DO A CASE ANALYSIS FOLLOWING THESE INSTRUCTIONS:
How to Write a Generic Case Analysis:
EXAMINE AND DESCRIBE THE BUSINESS ENVIRONMENT
• Describe the nature of the organization under consideration and its competitors.
• Provide general information about the market and customer base.
• Indicate any significant changes in the business environment or any new endeavors upon which the business is embarking.
DESCRIBE THE STRUCTURE AND SIZE OF THE BUSINESS
• Analyze its management structure, employee base, and financial history.
• Describe annual revenues and profit.
• Provide figures on employment. Include details about private ownership, public ownership, and investment holdings.
• Provide a brief overview of the business’s leaders and command chain
IDENTIFY THE KEY ISSUE OR PROBLEM IN THE CASE STUDY
• In all likelihood, there will be several different factors at play.
• Decide which is the main concern of the case study by examining what most of the data talks about, the main problems facing the business,
• Examples might include expansion into a new market, response to a competitor’s marketing campaign, or a changing customer base.
DESCRIBE HOW THE BUSINESS RESPONDS TO THESE ISSUES OR PROBLEMS
• Draw on the information you gathered and trace a chronological progression of steps taken (or not taken).
• Cite data included in the case study, such as increased marketing spending, purchasing of new property, changed revenue streams, etc.
IDENTIFY THE SUCCESSFUL ASPECTS OF THIS RESPONSE AS WELL AS ITS FAILURES
• Indicate whether or not each aspect of the response met its goal and whether the response overall was well-crafted.
• Use numerical benchmarks, like
– a desired customer share
– show whether goals were met
– analyze broader issues
– employee management policies
– talk about the response as a whole
POINT TO SUCCESSES, FAILURES, UNFORESEEN RESULTS, AND INADEQUATE MEASURES
• Suggest alternative or improved measures that could have been taken by the business
• Using specific examples and back up your suggestions with data and calculations
WHAT WOULD YOU DO?
• Describe what changes you would make in the business to arrive at the measures you proposed
– changes to organization
THIS IS THE CASE:
4 Dave-Anne Stores Ltd.
Dave-Anne Stores Ltd. (DAS) is a business owned by a husband and wife team and they now operate two retail shops selling a wide range of groceries and associated goods to the local community. The business was started a few years ago with one shop. The couple used the proceeds of a family inheritance and their own savings to purchase a lease on a suitable vacant shop and to refit the premises. DAS is a success, although it is a low-margin operation and requires long hours of work. A second shop located in another part of the same town was added two years after start-up using the same funding method to acquire the lease. Both shops now generate revenue of about $100,000 each a year. Each shop had a surplus over all costs of about $10,000 in the last year after the directors had drawn a salary and these funds are currently being retained in the firm. The business hopes to add further units in future years. Apart from the directors, all the staff are part time. Over 90% of sales receipts are in the form of cash or debit card transactions over the counter (the directors do allow a couple of firms close to the shops to have a monthly account for purchases settled by invoice and internet banking soon after the end of each month). DAS is part of a wholesale buying chain that will supply all deliveries during a month on account. The invoice needs to be paid within the first five days of the next calendar month. However DAS collects revenue on a daily basis to meet this bill (as well as a regular VAT bill). As a result, beyond deposit and current accounts, the only external finance products used by DAS are leasing facilities for the small van acquired to move stock between the two premises and for certain items of equipment in the shops (the tills and display freezers). The use of leasing made sense as profits are modest, regular payments also matched income streams and in both cases the goods came with a maintenance contract from the supplier. Discussion DAS is very typical of many smaller retail firms. The core initial funding came from a family inheritance not debt and the two directors wanted to set up a business that in effect also provides them with a job. The use of a wholesale buying arrangement has effectively provided a solution to any cash-flow management needs of the business, especially as they are mainly paid in cash. DAS is a regular user of the local high street bank as it needs to pay in cash on a daily basis but they have no current debt or any immediate plans to start borrowing. Some of the key shop equipment is leased with a maintenance agreement. Although DAS does not have any immediate plans to expand further, this remains the medium-term aim. A consideration could be the method of funding any further expansion. On the two previous occasions, DAS have used a family inheritance to pay the premium of a new shop lease plus fitting out costs. The property is then rented on a monthly basis. This way the premises could be occupied with minimal capital outlay. However, for a third property they would probably have another option as well. DAS now has a track record is setting up and running profitable retail stores. This will be recognised by a bank if they sought a commercial mortgage to purchase the freehold on a third outlet. The monthly accounting surplus from the initial two outlets held in the accounts would fund a deposit and pay for legal costs, while future revenue surplus would cover mortgage payments (indeed, this may not be needed as DAS would not need to pay rent on the new property anyway). Regardless of the method used to fund the acquisition of a new outlet, most of DASs other finance arrangements will easily extend to a third site, notably the wholesaling account and equipment leasing. It would appear that the main issue about expansion may not be one of raising the finance. Rather, a new outlet would have other implications for DAS. At present, each partner can look after one outlet providing oversight and control. A new outlet would require them to appoint a manager for one of the units as well (they have no suitable extended family members to ask to fill this role).