1. Briefly DESCRIBE the advantages and disadvantages of buying an existing business (AT LEAST FIVE OF EACH). In addition, what would you see as the most important advantage of buying an existing business and what disadvantage of buying an existing business would concern you the most? Explain your choices.
2. Case 5-1:Can You Trust Mom and Pop?
“To tell you the truth, son, Mom and I just want to retire and take it easy. We’ve operated this restaurant for a lot of years and have built up a good customer base. Mom’s cooking has always brought them in and the service has always been quick and courteous.”
Jim Phillips is well aware that a restaurant can be a profitable business venture, but he doesn’t know much about Mom & Pop’s Diner and how successful it really is. Fred and Ethel, the owners, appear to be straightforward, honest people. Jim recently saw the ad for the restaurant in the state trade association magazine and has driven 200 miles to check it out.
Mom & Pop’s Diner is located in a working class neighborhood in a large Eastern city. It is housed in an older building and could use some renovation. When Jim mentions the condition of the equipment, Ethel laughs and says, “They don’t make stuff like this anymore, Sonny.” Jim also is concerned by the fact that several franchise restaurant chains have opened in the past few years within one mile of the diner. Jim is puzzled when he asks Fred if he can study the diner’s financial statements for the past five years and Fred says, “What financial statements? What do you think we are, a corporation? I guess last year we cleared about $90,000.”
Respond to the following questions:
If you were Jim Phillips, how would you further investigate Mom & Pop’s Diner?
Identify any warning signs to Jim that all may not be as it seems.
What are some of the potential problems Jim faces if he buys the diner?
3. Discuss how a company can achieve stellar customer service and satisfaction.
4. Discuss the advantages and disadvantages of using radio and television advertising. (Provide AT LEAST THREE advantages and disadvantages for EACH medium.) How and why would you choose one over the other?
