You have just graduated from the MBA program from UniversityCanada West (UCW) and are so excited about
Question:
You have just graduated from the MBA program from UniversityCanada West (UCW) and are so excited about the upcoming graduationceremony. Unfortunately, due to the current situation in the world,thankful to COVID-19, your aged parents and your siblings will notbe able to come from overseas.
After several years of hard work and study at UCW, you feel veryproud of yourself and more than ever ready to implement yourbusiness knowledge and your own ideas into practice. Youare very confident that the knowledge your professors transferredto you, will be very useful and you cannot wait to put it inaction.
You have always dreamed, even as a young kid, to have your ownbusiness, a business that will produce jellybean candies. You havebeen talking to your friends about your business idea and many ofthem did not understand why you have such a strong desire to becomea manufacturer of jelly beans. The answer to their question bringsyou to your childhood where your parents told you that candies arenot good for you and never bought you any. You had a very happychildhood full of books, toys, friends, however, notcandies.
You feel now is the right time to think about your dream and toput it into action, and to open your own jellybeanfactory. Your destiny that you were dreaming about forso many years, could become a reality. However, you are aware thatopening a business in Canada is easy but staying in business andbeing successful could be very challenging. You remember from youraccounting and other business courses that sale is a very crucialfactor and without sales and customers your business will not beable to survive for long. You decided to give it a try and startyour jellybean business this year.
Required:
Think of your proposed business and answer the followingquestions under the two-scenario planning, COVID-19 and postCOVID-19 following the six-step process. Before you start workingon the project, read an article “SCENARIO PLANNING – Applying ASix-Step Process To Your Organization” by David A.J. Axson. Thelink is provided in your course syllabus under the “Other RequiredArticles & Resources”.
- What will be your business strategy? Product differentiation orlow-cost provider?
- How much money do you have for investing in your business andhow much money you need? How do you plan on raising cash needed foryour business?
- What will be your selling price per one jellybean bag of 200grams? What factors you need to take into considerations whenpricing the product?
- What variable costs will incur once you start operations?
- What will be your fixed costs? Think of them on an annualbasis.
- To simplify your analysis, think about producing only oneproduct, a mixed jellybean bag of 200 grams. Based on your sellingprice per bag, unit variable cost, and total fixed costs, perform abreak-even analysis to compute how many bags you need to sell tocover all costs from your revenue and generate zero income. What doyou think, is it feasible to break-even in the first year inoperations? Briefly explain.
- You are now curious to know how many jellybean bags you need tosell to earn an income of $50,000 Canadian Dollars. What do youthink, is it feasible in first, second, or third year? Brieflyexplain your findings.
Note: During your quantitative andqualitative analysis, be reasonable and objective. Do not consideronly costs but other factors as well.