Instructors Manual For Canadian Entrepreneurship And Small Business Management 11th Edition By Wesley Balderson
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Supplemental Case Notes Thompson Greenhouse ............................................................................................................................ 1 Robinson Test Prep Co ............................................................................................................................. 4 The Beach Buddy ..................................................................................................................................... 6 Organic Gourmet Express......................................................................................................................... 8 The Winslow Clock Company ................................................................................................................... 9 Windows Tech ....................................................................................................................................... 10 Edge Hockey .......................................................................................................................................... 12 Beach Stake ........................................................................................................................................... 14 The Framemakers .................................................................................................................................. 15 Top Human Tech Inc. ............................................................................................................................. 21 Clovis Jewellers ...................................................................................................................................... 22 Blake Lock and Security Systems ............................................................................................................ 23
Thompson Greenhouse Case overview Thompson Greenhouse is family business owned by Earl and Lisa Thompson. The business has enabled them to supplement their income and provide work for their children. With increased competition from major retailers the Thompsons are unsure how they should compete in the year’s ahead and if they should invest further into their business.
Discussion questions
1. Discuss the implications of the Thomsons’ attempt to obtain additional commercial contracts (the department stores) for their products. 2. Evaluate the decision to construct another greenhouse from a financial and an organizational point of view. (Use rate of return, payback, and break-even analysis in your evaluation.) 3. Comment on the financial health of Thomson Greenhouse through a review of the financial statements.
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4. Discuss the implications for succession of the business if the decision were to pass the business to one of the sons sell the business to someone outside the family. Instructors may opt to use these questions or ask the students to complete a simple case analysis including a problem statement, SWOT, alternatives and recommendation.
Solutions to discussion questions
1. Discuss the implications of the Thomsons’ attempt to obtain additional commercial contracts (the department stores) for their products. Student answers will vary. Students will likely point out that this is becoming an increasing popular choice amongst consumers. Students should also note that the business will come with much lower margins than they have now. Some students may question if the Thompson’s should pursue this type of business. 2. Evaluate the decision to construct another greenhouse from a financial and an organizational point of view. (Use rate of return, payback, and break-even analysis in your evaluation.) The case does not provide all the financial information needed to complete the tasks at hand, so some estimates are needed. To keep things simple: Margin: 20.53% (using revenue and all expenses) New Greenhouse - $75,000 Variable Cost of the Greenhouse - $60,0000 @ 8 percent interest over ten years = $26,861.45 in interest costs. Total repayment including interest would be $86,861.45. Variable cost per year using interest only would be 26,861.45/12 = 2,238.45 Extra Income - $60,000 a year If you read through their financials, most of their costs are fixed and would likely not increase as a result of the added greenhouse. The two extra expenses would be Power and Heat@ $6,450. There is no discussion of additional labour required. Hence the income before income, taxes and depreciation would be: 60,000 – 6450 – 2,223.45 (interest) = $53, 326.55 Beststudy284@gmail.com