What is going on at CPK? What decisions does Susan Collyns face? In what ways can she facilitate the success of CPK? What do you recommend?
Susan Collyns’ currently led California Pizza Kitchen Company, is a company that came to be through an ideology of the two defense legal representatives. CPK started its operation in Beverly Hills during the year 1985 and later increased its areas of operation to two hundred and thirteen outlets later in the year 2007. These outlets are all distributed globally but a good number of them about 85 in number, operate in California. CPK’s primary source of its revenue is through its profits which are used to open new outlets while some of them come as a result of partnership by other able stakeholders.
Due to the drop of share price of the company, there was a need to call for a review of the preliminary results by the financial taskforce that was founded in the year 2007 which found that the share price had a drop of approximately 10% to a figure of about $22.10 in the second quarter as compared to the previous performance of the same quarter. At a time like that the previous month the company was enjoying its maximum profits as compared to its competitors in the industry something that the management of CPK was very proud of. There were a general increase of row products which led to an increase in the prices in all the business at the time and the management of CPK framed a financial policy which restricted any form of debt in their business something that ensured there is continuous growth of the business operations.
Because of the deterioration of some outlets business, the management led by Susan is having a plan of reviewing its outlets and sell some of them in order to raise the capital to open other outlets. The proposed source of capital will be from suitable capital structure in this case repurchasing new outlet by the amount sourced from the sold outlets.
Considering the share market currently, this will be of favor to CPK because of its reputation and that the share price is depressed at the moment. This will see CPK have its stock taken care of, through a projected return on equity share, therefore an advantage to the firm. In addition to that the company is expected to enjoy reduced amounts of capital and a reduced price of stocking the goods. The management might decide to employ creditors financing though it is restricting itself from addition of more debts to the company. By a good financial plan this will be of help to the business in dealing with the capital issue which is the greatest challenge at the moment being faced by the CPK firm.
The firm has different ways of financing its capital which are using the profits from the already owned business, the funds from partners and some royalties from franchised restaurants. Therefore, for sustainability plan of CPK to work well the firm must continue with this tradition. This is a suitable plan that has worked well over years and if improved it will be of great help to the firm in the future.
This firm is a well-established company which has for the past controlled and commanded a good part of the market. This gives the management a reason of having to work even harder because the firm has a future from the look of things. The estimate of the firm’s revenue growth over the years is a clear indicator that the business is doing well and the management is doing a good job in performing its business therefore a pointer of the existence of the CPK even in the future is guaranteed by a larger percentage.
I recommend that the management led by Susan employ the sourcing of the capital from partnering with other willing and able stakeholder and profits from the running restaurants to set up new outlets in order to increase the revenue of this reputable firm.