Case see, these reasons provide convincing evidence that
Case Solution: Schoolhouse Lane Estates Overview After receiving a great amount of inheritance money, Jan Thaw invested her money in planting grapevines for wine.
Based out of the Long Island area, increasing trends for wineries began to rise. The U. S.
wine market began to surge reaching all-time highs, leaving Jan with the opportunity to expand the business. Due to this forecasted expansion, Jan now wants to purchase additional land for more office space and harvesting.She now faces the predicament of either selling the company now or continuing her focus on internal growth. Strategy Schoolhouse Lane Estates is using a cost leadership strategy. Problem Which strategic option does Schoolhouse Lanes Estate need to implement to generate a stable cash flow and grow? Alternatives 1. Jan could sell the company since it is worth more than book value.
2. Schoolhouse Lane Estates could merge with a larger winery. 3. Jan could postpone renovations and buy more land with a loan from North Fork Bank.
. Schoolhouse Lane Estates could form a strategic alliance or joint venture with wineries in the area. Common Evaluation Criteria A. Fit with company goal B. Customer’s expectations C. Level of investment needed Recommendation We recommend that Schoolhouse Lane Estates implements alternative # 4 because of the following reasons: First, Schoolhouse Lane Estates would reduce their manufacturing costs if the crushing facilities and expenses were shared with other local wineries.
Second, the capital provided from the smaller wineries in the area added to Schoolhouse Lane Estates existing capital could be enough to buy new land for expansion and make renovations. Finally, existing distribution channels combined together would be a huge cost savings and would expand Schoolhouse Lane’s market share. As you can see, these reasons provide convincing evidence that Schoolhouse Lane Estates should implement alternative #4 to generate a stable cash flow and grow.