Two brothers that enjoyed customizing anything with a motor, specifically motorcycles, dirt bikes, and Jeeps founded Custom Toys for Big Boys, Inc. Over the last 10 years, Custom Toys for Big Boys has grown to two locations, one in Orlando, Florida and one in Miami, Florida. One brother is at each location, along with a team of mechanics, and specialized trade people that help create the Custom Toys for our customers. We do not sell new bikes or Jeeps, however, we do sell customized items that we purchase, and we do the customization for our customers when they bring in an item. We do everything from paint to carburetors, and take pride in our unique toys designed for the customer. We cleared $1,000,500.00 in actual profits last year and want to reinvest that profit into one of the following three scenarios. Please read each scenario and help us determine which scenario would benefit our brand and our bottom line, while not losing the core of our culture, which is "a customization shop, not an assembly line".

Scenario 1:

A prime location has become available located in Daytona Beach, Florida. The price to purchase the location is $650,000 and any construction costs to revamp and renovate. This location has many bike festivities and tourism year round. This location is not far from the Orlando location, and is only available as a purchase, leasing or renting short-term is not an option.

Scenario 2:

Expand the Miami, Florida location by 10,000 square feet. The estimated cost to complete the expansion is $1,000,000.00 and the expansion would take 6 months to complete. Upon completion, we anticipate hiring on 10 more skilled trade people in order to accommodate the expected increase in business. With this expansion, we could finish five more jobs per week.

Scenario 3:

Expand the Orlando, Florida location by 25,000 square feet and close down the Miami, Florida location. The estimated cost to complete the expansion is $3,000,000.00 and the expansion would take 9 months to complete. Upon completion, we anticipate hiring on five more skilled trade people and move all of the Miami staff to Orlando. All are willing to move. With this expansion and closure, we could finish ten more jobs per week, and all of our expertise would be under one roof.

Please determine which scenario best fits our needs, and why. Come up with a short marketing plan that includes costs for us to evaluate. You may use the following information to assist in your plan:

• Annual costs of the Orlando shop are $480,000.
• Annual costs of the Miami shop are $650,000.
• Annual profit after all expenses of the Orlando shop are $900,000.
• Annual profit after all expenses of the Miami shop are $100,500.

You must evaluate the  above three scenarios and determine which scenario is in the best interest of our company based on profitability, target market, and our culture.

Answer rating: 100% (QA)

I have evaluated the three scenarios using the following criteria Profitability The net profit after deducting the costs of the investment and the annual costs of the shops Target market The potential ... View the full answer