BC CASE ANALYSIS

ARROW PRINTING AND PUBLISHING

Submitted to:

Dr. Niva Bhandari

Submitted by:

Shashank Agrawal (PGFB1446)

Saurav Dey (PGFB1444)

Situational Analysis

The case is set upon the dilemma faced by the owner of the Arrow Printing and Publishing, Mr. Dunnet. Mr. Dunnet purchased the company in 1979 at 60,000$ from its previous owners. Now he has developed this firm into a very profitable venture with some very loyal customers. The firm has two employees that is himself and his son peter, he is also helped in petty affairs by his wife who otherwise work a fulltime job.Mr. Dunnet has a heart for politics and has been associated with local politics for quite some time, so he needs to make a decision of what to do with the firm. He has multiple options from which he could choose, the major ones include selling the firm or continue running it and, expand it.

Problem Statement

The problem statement is what should Mr. Dunnet do based on the data on hand, what decision he should make for future of Arrow Printing and Publishing.

Options

The options available to Mr. Sam Dunnet are:

Selling Sell to his son Peter Sell to an external buyer

To expand the business by inviting a salesperson from an existing company

Criteria for Evaluation

Selling to peter:

Available work hours

Monthly rent

Interest in the business

Knowledge of the business

Selling to an external buyer:

Advertisement cost

Uncertainty regarding operations

Chance of bad debts

Increased need for advertising

Decrease in production cost by 10%

Expanding the business:

Available market opportunity

Growth rate of 25%

Ownership reduced to 51%

Funds for new machinery could be obtained easily

Evaluation of options

For selling to peter Rent= $5000Amount Mr.Dunnett would generate: $60,000

For selling to external buyer

Calculating Profit of buyer: Profit= $93,173 Bad Debt Expense= $ 920 Deducting 10% cost of production= $6315.6Total Expense= $57,164.4Profit earned= $36,008.6Therefore the external buyer will pay Mr.Dunnett the amount less than this, estimating the amount to be $ 30,000

For expanding

Sales: 200,000 Machinery cost: 50000075% of the total cost is non-repayable: $375000 Therefore the Amount he have to pay= $125000Also he would be selling 49% of the company Stocks.Estimating 1 Stock value = $600 Therefore Amount earned= $29400Also profit Earned by Mr.Dunnett will be around= $75000As he would be Expanding in the field of four color specialty web work.

Recommendation

Therefore most benefits would be enjoyed in the case of expansion where all the good opportunities for both peter and sam would be present. Peter would get to work and sam will get to serve his loyal customers while enjoying even more profits, so expansion is the best option.

Action Plan

The action plan could be implemented in steps:

To find a suitable partner for the business To procure proper machineries for expansion Advertise to get attention of new segments of customer, interested in their new services

Contingency Plan

The contingency plan should be in order to back up all the data in case of some disaster. Also proper insurance should be planned to cover damages in case of disasters. So, Mr. Dunnet needs to have proper plans to deal with any problem that may harm the business.