CLOSING CASE CHAPTER 11

1. Currently the business strategy is to run one location. What might be the

advantages and disadvantages of adopting this strategy to multiple sites?

Advantages

 Communication is easier because everything is done in one place.

 Less operational costs incurred because of fewer activities carried out.

 Easier to manage and control operations because of fewer employees.

 Local customers are understood better.

Disadvantages

 Lack of closer contact with far-distance consumers.

 Operates in a small market because of its localized nature.

 High risks of closure in case of a severe financial crisis.

 Massive recruitment is challenging because of its one location.

 It’s not competitive, especially when competing among giant companies.

2. Is the cost and effort of legally protecting the company’s intellectual

property a worthwhile investment?

Yes, because according to the case, the party business seems competitive given that

it’s easier to start with low costs hence prone to claims of the patent and copyright

infringement and trademark counterfeit. Companies competing against each other can

steal each other’s information to be the best in the market. Therefore, a company

should purpose to protect its IP to avoid such cases, increasing its value based on
productivity. The creative ideas that a company has worked hard on will be protected

against theft hence a worthwhile investment.

3. Given the existing facilities and staff capabilities, can you identify

additional product offerings?

Since the business has 75% of its market segment as boys aged 6-10 years, it should

consider coming with birthday activities for girls for the market to be evenly distributed.

Some of those activities include fashion-themed parties and frozen themed parties.

Fashion themed parties should involve the birthday girl being modelled with a

fashionable dress, heels etc. because most girls between 8-13 years love fashion

secretly. Henceforth, a fashion can be organized for the girls to match. On the other

hand, frozen themed parties can decorate the birthday venue with blue and white

colours and dress the birthday girl like Elsa from the Disney princes. Also, snowflake

desserts should be served during the dress-up of the station.

Besides, some other product offerings can include:

 Harry-porter birthday party- visual representations of harry potter, for example, in

the birthday stickers.

 Superhero birthday parties- The child having birthday can be clothed, for

example, with superman’s clothing in celebration of his/her birthday.

 Sports birthday parties- Sports activities such as football can be organized for

kids to play during the party.

4. Using informed estimates to fill in the missing data, formulate a financial

summary of the business in its current form. Forecast what these might

look like in a year or two, assuming the hoped-for expansion has been
 realized. Would you invest in a business like this? Are there efficiencies of

scale?

Financial summary

Estimation Year 1 in £ Year 2 in £

Revenue Assuming 4 parties takes Projections

place in each day with 24 Expansion( 20% increase

young people being in both revenue and

present. expenses)

Weekends(295*4*2*52)= 120%*195,880

$122,720

Easter Holiday (2 days)=

(295*2*4)= $2,360

Summer holiday (excluding

weekends-

60days)=(295*4*60)=

$70,800

£195,880 £235,056
Less: Operating Expenses £50,000 £60,000
NET INCOME £145,880 £175,056
Above are just estimations on what the business earns and incurs in its operation.

I would invest in this business because birthdays can occur with or without a recession.

Therefore, it’s an assurance of consistent income. Also, it has a higher probability of

growing in the future because of new customers interested in indoor activities.

Yes, efficiency of scale, because at first, the company will tend to enjoy the economies

of scale during expansion, after which diseconomies of scale will occur, and hence the

lowest point in between the two sides is the efficient scale (price is still competitive).

5. What additional revenue opportunities might the business investigate?

Kid's fitness program- Since the business has a large piece of underutilized land, some

space could be set aside for fitness programs such as physical exercises and games.

This opportunity would generate a lot of revenue because most parents love to take

their kids to sports games.

In-studio parties in brick and mortar locations- Parents are likely to be happier with their

children when a birthday party is held at home in their backyard while enjoying the

business's services. Furthermore, they can be creative to make the party more

interesting than the one done outside homes. This can be a good source of revenue.