Case Study: The Cheesecake Dilemma
Meet Cheddar’s Cheesecakes, a quirky little bakery famous for its outrageously delicious cheesecakes—and its even more outrageous owner, Barry Cheddar. Barry recently stumbled upon an exciting opportunity: opening a second location next to a gym. “Because who wouldn’t want to reward their workout with a cheesecake, right?” Barry proclaimed to his team, receiving a mix of nervous nods and muffled laughs.
However, Barry has a problem. His accountant, Ms. Penny Pinch, warns that the business’s cash reserves are low, and this expansion will need careful financial planning. Options for funding include taking out a loan, bringing in an angel investor, or crowdfunding. Each option has its pros and cons—and Barry is not the best decision-maker, as evidenced by last week’s “pickle cheesecake” experiment.
To organize his thoughts, Barry suggests conducting a Force Field Analysis. He invites his team to help weigh the driving forces for the new store, like increased revenue potential, brand growth, and proximity to health-conscious customers, against the restraining forces, such as high start-up costs, the risk of alienating loyal customers who prefer the original location, and the unknown demand for cheesecakes in a gym-goer demographic. Barry also wonders if the pickle cheesecake fiasco might have tarnished their reputation.
Barry is counting on the team to guide him toward a sweet decision. But will they?
Q1. Identify the types of costs Barry will face in his expansion plan and classify them as fixed, variable, and direct, or indirect.
Q2. Explain one advantage of both an internal and external source of finance that Barry could consider.
Q3. Create a simple Force Field Analysis for Barry’s idea. List three driving and three restraining forces for opening the new location. Add the weights yourself and then indicate what the business should do.
Q4. Explain one strength and one limitations of Force Field Analysis as a decision-making tool in this context.
Scour the latest business news from around the world and try to find a story about a business which has just made a major decision. This could be about a merger, going public, cutting the workforce, a major new investment, or anything really!
Once you have found your article, I want you then to do some additional research so you can then create your own forcefield analysis as if you were working for the company when they made this decision.