The Missing Pet Assignment Example | Topics and Well Written Essays - 750 words

The Missing Pet - Assignment Example Were any assumptions they made unreasonable? Fred and Dwayne were armed with more than enough experience, brains, commitment and motivation needed for business success but the numbers didn’t exactly add up. They had perfect access to the market since they knew the industry well because of their long term association with the industry. Fred being a sales person had access to customers whereas since Dwayne was a buyer he had contacts with suppliers strengthening the business and justifying their business plans. Fred's 6 years experience and Dwayne's 9 year experience with an impeccable background of bringing profits was also a bonus to the business as both of them brought with them diverse, successful experience from the same industry. Their business plans were accurate and while Dwayne shored customers, Fred worked to draw business plans. The business started after considerable long term planning and at least studying the market for seven months, therefore their business and ma rket analysis and projections can also be considered accurate. The only glitch in the plan and the initial hurdle was a lack of financing which was assured by a friend. The problem with the plan was that it was a personally guaranteed bank debt which was not guaranteed well after the initiation of business. Thus access to capital was not present and the availability was not confirmed. This could stop all activity as capital is the lifeblood of business and eventually led to problems. Thus though Fred and Dwayne were armed with all intangible resources for business, the main resource which was financing was not available and led to business problems as they had wrongfully assumed its sure availability and the opposite happened. 2) What were the ethical issues facing Dwayne and Fred in contemplating starting their business? The main ethical dilemma for Fred and Dwayne was to be loyal to their current employer despite knowing that he is going to be their competitor eventually. Working with diligence for ACME pets meant that they will be penetrating and securing the market for ACME, thus decreasing the saturation level of the market and thus reducing their potential for future success. Being completely honest to ACME will mean that they will be grounding ACME more firmly which is not viable for their future business but their ethical and moral responsibility now. This meant they had to decide between their future benefits and current ethical responsibilities. 3) Build a simple income statement for Fred and Dwayne's first year based on the numbers in the case. Based on the first years projected profit, is this business worth it? Why or Why not? What additional information do you need? Income statement Gross income $1000000 Cost of goods sold(Inventory) - $ 700000 Operating expenses+ interest - $ 288000 Startup costs - $ 87500 Net income (loss) $ - 75500 The projected income for the first year in business is the loss of $75500, but that includes the startup costs as well. The first year for any business is very crucial and businesses normally suffer a loss in the first year. It is generally after the first year that businesses break even and start generating profits so losses should not deter Fred and Dwayne from initiating the business. It should also be considered that the amount of losses is less than the startup costs which will not be incurred in the second year and thus the business can expect reasonable returns and profit in the second year. Thus this business idea is qyuite feasible. Other expenses incurred are also needed and the amount of taxes incurred will also be needed to generate a definite income statement. 4) What would you recommend Dwayne and Fred to do in their current situation? What are their options? If at all possible how might they make this work? Dwayne