Part One:
At the end of Chapter 6, read Situation 3 and using the questions as a guide, discuss recommendations.
At the end of Chapter 7, read Situation 1 and using the questions as a guide, discuss recommendations.
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CH. 6 Situation 3
situatiOn 3
John Martin and John Rose decided to start a new
business to manufacture noncarbonated soft drinks.
They believed that their location, close to high-quality
water, would give them a competitive edge. Although
Martin and Rose had never worked together, Martin
had 17 years of experience in the soft drink industry.
Rose had recently sold his fi rm and had funds to help
fi nance the venture; however, the partners needed to
raise additional money from outside investors. Both men
were excited about the opportunity and spent almost
18 months developing their business plan. The fi rst
paragraph of their executive summary refl ected their
excitement:
The “New Age” beverage market is the result of a
spectacular boom in demand for drinks with nutritional
value from environmentally safe ingredients
and waters that come from deep, clear springs free of
chemicals and pollutants. Argon Beverage Corporation
will produce and market a full line of sparkling fruit
drinks, fl avored waters, and sports drinks that are of
the highest quality and purity. These drinks have the
same delicious taste appeal as soft drinks while using
the most healthful fruit juices, natural sugars, and the
purest spring water, the hallmark of the “New Age”
drink market.
With the help of a well-developed plan, the two men were
successful in raising the necessary capital to begin their
business. They leased facilities and started production.
However, after almost two years, the plan’s goals were not
being met. There were cost overruns, and profi ts were not
nearly up to expectations.
Question 1 What problems might have contributed to the
fi rm’s poor performance?
Question 2 Although several problems were encountered
in implementing the business plan, the primary reason
for the low profi ts turned out to be embezzlement. Martin
was diverting company resources for personal use, even
using some of the construction materials purchased by the
company to build his own house. What could Rose have
done to avoid this situation? What are his options after
the fact?
CH.7 Situation 1
SituatiOn 1
Tina and George Showalter opened the Blonde Bear Bed
& Breakfast in Kenai, Alaska, in 2005. According to Tina,
“Our first summer, we did great with word-of-mouth
advertising, and then we got involved in the Internet,
and it has pretty much exploded from there.” In
this town with a population of under 10,000, 50
businesses signed up with MerchantCircle.com, a local
business listing service. The site provides business
descriptions, reviews, blogs, coupons, maps, and
links among the companies. The cross-promotional
and networking benefits have proven valuable to the
businesses on the site
Question 1 What businesses do you think would
benefit most from being on a local website in your
hometown?
Question 2 How do businesses that provide such local
Web services diff er from newspapers and Yellow Pages?
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