Be Our Guest Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

INTRODUCTION

In the year 1983, the company “Be our guest” was founded by Stephen Lizio. Stephen Lizio is a well experienced person in the field of wine and food business. The company initially provided only temporary wait-staff and other services to the catering companies.

In the mid 1980’s, the idea of renting out equipment's came out and the company started to rent out tables, chairs and other equipments to the caterers. Mr. Lovata was brought in by Mr. Lizio as the Chief Executive Officer in September 1988.

The change in the strategy brought an increase in the company when the food industry in Boston sponsored a major fund raising event. Simone Williamson was added as a manager in the team in 1989. Her job was to look after and manage the day to day operations of the company. In the year 1996, she was appointed as the president of the firm.

GROWTH:

The company was growing in a rapid speed; the company was started in the year 1983 and in the year 1991 its revenues reached $1 million and a more rapid response till the year 1997 making revenues of $2.7 million.

SERVICES:

The company is a service provider, there fore it is very important for the company to make good relations with the customers and maintain those relations. Williamson was responsible for the maintenance of healthy relations with the customers and for making new relations.

Williamson reported that the firm had strong relations with 14 of the 20 top firms in the area and provided some services to another 4 firms. In the year 1997, the company was awarded as the small business firm of the year by the Boston Chamber of Commerce.

CHARACTERISTICS OF THE BUSINESS:

The company“Be Our Guest” consisted of the effective relations with the caterers as most of the operations of the firm depended on the caterers. After the caterers are hired for the job, they then contact the firm to rent equipment for that event.

The drivers play a vital role in the daily operations of the business. The drivers are responsible for delivering the equipments and receiving the equipments from the site of the event. They are also responsible for the safe custody of the equipments.

Projects that come to the firm vary in nature. The events may ask for a small quantity from renting one table to a customer in a bind or they could provide all the equipment for a 1300 person reception. A more typical event can be a wedding reception for approximately 200 people.

PRICES:

The prices of the contracts differed on the basis of the quantity and quantity of the equipments. The price for an event like wedding reception of 200 people would cost about $4000. This price is accumulated by the increase in the quantity of the equipments. A single table for 10 with the stuff required to decorate it will cost about $167. Therefore,the total for the event of 200 becomes $ 4000 with the addition of ovens, serving tables and other items.

PROBLEM STATEMENT

What the company should obtain from the bank, a line of credit or term loan with the current financial status of the company?

ANALYSIS

The company is a service provider, its annual profits and sales are difficult to analyze as there is uncertainty in the business. It is very difficult for the finance manager and other people involved in the business to project the sales for the next year.

The company has been generating profits since many years and the company is experiencing growth in its sales from past many years. The officials of the company are hopeful that the company will continue performing well in the industry.

The factor that makes the company to come in an uncomfortable situation is that the first and third quarters of the year are the most crucial quarters for the company in the year. The company experienced losses in these two periods.

The company distributes profits to its shareholders who are also the executives in the company therefore;the company pays the profits of the company in terms of salary to these executives, which ultimately increases the administrative and general expenses of the company.

The company faced losses in the first and second quarters of the year;how ever the company paid salaries to its executives without considering the losses. The company hires employees on seasonal basis however;some of the employees are hired on normal basis.................

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