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Companions Breweries – Group Assignment Amaryllis
1. Executive Summary
Companions’ Breweries (hereafter the company) is a UK brewery which currently faces huge competition, which translates into declining market share. The company analyzes data on its existing pubs to improve future site selection to enhance market share and profitability. The brewery is offered two sites, an old family pub in the countryside and a disused church in the inner-city area. Reviewing the number of key determinants for the revenue growth based on the sample of 47 pubs, the objective was to develop a recommendation which of the two sites would be a better investment opportunity. Using regression analysis to identify the strongest correlation, it became evident that quality of management, the pub type and the income of the customer turned out to be the main drivers for the revenue, with first two having a positive correlation to revenue growth and the last one having a negative one. To make the final assessment of the sites more complete further available information like running costs and assumed investment needs were evaluated to make the final recommendation. Analysis highlighted that both sites offer good investment opportunities, depending on the long-term strategy of the company, however it’s clear the chances of making earlier returns are higher with site A. Hence the recommendation suggests aligning the investment decision with company’s strategy and go for site A if earlier returns and lower costs are of a priority or select site B, if a long-term rebranding with a focus on a new demographical group is planned.
2. Status Quo
Companion’s Breweries is a UK brewery producing a large range of beers. It distributes through its own network of pubs, restaurants, off-licenses and other outlets. The brewing industry became very competitive due to international competition from lite beer producers of the US and lager makers of Europe. The company therefore faces fast decreasing market shares. On top of that Monopolies and Merger Commission had been looking into the organization of the brewing trade as well. In order to face those challenges, the company has been analyzing data from its existing pubs in order to better understand the main determinants of cost and revenue and hereby improve selection of sites for its pubs. The company is currently offered two sites for new pubs. The objective of the analysis is to recommend for which, if either, the company should go for.
3. Approach
Firstly the available data on the 47 existing pubs was used in order to determine the correlation of five different factors to the revenue growth. Using regression analysis for modeling the relationships between the given variables, the determination of the significance of the relationship has been identified as well as looking at linear and non-linear type of the correlation and prediction models w...
