LEISURE WORLD INC.

Jamie McCullough, owner of Leisure World Inc., is worried about his business's future. He has tried various strategies for two years now, and he's still barely breaking even.

Two years ago, Jamie McCullough bought the inventory, supplies, equipment, and business of Leisure World, located on the edge of London, Ontario. The business is in an older building along a major highway leading out of town, several miles from any body of water. The previous owner had sales of about $500,000 a year but was just breaking even. For this reason plus the desire to retirethe owner sold the business to Jamie for roughly the value of the inventory.

Leisure World had been selling two well-known brands of small pleasure boats, a leading outboard motor, two brands of snowmobiles and jet-skis, and a line of trailer and pickup-truck campers. The total inventory was valued at $250,000and Jamie used all of his own savings and borrowed some from two friends to buy the inventory and the business. At the same time, he took over the lease on the buildingso he was able to begin operations immediately.

Jamie had never operated a business of his own before, but he was sure that he would be able to do well. He had worked in a variety of jobsas a used-car salesman, an auto repairman, and a jack-of-all-trades in the maintenance departments of several local businesses.

Soon after starting his business, Jamie hired his friend, Omar, who had a similar background. Together, they handle all selling and setup work on new sales and do maintenance work as needed. Sometimes the two are extremely busy; usually at the peaks of each sport season. During that time, both sales activities and maintenance keep them going up to 16 hours a day. At these times it's difficult to have both new and repaired equipment available as soon as customers want it. At other times, however, Jamie and Omar have almost nothing to do.

Jamie usually charges the prices suggested by the various manufacturers, except at the end of a season when he is willing to make deals to clear the inventory. He is annoyed that some of his competitors sell mainly on a price basisoffering 10 to 30 percent off a manufacturer's suggested list priceseven at the beginning of a season! Jamie doesn't want to get into that kind of business. He hopes to build a loyal following based on friendship and personal service. He also doesn't think he really has to cut prices because all of his lines are exclusive for his store. No stores within a 10-km radius carry any of his brands, although nearby retailers offer many brands of similar products.

To try to build a favourable image for his company, Jamie occasionally places ads in local papers and buys some radio spots. The basic theme of this advertising is that Leisure World is a friendly, service-oriented place where you can buy the equipment needed for the current season. Sometimes Jamie mentions the brand names he carries, but generally he tries to build an image for reliable, friendly serviceboth in new sales and repairsstressing "We do it right the first time." He chose this approach because, although he has exclusive rights on the brands he carries, there generally are 10 to 15 different manufacturers' products being sold in the area in each product categoryand most of the products are quite similar. Jamie feels that this similarity among competing products almost forces him to try to differentiate himself on the basis of his own store's services.

The first year's operation wasn't profitable. In fact, after paying minimal salaries to Omar and himself, the business just about broke even. Jamie made no return on his $250,000

investment. In hopes of improving profitability, Jamie jumped at a chance to add a line of lawn mowers, tractors, and trimmers when he started into his second year of business. This line was offered by a well-known equipment manufacturer who wanted to expand in the area. However, the equipment is similar to that offered by other lawn equipment manufacturers. The manufacturer's willingness to do some local advertising and to provide some point-of-purchase displays appealed to Jamie. He also liked the idea that customers probably would want this equipment sometime earlier in the season than boats and other summer items. So he thought he could handle this business without interfering with his other peak selling seasons.

It's now been two years since Jamie bought Leisure Worldand he's still only breaking even. Sales have increased a little, but costs have gone up too because he had to hire some part-time help. The lawn mowers, tractors, and trimmers helped to expand salesas he had expectedbut unfortunately, it did not increase profits as he had hoped. Jamie needed part-time helpers to handle this businessin part because the manufacturer's advertising had generated a lot of sales inquiries. Relatively few inquiries resulted in sales, however, because many people seemed to be shopping for deals. So Jamie may have even lost money handling the new line. But he hesitates to give it up because he doesn't want to lose that sales volume. Plus, the manufacturer's sales rep has been most encouraging, assuring Jamie that things will get better and that his company will be glad to continue its promotion support during the coming year.

Jamie is now considering the offer of a mountain bike producer that has not been represented in the area. The bikes have become very popular with students and serious bikers in the last several years. The manufacturer's sales rep says industry sales are still growing (but not as fast as in the past) and probably will grow for many more years. The sales rep has praised Jamie's service orientation and says this could help him sell lots of bikes because many mountain bikers are serious about buying a quality bike and keeping it serviced. He says Jamie's business approach would be a natural fit with bike customers' needs and attitudes. As a special inducement to get Jamie to take on the line, the sales rep says Jamie will not have to pay for the initial inventory of bikes, accessories, and repair parts for 90 days. And, of course, the company will supply the usual promotion aids and a special advertising allowance of $10,000 to help introduce the line to London. Jamie likes the idea of carrying mountain bikes because he has one himself and knows that they do require some service year-round. But he also knows that the proposed bikes are very similar in price and quality to the ones now being offered by the bike shops in town. These bike shops are service-oriented rather than price-oriented, and Jamie feels that they are doing a good job on service. Therefore, he is concerned with how he could be "different."

Can you please help me write 4 alternatives for this case study with advantage and disadvantage for each alternative