The Paul Olsen case describes the situation for a decision that Paul Olsen needs to make. Paul and Robert Rose devised a plan to open a piano bar in a new urban mall development in Pittsburg, PA. If successful, Paul and Robert would add a restaurant and café at the same location to grow their business. With three and a half months before opening, Paul did not have enough investors to fund the startup costs, so he needs to decide whether to invest all of his student loan money ($12,500) to maintain the timetable for the opening.
Similar to the R&R case, the Paul Olsen case is about identifying risks and developing strategies to manage that risk. By controlling risk, Paul is able to minimize his exposure to potential losses if the
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Although the restaurant industry is perceived to have high risk of failure, the risk of a restaurant failing is not too different from other small businesses. Parsa et al. quantified the risk of failure at 26% in the first year and 57% by year 3. He also described several factors that can influence the risk of failure. Those include physical location, firm size, speed of growth, differentiation from other restaurants in the market, adapting to external trends, and management experience. In terms of location and differentiation, Paul’s bar will be located in a new development designed to attract affluent customers and with very few competitors. Paul’s small firm size increases risk because of barriers to attract partners (i.e. suppliers and bankers are prejudiced against smaller firms) and growth that may be too rapid to manage. On the other hand, Robert already has experience in the restaurant business and should know how to run the bar and subsequent restaurant. Their choice of a piano bar may be in response to local trends that favor success.
A final question is whether Paul should apply his student loan money to the startup costs. Since his living expenses and tuition are already paid by the Ford Foundation grant, the loan money is not immediately needed. The contract in exhibit 3 shows that his services towards opening the bar are valued at $17,500 in addition to the cash contribution. Therefore, his percentage claim towards any profits from
Mr. Shields’ should accept Mr. Fordham’s proposal in relation to the acquisition of Upstate Canning Company, Inc. In this case, Mr. Shields attempts to conclude if he should acquire the company from its owner, Mr. Fordham, using his personal savings of $35,000 in addition to an investment of $65,000 from his associates. Moreover, Mr. Fordham proposes that he will loan Mr. Shields’ $300,000 worth of income bonds, to be repaid in up to 10 years. Mr. Fordham provides Mr. Shields’ with a bond repayment schedule which allows Mr. Shields’ to repay the bonds at a discount if he meets the wishes to repay the bonds back early. Mr. Shields’ faces a
Paying for the maintenance and cleaning of all rooms at the motel will further decrease the amount of money that McGregor will make from Alward’s group. In other words, in strict quantitative terms, Alward’s offer is a bad idea for McGregor. However, in the small resort community where the motel is located, quantitative factors are not everything. McGregor will suffer all sorts of negative consequences from church groups and other members of the community if he refuses Alward’s offer. Therefore, the prudent thing to do is to accept Alward’s offer with two conditions. The opportunity cost
Sparkle Company is a Nigerian diamond mining company. Sparkle is a joint venture, 50 percent owned by Shine and 50 percent owned by Brighten. Both Shine and Brighten are U.S.-based companies with their functional currency being the American dollar. Sparkle Companies functional currency is that of Nigeria, being the Naira. During 2009, Sparkle had several transactions with its joint venture owners and outside parties. The details of Sparkle’s transactions are three loans, three expenditures, and one revenue stream. The loans the company took out were $1 million from Brighten, $1 million from Shine, and 300 million Naira from a local Nigerian bank. The expenditures
In business there are no guarantees for success. Skills, knowledge, great motivation and honest evaluation of ability to carry out and then manage the operations are just some of the requirements that determine the probability of the successful project. Success is never automatic and does not rely on luck. There are no ways to foresee or eliminate all of the risks that might affect successful operation of a new business. However detailed planning, thorough analysis and well-carried out organization create good potential for a new business. In the provided case study, we will assess the probability of success for Icedelights franchise in Florida. Analysis will be done through evaluation of each step in the decision making process, close
ASC 320-10-35-33F: “Changes in the quality of the credit enhancement should be considered when estimating whether a credit loss exists and the period over which the debt security is expected to recover.”
Energy Inc. (Energy, or the Company), which operates in the oil industry, is a U.S. subsidiary of a U.K. entity that prepares its financial statements in accordance with IFRS and U.S. GAAP. A draft law in a country where Energy operates in, which requires a cleanup of land already contaminated, will possibly be enacted shortly after the year-end.
African America were brought on a dutch ship that brought 20 African Americans to britain to work in the 1600s and in later years fight for rights(1).It started back in the 1700s slavery was now legal in the NorthWest territory and the United States(1).People started buying slaves and trading food for slaves to work on the farm fields(2).In 1793 a federal fugitive law was made that if you catch a runaway slave you have to bring it back to its owner(1).In 1793 Eli whitney’s invention of the cotton gin greatly increased slave labor(1).In 1849 Harriet Tubman escapes slavery and becomes one of the leaders of the underground railroad(1).In 1857 the Dred scott case holds thats congress do not have the right to ban slavery because they said african americans were not citizens(1).In 1896 Plessy V.S Ferguson this landmark Supreme Court decision holds the racial segregation is constitutional,paving the way for repressive Jim Crow laws in the South(1).
Some of the key reasons for the dismal profits are primarily due to lack of control, and inexperience from both Julie and Mary, the co-owners and managers of Café Bijoux. The reasoning behind this claim is that a business that is not seen profitable is usually not. In addition, a real restaurant sign is not up and visible. A sign is a major gateway to success in a busy congested market which sees more than eleven businesses surrounding a one km radius. However, Julie and Mary have been awaiting the funds to put up a sign, which has seen negative results due to lack of
Over 30 divestitures in under 20 years in efforts to only keep business that would continue to add value
When USAA started in 1922, they were a property and casualty insurance company however, with time they expanded their services to their members and became a financial institution.
The entrepreneur that I interviewed was Lydia Patterson. In 1989, Lydia and her husband, Lou, decided to start planning to open up a new Italian restaurant in Virginia. The restaurant industry, especially in the Washington DC area is very competitive. It is highly competitive with respect to price, value and promotions, service, location, and food quality. There are a substantial number of restaurant operations that compete for customer traffic, some of which have significantly greater resources to aggressively market to consumers, which could result in losing market share. Consumers are highly focused on value and if other restaurants are able to promote and deliver a higher degree of value, guest traffic levels
I am writing the memo to share some issues I have with one of my employees. Ten moths ago I hired a salesman with Chinese origin to help the company to take over the Chinese businesses in Plano, Texas. I cannot “click on personal level” with him since the very beginning of our relationship which is causing troubles in our communications. Another reason for our communication problem could be the different cultural background we have and our opposite personalities. I believe employees should be able to connect to their leader to become good followers. I think I am extrovert and should be able to get closer to him over time but there are some other issues that I
Franchisors are increasingly having to be more and more selective in the adoption of franchisees with factors such as economic climate and the potential difficulty with growth playing key factors in the decision making process. It is not simply an ability to grow which creates a successful Franchise and nor is it the desire of any franchisor to adopt every potential franchisee. Franchisors are becoming more and more scrutinising as the global economy declines. There is a general understanding within any franchised
• Risk of new entry by potential competitors: the risk is very high in the restaurant industry because of the low capital investments required to enter. Outback Steakhouse competes not only with the casual diners but as well as with fast food chains, and even supper markets. Many of the high-end grocery stores offer variety of complete meals. It costs the customer absolutely nothing to switch to a different restaurant; therefore companies in this industry cannot depend on locking in the customers. However, by establishing a brand loyalty customers will return. Established restaurants such as Outback Steakhouse have an advantage with the economies of scale in advertising and purchasing.
Great food, high-traffic location, and super decor -- all are important to the restaurant business. If you take a close look at what