CASE QUESTIONS

1)Analyze the financial situation

2)Analyze competitive environment

a.What is the structure of the market and does the business have pricing power?

b.Is there sufficient product differentiation among the competitors?

c.Is market entry by new comers easy or difficult?

3)Based on your analysis of 1) and 2) above, clearly articulate Karen's core business problem?

4)Based on your learning on pricing and price discrimination, develop alternate pricing strategies for the firm?

5)Do you detect any problems with the decision maker?

6)Assess the risks to the business in Karen's current thinking.

7)What risks do you perceive with your recommended business model?

Data:

AutoSave O OFF AAP ? C... Second Case spreadsheets.xIsx - Saved to my Mac Q Home Insert Draw Page Layout Formulas Data Review View Acrobat Tell me Share Comments Calibri (Body) AA General Conditional Formatting v Insert v Format as Table v 1x Delete v Paste BIUV A % " Editing Analyze Sensitivity Create and Share Cell Styles v Format v Data Adobe PDF C3 X V fx Outstanding Loan B C F G H M N 0 P R S U V W 2011 Loan for New Oven: $25000; Interest Rate 3%; Duration 10 Years Outstanding Interest Principal Annual 13 Loan Payments Amortization Payments 28,150.0 5 Year 25,694.5 $ 844.5 $ 2,455.5 $ 3,300.0 23,165.3 $ 770.8 $ 2,529.2 $ 3,300.0 20,560.3 $ 695.0 $ 2,605.0 $ 3,300.0 8 17,877.1 $ 616.8 5 2,683.2 $ 3,300.0 15,113.4 $ 536.3 $ 2,763.7 $ 3,300.0 10 6 12,266.8 $ 453.4 $ 2,846.6 $ 3,300.0 9,334.8 $ 368.0 $ 2,932.0 $ 3,300.0 8 6,314.9 5 280.0 $ 3,020.0 $ 3,300.0 13 3,204.3 $ 189.4 s 3,110.6 $ 3,300.0 10 0.4 S 96.1 $ 3,203.9 $ 3,300.0 Competition Financial Statement Loan Details + 100%AutoSave O OFF AAP ? C ... Second Case spreadsheets.xIsx - Saved to my Mac Q Home Insert Draw Page Layout Formulas Data Review View Acrobat Tell me Share Comments Calibri (Body) 11 AA General Conditional Formatting v Insert v Format as Table v 1x Delete v Paste IUV A $ % " Editing Analyze Sensitivity Create and Share Cell Styles v Format v Data Adobe PDF A24 X V fx B C D E F G H L M N O P R S U Five Years - Income Statement 2012 Balance Sheet 2009 2010 2011 2012 Sales Revenue 625,000 $650,000 $657,000 $650,000 Cash at Hand 55,000 Discounts/Promotions 62,500 $ 65,000 $ 66,000 $ 66,730 Short Term investments 15,000 Net Revenue 562,500 $585,000 $591,000 $583,270 Accounts Receivables Cost of Goods 'S 375,000 $390,000 $400,770 $409,500 Inventory 10,000 Gross Profit 187,500 $195,000 $190,230 $173,770 Fixed Assets 100,000 10 Expenses Total Assets 180,000 Advertisment 8,400 $ 8,300 $ 8,500 $ 8,250 Interest Payments S 750 $ 374 Short Term Liabilities 35,000 Credit Card charges 6,250 $ 6,500 $ 6,570 $ 6,500 Long Term Liabilities 23,165 *Payroll: Salary & Benefits 70,000 $ 72,100 $ 74,263 $ 76,491 Total Liabilities 58,165 Christmas Bonus 750 $ 750 $ 750 $ 750 Janitorial Expense 15,000 $ 15,000 $ 16,000 $ 16,000 Owners Equity $ 121,835 Supplies (paper products) 6,000 $ 6,200 $ 6,500 $ 7,000 Rent 25,000 $ 26,250 $ 27,563 $ 28,941 Rental Space: Repairs 700 $ 1,000 $ 500 $ 500 Kitchen 1,000 square feet Security Services 300 $ 360 $ 360 $ 420 Storage 800 square feet Utilities 15,000 $ 15,000 $ 15,000 $ 15,000 Front Retail space 800 square feet Depreciation 5,000 $ 5,000 $ 5,000 $ 8,000 Sidewalk 15 feet by 7 feet Total Expenses 152,400 $156,460 $161,756 $168,226 Furniture & Equipment in Front Retail Space Pre Tax Income EBIT $ 35,100 $ 38,540 $ 28,475 $ 5,544 Refrigeration unit for cold drinks (Coca cola provided) Small Video Arcade Unit (kids below 10 years) Seating for 10 persons Menu: Products Sold Bread - Honey Wheat Chocolate Cake Coffee: 3 Varities Percent of Total Sales Bread - Baguette Vanilla Cake Soft Drinks Bread 50% Ciabatta Chocolate Muffins Cakes 15% Croissants Vanilla Muffins Muffins 20% Rolls Coffee Cake Muffins Coffee & Soft Drinks 15% Dinner Rolls Italian Cookies: 4 varieties 35 36 Competition Financial Statement Loan Details + 100%Q AutoSave O OFF AAP ? C ... Second Case spreadsheets.xIsx - Saved to my Mac Home Insert Draw Page Layout Formulas Data Review View Acrobat Tell me Share Comments Conditional Formatting Insert v Calibri (Body) 11 AA General Format as Table v 1% Delete v % 9 Editing Analyze Sensitivity Create and Share Paste B A Cell Styles v Format v Data Adobe PDF X V fx S G H K M N P Q R S W B C E F T U V D Grocey Super Market: Store Baked Breads Items are priced individually Have weekly promotions Breads $3.50 to $4.10 Artisan Breads $4.50 and up Cakes $7.00 Cookies $7.00 allb S Local Deli Items are priced individually Sell Breakfast and Lunch bundles (sandwiches + drinks) Breakfast Sandwiches $6.00 Lunch /Dinner Sandwiches $7:00 and up Cookies Priced individually: $1.50 Ice Creams $3.00 a serving Soft Drinks $2.00 Bread Shop Items are priced individually Artisan Nut Br $4.50 and up Artisan Olive Loaf $4.50 and up Bread - White Loaf $3:75 Bread - Honey Wheat $4.25 Bread - Baguettes $3.00 Ciabatta $4.25 28 Croissants $2.00 each 29 WHAT IF DUNKING DONUTS WERE TO ENTER THE MARKET? 31 36 37 Competition Financial Statement Loan Details + 100%