Read the cases (A & B) in your HBR course Pack on A Couple of Squares Gourmet Cookie Company. You are given assumptions and some cost data in the case. You may need to adjust those estimates and make your own assumptions given your judgement and recommendation on business strategy and evaluation of competitive set. 2 1. Please complete the chart below to demonstrate understanding of the financial targets for A Couple of Squares and their current financial plan. (10 pts) Year Sales Goal % Increase over prior year COGS Gross Margin % Expenses Profit Target % Increase over prior year Profit % 13 1.8 MM $1,242,000 $396,000 $162,000 14 2.0 MM $1,380,000 $340,000 $280,000 15 3.5 MM $2,415,000 $525,000 $560,000 16 5.0 MM $3,450,000 $750,000 $800,000 2. Pricing Action: In the beginning of Case B, it is revealed that ACOS determined they would take a price increase that would guarantee a 10% margin, from the 8% presented in case A. Upon investigation of current pricing and margin in the cost data in Case A, Exhibit 8, you could find their current margin is at 9.1%. Do you think the 10% margin would be good enough to meet their financial goal? What level of price increase would be needed to take them from $1.3 MM in Sales to their sales goal of $1.8MM, assuming quantity is stable. (20 pts) 3. E-commerce initiative: What are the risks and benefits for A Couple of Squares in launching an e- commerce site? What steps could be taken to mitigate the risks? (Be sure you consider the competitive set, channel and operations management issues.) You need a minimum of 3 benefits and 3 risks. This answer should be presented as a table, or chart. (10 pts) Benefits of B2C Online Selling Risks of B2C Online Selling Risk Mitigation 4. Revenue and profit for the B2C business. (20 pts) The rTraction business model estimates a 35% margin for B2C cookies sold. It is also stated in the case that the margin on B2C cookies could be as high as 55%. Look at the competitive set, and determine the proper product strategy and pricing strategy for ACOS B2C initiative. What is your margin target? Assume COGS are stable. Estimate the revenue and profit for the B2C business based on your margin target. 5. Compute the break-even for paying for and promoting the website in terms of units (number of cookies, or boxes of cookies) and time (how many months). You will need to make several assumptions, detail your assumptions and show your work. (20pts) 6. Does the e-commerce initiative solve ACOS problem in growing the business adequately to reach their goals? If not, what other growth initiatives should be pursued? Show that the initiatives you propose are practical and estimate financial impact, showing your assumptions. (20pts) 3 Team Project Assessment 1. 50% of your grade for the assignment is based on thoroughly answering all of the assignment questions and following the additional guidelines below. 50% will be assessed based on: Logical reasoning and enough elaboration. Well-supported defense and assumptions Explaining and supporting WHY your answers make sense as a whole. Points will be deducted for inconsistencies, flawed reasoning, and unsupported conclusions. 2. Submission Only one of your team members must submit the assignment via CANVAS. 3. Mechanics Use question numbers, headings, subheadings appropriately. Proper spelling, grammar, and punctuations must be followed. Spacing, alignment, capitalization, punctuation, and spelling are all correct. Any graphs, charts, tables, etc. must have proper titles, and X and Y-axes of graphs are provided. Styles (fonts, colors, etc.) are consistent throughout each assignment. Graphs or charts must be used to present numeric data showing proportions, trends, rank, or comparison. Assignments must read as if written by a single "voice." Sources of information (e.g., facts, graphs, charts, etc.) should be provided following APA style. All sources must be cited. Poor spelling, grammar, etc. are usually indications that you have not put enough time and/or thought into the assignment. Your future managers do pay attention to these details, so we enforce the same to help you develop good habits.