Reference no: EM131734001
Part A - Application Case
The Key Lime Pie Company was started in 2006 in Key West, Florida and has become one of the premier providers of the iconic dessert. In 2008, their key lime pie was named the best pie in the country by the American Pie Council, and business was booming. At the same time, even with multiple retails stores and a production facility, in 2014 the company was losing money. The Key Lime Pie Company was featured, then, on the television show, The Profit, and star Marcus Lemonis acquired a controlling interest in the company.
In responding to the questions below, please include and explain appropriate business concepts and citations for any sources used in shaping your responses.
The most effective responses 1) directly address the question, 2) provide specific supporting data and 3) use program concepts and tools. Provide your answers below each question on this sheet, and include your name at the top. Submit your response by the deadline provided by your instructor. Each question can be answered effectively in one or two paragraphs.
From watching the case preview, reviewing the website, and any additional brief research you've undertaken ...
1) What do you observe to be the key one or two strengths of the Key Lime Pie Company that could be used in successful operations and marketing of the organization?
2) What indicators would you use to assess the financial performance and health of the organization? Indicate why the indictors you chose would be most important.
3) Identify one or two opportunities for the Key Lime Pie Company that it should consider in developing strategy and indicate what makes that opportunity potentially important.
4) Given what you know of the organization, identify an ethical issue that you think the organization needs to be most conscious of forming its strategic direction, and indicate why you think that is so.
5) Given your understanding of the Key Lime Pie Company, briefly describe one strategy option for the organization, given your answers to #1 and #3.
6) Given your understanding of the organization, what do you see as the key leadership issues in enabling the organization to successfully pursue the strategy you identify in #5, and indicate why.
Part B -
Problem - Calculate return on investment and residual income for each segment
Shaq Company operates with three segments, Louisiana, Orlando, and LA. Data regarding these segments follow:
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Louisiana Segment
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Orlando Segment
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LA Segment
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Contribution to indirect expenses
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$324,000
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$180,000
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$144,000
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Assets directly used by and identified with the segment
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1,800,000
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1,440,000
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720,000
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Required -
a. Calculate the return on investment for each segment. Rank from highest to lowest.
b. Assume the cost of capital is 12% for a segment. Calculate residual income for each segment. Rank them from highest to lowest.
c. Repeat (b), but assume the cost of capital is 17% for a segment. Rank them from highest to lowest.
d. Comment on the ranking achieved.
Attachment:- Applications Case.rar