinmaximizingcapacity
andsalesdollars.
QUESTIONS
1.Inwriting,applythedecisionmakingprocessdescribedinthechaptertothiscase.
WhatisthemajorproblemfacingWallingford?Listfivespecificalternativesolutions
thatcouldbeimplementedtosolvethatmajorproblem.
2.Asgeneralmanagerofthiscompany,howcouldyouutilizeandmanagethegroup
decisionmakingprocessandtechniquetoimprovecompanyprofits?Whichemployees
wouldyouincludeinthegroup?