We will use this Fiesta case to showcase the use of ABC analyses in practice and the importance of connecting the outcomes of spend analyses to clear and actionable decisions. Fiesta Gifts is an online retailer of novelty items that is headquartered in Chicago and caters to a customer base of small gift stores. The time reference for the case is two weeks prior to Christmas $2011,$ which is at the peak of the holiday season in the United States. The market is poised to make a comeback three years after the financial crisis of $2008.$ However, the team at Fiesta continues to grapple with teething issues and high spend costs. Concerned with these developments, the CEO of Fiesta, Penelope Sanchez, has tasked her Chief Procurement Officer Peter Bridges with identifying ways to stem the problems. He is assisted by Tara Rao, a recently recruited CFO with a head for numbers, who undertakes a comprehensive spend analysis of the company$$s entire activities to date. Together, they arrive at a set of decisions that hold the promise of turning the company around.

Read the case and answer the following questions:

$1.$ What are the pros and cons of establishing a start$-$up like Fiesta from a supply chain perspective?