MIR 889 Assignment
Business Case Scenario
Assignment Process: Upload your assignment to Moodle. If you have any
problems with this, you can email it to me. If you have any questions, I can be
reached any time at andrew.graham@queensu.ca.
Your assignment is to prepare a short business case presentation, either in writing
(no more than 800 words) or PowerPoint (no more than 12 slides), to be presented
to your immediate supervisor. Your objective is to gain support for the business
idea, provide as much information as you can based on the scenario, outline further
actions and recommend a course of action. Remember, there are no right and wrong
answers here.
Scenario: Upright Construction Company
Upright Construction was founded by Barry Fenton in 1986. Since then, the business
has grown to over $800,000 in revenues. In Fall 2005, Barry Fenton invited Jason
Corliano, a leading area subcontractor, to join Upright Construction as a co-owner.
Upright Construction is projected to do $990,000 in sales in 2006, with $2,480 in net
profit. Operating costs are high, especially the cost of building materials. The net
profit is calculated after the owners receive their salaries. It also tries hard to keep
its overhead low and costs competitive.
Description
Upright Construction does home renovations for residential customers, ranging
from refinishing basements to remodelling kitchens to building new additions. It
administers the application process for all permits, chooses and manages
subcontractors, orders and stores building materials, and provides project
management.
Competitive Advantage
Upright Construction’s competitive advantage is a combination of its low overhead
and great reputation. Since it buys the majority of building materials at salvage
yards, and the office and warehousing space is located on Barry’s own premises,
Upright Construction can charge very competitive prices. Plus, its longstanding
reputation for quality and integrity in the community makes it a preferred choice for
home renovations. Barry sees the reputation, as spread by word of mouth, as a key
asset not on the books, but there anyway.
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MIR 889 Assignment
Business Case Scenario
Target Customers
Upright Construction targets people making improvements to their homes. In
particular, the business goes after aging baby-boomers, who have more disposable
income and who are getting more reluctant to take on do-it yourself jobs. These
customers place a premium on three things: competitive and fair project pricing,
minimum disruption of their daily lives, and service that emphasizes trust and
communication.
If they’re not using Upright Construction, these customers are either undertaking
such projects themselves – which is becoming more difficult as they grow older – or
they are employing other contractors. Existing customers say they choose Upright
Construction because the company is easy to work with and delivers what it
promises, at very good prices. However, there are a number of similar small firms
competing in the same area.
Industry Outlook
The do-it-yourself trend and the recent decline in residential building will lead
many area general contractors to concentrate more than ever on commercial and
institutional projects. At the same time, Upright Construction expects a
strengthening economy and increased disposable income among baby boomers to
cause the local market for residential contracting services – and home renovations
in particular – to grow in the near future. Upright still wants to stay in the
residential market.
Promotion
Upright Construction already promotes its services through:
1) Printed business cards.
2) A Yellow Pages listing.
3) Signs with the business’ contact information, displayed on the lawn of any home
currently being worked on.
The current Income Statement indicates that the firm spends about $800 annually
on such publicity.
Business Challenge
Maya Fenton, Upright’s Business Manager believes that the firm needs to branch out
in its promotion efforts if it is going to meet the growth targets it has set for itself.
These are outlined in the Balance Sheet below. The community it services, a
growing part of the Lower Mainland of British Columbia, is changing rapidly. This
creates lots of opportunities but also lots of new competition. She feels that even the
firm’s current preferred market – the baby boomers – are looking for solutions in
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MIR 889 Assignment
Business Case Scenario
different places (when was the last time you used the Yellow Pages?) and that word
of mouth reputation works but very slowly. Will it yield 10% growth?
Assignment: Put together a short business case to Barry and Jason with suggestions
for more investments in promotion. You are not required to do a detailed costing
but should suggest how much money might be devoted to each undertaking.
However, you should cover the basic requirements of a good business plan. You
should address the question of how this will be paid for. Attached, for you
information and potential use, is the current Balance Sheet report on the firm. Be
prepared to give a 10 minute presentation of your ideas in class.
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