Question

a. Expanding the number of stores in a foreign market, such as the expansion plan launched by Starbucks in China (announced in 2018), is a major capital budgeting project. A project of this scale requires coordinated planning across all functions of a business that you are studying in your Integrated Core classes. Choose and discuss three items on the income statement and balance sheet (a total of six items) that you think this new undertaking will effect. Explain why you chose those particular items, and how the marketing, management and operations decisions of the company will affect them.

b. Choose and calculate three ratios for Starbucks for the last two years. Make sure to select ratios that you think that expanding into a new market will affect, and explain your reasoning. Identify a competitor of Starbucks and contrast these three ratios for the two companies. Explain why you selected this competitor. Describe how the decisions made by management, marketing, and operations functions of the company can impact, and hopefully improve, the components of firm operations that these financial ratios measure.

c. Explain how the financial decisions regarding opening a new store are related to management, marketing or operations decisions that the company must make (or has made)?

huge thumbs up to any help- im really stuck

Answer 1

1) For the successful expansion of business it is necessary for every company that before expanding any new store in the foreign market , company should make thorough analysis of the market demand and should review whether customers in the market are liking their product or not.

New undertaking will effect following three items in the income statement : Sales, Purchases and expenses ultimately income will get affected.

In Balance Sheet following items get effected : Loans and borrowings if any taken to expand the business i.e. expanding new stores, capital structure changes , Assets enhanced , stock increases.

When proper marketing of products will be made then that will increase sale and due to that profit will also increase.

more & more purchases will be made to fulfill the market demand

when new stores will open company assets will increase

3) financial decision of opening a store is truly dependent on management and operations because before entering any new market a market survey will be made based on management instructions and then management will take decisions based on that survey that whether a store should be open or not in that area and any changes if needed in the product.

marketing plays a crucial role because without advertisement people would not be aware about your product as well as your store so good marketing will increase sales and

business operations when run smoothly and in coordination, increases the creditabillty of the company and helps in increasing the customer base.

Good relations should be made with customers .