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Section B

Question 1 (60 marks)

Three years ago, Big Plc purchased the fast-growing restaurant chain Olivers Limited from their charismatic, innovative founder and award-winning chef Oliver Pratt. The restaurants were situated in excellent locations and normally in slightly unusual premises (converted pubs and banks). When Oliver ran the company, each restaurant had its own manager who worked carefully with Oliver to create the relaxed dining environment which gave the company its excellent reputation. After purchasing Olivers Limited, Big Plc restructured the company. Regional managers were appointed, and the company was split into four divisions each based in a different part of the country. The regional managers were given total control over their restaurants and are able to set their own prices. The performance of the regional managers is measured by two key performance indicators (kpi), which if exceeded resulted in the regional manager gaining a substantial bonus. The kpis the managers are measured against are the utilisation percentage (occupied tables/available tables) and the return on investment (ROI).

Despite positive financial results, the company is concerned, a recently commissioned customer survey showed that 35% customers rated the experience as disappointing and only 55% said that they would come again. The information below relates to the companys financial performance over the last three years:

		Year Ending May 2019 '000				Year Ending May 2020 '000			Year Ending May 2021 '000
Revenue		17,399				19,124			21,346
Purchases (variable costs)		4,680				4,800			5,230
Expenses:
Staff		2,704				2,825			3,136
Building Repair & Maintenance		521				531			542
Other Building Costs (rent etc.)		5,264				5,904			6,867
Marketing		851				1,089			1,220
Other Fixed Costs		2,032				2,089			2,218
		16,053				17,239			19,212
Profit		1,346				1,886			2,134
Net Assets		10,304				10,872			12,159

Key Performance Indicators
Return On Investment (ROI)		13.1%		17.3%		17.5%
Utilisation %		58%		63%		65%
Other Operating Data
Number of Restaurants		16		18		21
Total Customers in the Period		400,896		489,110		585,144

Required:

a) Evaluate the unique resources and core competencies that were being used by Olivers Limited to achieve its competitive advantage before it was taken over by Big Plc.