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Strategy
Create chain private motels to improve flexibility, easily attain high growth
strategies and implement comprehensive marketing plan developed for the
past seven years
Compete at a lower price point by providing basic/stripped down services
Avoid seasonality demand fluctuation by targeting mainly the business
traveler
Increases inflow of customers by
locating properties near interstate
highways/major routes and spreading out rooms per area
Ensure compensation criteria covers most areas of concern
Reduce the rate of turn-aways by expanding existing properties (76-116
roomed)
Increase profitability by sale of properties with no ROI/too great a financial
burden
Improve customer satisfaction by being efficient in quality of control of
present properties
Stakeholders
Management
Employees
The general public (customers)
Issues
Inability to expand geographically due to restrictive contracts
Turn-away instances occurring due to properties at full capacity
Some variables that the manager has no control over
compensation
may
lower
Key Variables
Adrian Mutandiro
SWOT Analysis
Strengths
Weaknesses
Restrictive contracts limit expansion
Turn-aways due to properties at full capacity
Variables that the manager has no control over may lower compensation,
leading to de-motivation
Opportunities
Threats
Recommendations
Wayside Inns Inc. is a strong company, but a number of changes will need to be
implemented to do even better. These are:
Fairer rewards systems that take into account factors out of managers
reasonable control
Lower/ditch the fringe benefits as a form of compensation as it is not tied to a
performance measure
Adrian Mutandiro
Figures
expansion)/Income
before
ROI = EBIT/Investment
Actual Figures (1991)
397504/1469738*100% = 27.05%
Expansion Figures
624235/2572789*100% = 24.25%
Questions
Question 1 - Is the proposed investment likely to be a good one for Wayside Inns,
Inc.?
Overall, it will be a good decision, because the positives outweigh the negatives:
The negative effect here is that ROI is lower in comparison with the previous year
Adrian Mutandiro
No, it is not. Based on the calculation, the overall compensation is higher.
Additionally, the ROI component itself shows an increase from $9743 to $10914.
Base salary the years of service combined with relative sales volume are a
good way to compensate the loyalty employees as well as their relative
performance respectively. No unfairness is indicated in the case in terms of
seniority.
Sales volume incentive as the name suggests, the compensation is tied to
sales performance.
ROI Bonus this bonus is also tied to a measure of performance, namely the
amount of money generated per dollar invested in the business.
Since it was mentioned that the customer retention was also a key to
success, Management needs to measure customer satisfaction in some way.
A system can be devised to collect customer opinions on their overall
satisfaction with the service (similar to what is done in companies such as
Amazon). These can be tallied up and form a basis for compensation.
A significant reduction of fringe benefit to the bare minimum essentials. They
are simply unnecessary, add to overall company costs and are not tied to any
performance measure at all.