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Accounting For Manager - Module 9
Accounting For Manager - Module 9
XARAGUA
Prepared by,
1. it’s a new name of coffee and café in the market so most of the consumers and wholesalers
don’t know about it.
2. As it’s a new company it would be obvious that this company have a Limited cash to take a
position, its 3 partners have to arrange cash from some market sources (angel
investors, financial institutions)
Opportunities:
1. 65% of market section like and drink coffee daily as it is the integral part of the people’s life,
so the more the consumer you have the more the profit will increase.
2. There is a very good Growing demand of coffee in youth’s basically Colleges and Universities
students. And if population keeps on increasing then the rate of demand for the coffee in future
has to rise and then company can be able to capture the large amount of market.
Q2. What qualitative (non-number: political, ethical, organizational culture or any topic
other than accounting as examples) analysis need to be done?
A2. Strengths
The item is devoured by 65% of Canada, which can be utilized as solidarity to
promote the item in the market by keeping up the great quality.
The taste of their product is very good compared to their competitors.
Importing the excellent quality espresso from Haiti, consequently decreasing the
expense too.
Generally, less expensive ($3 for ordinary and $4 for Special)
Weakness
Less Known/ New Brand Name
Restricted cash to contribute to the business.
Opportunities
The developing interest for espresso in youth (Colleges and Universities)
65% of the market portion like and drink Coffee every day
Threats
Existing contenders (Starbucks and Second Cup)
Substantial marketing efforts from contenders.
New contestant to the market
Since the area, Kensington, which was chosen in Calgary was profoundly great for
business openings' along these lines the Café Xaragua needs to confront some
monstrous contenders like Starbucks and Second Cup. Starbucks is a universally
perceived name in the Coffee business and has a cutting-edge retail outlet network
worldwide with a remarkable brand picture. They have a renowned contribution,
uncommon and predictable taste of espresso by keeping up the remarkable monetary
position. Additionally, Second Cup is a Canadian espresso retailer having activities of
more than 345 bistros across Canada and is very renowned for its forte in espresso. It
was set up back in 1975 and is a seriously experienced contender.
Q3. What quantitative analysis needs to be done (what numbers need to be calculated)?
A3. After studying the case, to analysis café’s success we can do following quantitative
analysis to give clear picture to estimates and to conclude the decisions of partners.
1. Required customer visits to Café Xaragua need to break even in the first year.
2. Required customer visits to Café Xaragua need to break even in year 2.
The partners estimated they could sell between 200 and 300 drinks per day evenly split
between regular drip and specialty drinks.
So, it is estimated that average of that would be the sales per day that is 250 drinks per day.
50% of
daily 10% of
sales i.e. daily sales
91250 i.e. 91250
II. Now we can prepare a Statement showing fixed cost and calculate Break-even analysis:
Add: Increase in Salary (shifting from part time manager to full time manager) 35,000.00
Q4. What other data would have been helpful for this case?
• Firstly, Rob Lehnert requires identifying the potential market where the business of
the cafe expands and becomes successful. Calgary was the best city for this business.
The reason to launch their business in Calgary was strong economy, higher prices
with a premium product.
• Secondly, to know about the competitors in the market relevant data should be carried
out. As competition is high and Starbucks is the main competitor in Keningston
district, Alberta.
• Furthermore, estimation of cost of the products needs to be done precisely and with
accuracy. As there are chances of wrong estimation or errors which can create further
barrier in the business.
• Lastly, the most important factor is to find out the ways through which capitals will
be raised for the business start up of Cafe Xaragua.
Q5. Role playing as the decision-maker in the case, what do you decide to do and why?
Being the Decision maker, Open a coffee shop in Calgary would be the optimum
solution as It not only give the business a Offline presence but also helps in
joining the competition in the Canadian market, with them bringing a rare product
like Burlap Coffee this gives them the competitive edge in the market.
Keeping in mind few strategies which is needed to be prioritised like: Brand
Image & Quality.
Going for a Offline store helps in creating a strong bond with the customers.