(Answered) Write my case study help on the topic ''The Valuation and Financing of Lady M Confections'' - Essay Prowess

(Answered) Write my case study help on the topic ”The Valuation and Financing of Lady M Confections”

(Answered) Write my case study help on the topic ”The Valuation and Financing of Lady M Confections”

Paper instructions:
A:Questions/Considerations for Lady M Confections:
1. What is important to succeed in the foodservice industry?
2. How unique is their model? Could it be replicated?
3. What are the barriers to entry? What is the limit on growth?
4. How many cakes would Lady M need to sell in a year in order to break even?
5. Assuming sales in year-one are break-even, how quickly would sales need to grow after the first year to pay for the start-up costs within five years? Is this growth rate feasible?
6. What is your recommendation? Should Romaniszyn open the new location in the World Trade Center?
7. What is Lady M’s enterprise value? Does it matter if one uses an EBITDA multiple or a perpetuity growth formula for a terminal value? How much of an equity stake should they be giving up to the Chinese investors?
8. What do you think of Romaniszyn’s and Tom’s baseline assumptions? Are they realistic?
9. Do you think they should take the Chinese investor’s offer? Why or why not?
B: Provide a bibliography and reference all facts/quotes

Solution

“Valuation and Financing of Lady M Confections”

Case Summary

            Lady M confection is one of the successful cake wholesale business instituted in May 2011. The increased growth and profitability of Lady M was presented in public magazines; Vogue, Harper's-Bazaar, and Oprah (Desai & Meyer, 2015). Due to the considerable market share, the restaurant wishes to expand its operations to the Middle East and Asia. Investors have offered $10 million credit for the equity of this organization and lose franchising privileges in China. Lady M contemplates instituting a boutique in the WTC. The yearly rent for the new periphery ranges is approximately $310,600. The restaurant should now decide whether to adopt the Chinese offer or World Trade Center. For the breakeven analysis, the profits relate to the organization's benefits and growth (Desai & Meyer, 2015).

Question1: Foodservice industry Success

            To succeed in the foodservice industry, the restaurants should work to position their brand based on the customer's requirement. The firm should have customized and appealing products that customers prioritize from other competitors' products (Fuller, 2016). The differentiation to quality and healthier foods can help in maximizing the customer relevancy and competitive distinctiveness. The second strategy is making its services convenient to increase the accessibility and reliability of the food. This is attained by establishing distribution channels to a new location (Fuller, 2016). Based on Lady M, the firm should also offer effective leadership to run the product sourcing, co-ordinate advertising, decision making, among other management activities. Leadership plays a significant role in the expansion and growth of the foodservice industry.

Question 2: Lady M. Model

            Lady M confections utilize the differentiation model to outdo other bakeries competitors. The company emulates the Japanese cakes rather than the ordinary sugar-laden loaves that are familiar to American consumers. Romaniszyn focuses on Japanese cakes that offer less-sweet delicate taste and aesthetics-pleasing foods.  The design of the Mille Crepe makes their model more productive and customer-attracting.  The Lady M model cannot be replicated. According to the case, numerous foodservice companies have tried replicating the Mille-Crepe, but they fail to meet the scale of cakes and quality produced in Lady M. Company.

Question 3: Entry Barriers

            There numerous barriers for the Lady M. company towards investment entry and expansion in the WTC. For Romanisyzn to set the new boutique in the new location, approximately $600,000 are predicted to be used for construction activities. At this location, the rent is $310,600 higher than other regions, with an escalation of 3% annually (Desai & Meyer, 2015). The annual labor cost has a 5% yearly escalation in $594, 750. Therefore, this is an extra cost that is very expensive for Lady M to ascertain. Romanisyzn acceptance of the Chinese investor's offers to the company would make the company lose franchising privileges to china. Lack of sufficient funds and fear of franchising rights loss are the two limiting factors for Lady M growth (Ageropoulos & McGee, 2015).

Question 4: Cakes Required to Break-Even

The Net Revenue = (Total Sales- Total Cost)

The Total Expenses = Companies Utilities+ Cost of Goods sold+ Labor + Rent

The COGs Sold = 50% of Total sales

Therefore, for the restaurant to break even, it needs to;

In the Year One

Amount in Dollars

The labor cost (escalation 3%)

594,750

The Utilities (escalation 3%)

38,644

The rent (escalation 3%)

310,600

The labor cost (3% escalation)

594,750

COGs (50% gross sales)

943, 994

Total sales

1,887,998

Cake Price

80

Cakes to be sold in a day

23, 600

Average cakes in a day

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