Valuation and Financing of Lady M Confections Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Valuation and Financing of Lady M Confections Case Study Analysis

The benefits and cost of expanding or growing the business, are discussed below:

Benefits:

It would increase the stocks or resources, andwould also offer an exponential growth.
It would spread the risk of operating the business and reducing the potential of poor decision or one product damaging the business.
It would allow the company to reach the new markets or customers
It would allow the company to put more funds back into the business.
A larger staff would allow the company to pursue more opportunities from both marketing as well as the sales standpoints.
It would help the company in driving the higher value proposition.

Drawbacks:

Although, selling products to a maximum number of customers would lead towards more cash flowing in the company, but the additional boutique would come with an additional cost.
The competition is getting rigorous with the passage of time, thus lasting greater impact over the company’s the profitability.

The amount of rent for new location is very high i.e. $310,600, shakingthe returnsas well as the revenues of the company.(Garvin, 2004).

Recommendation

Based on the quantitative as well as the qualitative analysis of each of the two options presented to Ken Romaniszyn and Daisy Tom;the option of opening the new Boutique in the New World Trade Center seems to be feasible as compared to accepting the offer from the Chinese investor,because of the reason that the company doesn’t have any plan to expand the the business in the near future, due to which the offer of $10 million from the Chinese investor would not be an ideal one. Additionally, if the company accepts the offer from the Chinese investor; the company would lose access to the China since the franchising rights should be transferred to the Chinese investor.

Additionally, choosing the option of opening the new store at the New World Trade Center would allow the company to attract the maximum number of customer, due to the prime location. Also, the added amount of capacity (one thousand seats within the 560 sq.ft. of the business) is in close proximity, which would help the company in attractingmore customers because of the reason that the people would prefer to come, sit down and enjoy the sweet delights.

Conclusion

Lady M Confections is one of the renowned cake whole sale business companies, which was found in May 2001. The investors of the company arekeen to expand the business to Asia and Middle East.They have an opportunity to open an additional cake boutique in the New York World Trade Center. The particular investor from China has offered $10 million and a line of credit in exchange for the equity stake, with an inclusion of exclusive franchising rights in China.Based on the quantitative and qualitative analysis of each of the two options presented to Ken Romaniszyn and Daisy Tom; the option of opening the new Boutique in the New World Trade Center seems to be feasible as compared to accepting the Chinese investor’s offer,because it would also increase the stock or resources and offer an exponential growth, and it would spread the risk of operating the business and reducing the potential of a poor decision or one product damaging the business.................................

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