Author: chris

Dream Dinners: Evaluating a Franchise Opportunity

John Stocker, Alfred Lerner College of Business and Economics,
University of Delaware, 319 Purnell Hall, Newark, DE 19716, 302 419 7665, stocker@udel.edu

Dinara Maskulova, Alfred Lerner College of Business and Economics,
University of Delaware, dinara@udel.edu

Paul Roseman was deep in concentration reflecting hard on his recent business venture. The franchise opportunity was only an idea a year ago. The investment seemed reasonable, the time to profitability appeared short, and the required skill set matched up well his background and interests. Unfortunately, the new venture had not panned out as expected. The business was bleeding cash and a decision had to be made to continue or pull the plug. Regardless of the decision made, Roseman was determined to learn from this experience. Looking back, he wondered if there was anything else they could have done in assessing the venture.

Paul Roseman was hunched over the latest set of financials from his family’s venture into the world of franchising and the numbers did not look good. For 18 months “Dream Dinners” hovered on the brink of profitability, but had consistently fallen short. After an initial investment of $40,000, signing on to a $250,000 SBA loan, and pumping another $36,000 into the business, Roseman was wondering when they would turn the corner. He knew he needed to make a decision to cut his losses and fold up shop or continue trying to forge his way to profitability. Roseman wondered if there was a better way to assess the true risk of a new venture. At the time of the initial investment the numbers looked good and the assumptions seemed reasonable. At the end of the day, Roseman was determined that if the business did go south he wanted to learn enough from the experience to avoid a similar situation in the future.

Background
Dream Dinners is a retail service center hosting pre-arranged sessions for the preparation of self- prepared home meals. Its primary value proposition is to help families both save time and enjoy healthy, delicious dinners in their own home. At a Dream Dinners location a client can assemble six to 12 entrees or more for the month in about two hours and then take the assembled meals home to cook. Dream Dinners provides the meal plans, ingredients, and kitchen facilities for preparation.
Dream Dinners was co-founded by Stephanie Allen, a working mother searching for a way to provide higher quality meals for her family. In 1986 Allen began preparing and freezing entrees for later cooking and consumption. She found that freezing the raw materials resulted in better  tasting meals when compared to reheating previously-cooked entrees. Over time she developed a collection of recipes.
In 2002, Allen hired Tina Kuna, a friend with management experience, to help with the growing demand.   The pair hosted “meal assembly” sessions that generated enough interest to warrant opening a retail establishment. Allen and Kuna opened two more locations within six months and, by December of 2003 the partners opened 35 new stores after reviewing more than 6,800 applications. In January 2004 they moved to new offices in Snohomish, Washington. The new facilities included a recipe test kitchen, corporate training facility, and playground for employees’ children. In less than three years Dream Dinners made the leap from home kitchen to national prominence. To a potential franchisee the value proposition seemed appealing:
At Dream Dinners, busy parents who want their kids to eat right can crank out 12 meals, up to 72 servings, in less than two hours for just $250. The company insists (based on its own research) that preparing those same meals at home would require 18 to 20 hours of shopping and cooking and cost between $525 and $585.

The Opportunity
Margaret Kramer was searching for a business opportunity in 2007 when she came across Dream Dinners. She liked Dream Dinners commitment to providing high quality, nutritious meals at a reasonable price. By 2007 Dream Dinners was on track to launch almost 200 new retail establishments for the year. Based on the franchise information, Kramer believed the opportunity provided a good return on investment with limited financial resources. Dream Dinners estimated a required initial investment ranging from $245,000 to about $370,000 with the potential for profitability in just a few short months. The initial investment would cover the site preparation and modifications, equipment purchases, permits and licensing, and operating expenses for six months of operations.
Exhibit 1 shows the pro forma financials distributed by Dream Dinners to potential new franchisees. The financials indicate that with only 187 monthly customers spending an average of $178 per month, an individual store could generate approximately $75,000 a year in operating profit. After reflecting on the numbers Kramer believed achieving 350 customers a month was highly achievable.

The Market
Santa Fe, the Capital of New Mexico, has a population of approximately 150,000 and a median family income of approximately $53,000 per year. A tourist destination and home to St John’s University, Santa Fe is the oldest capital city in the United States. The city seemed well suited to the Dream Dinners concept. While this would be the first Dream Dinners in Santa Fe the “meal assembly” concept appeared to be gaining traction as two other firms have also made plans to establish retail outlets in the city.
The Initial Investment
Kramer pulled the trigger and invested $80,000 in personal savings and took out a $253,000 SBA-backed loan to establish the franchise. After the initial euphoria wore off Kramer quickly realized that she was overmatched. Handling the day to day responsibilities of keeping the retail operation running smoothly while seeking out new customers required more hours in the day than were available.
At about the same time that Kramer launched the new venture Paul and Carrie Roseman were also looking for a new business opportunity. Both had success in past business ventures. Paul currently ran a successful consulting firm while Carrie had extensive experience in catering and marketing. The plan was for Carrie to take the lead on the new venture and for Paul to help when needed.
Margaret and Carrie were social acquaintances that had known each other for several years. About four months after launching Dream Dinners Margaret ran into Carrie and updated her on Dream Dinners. Carrie was intrigued by the concept and after numerous discussions with Margaret began to feel that it would be a great opportunity. The Rosemans opted to buy into the franchise, purchasing 50 percent of the equity for $40,000 and co-signing on the SBA loan.

The Results
Exhibits 2 and 3 present the results of operations for the last 11 months operated under the partnership and the beginning and ending balance sheets. During this time Dream Dinners had lost over $50,000 with monthly results ranging from an operating profit of approximately $5,000 to an operating loss of close to $14,000. During the six months prior to Carrie’s involvement Dream Dinners had lost a total of $58,000. Margaret had not taken a salary during the last 17 months and Carrie had gone without a salary for 11 months). Both were working full time in the business, although Margaret was currently running out of money and was seriously considering taking a full time job. The combined salaries of Carrie’s and Margaret’s last full time jobs was in excess of $10,000 a month and both felt they could be employed at this level if necessary. The SBA loan carried an interest rate of 6.5% per year and a 20 year amortization. Fixed assets had an average life of 10 years and were depreciated using the straight-line method to a zero salvage value. Intangibles were amortized on a straight-line basis over eight years.

Questions
⦁    Compare to the pro forma projections in Exhibit I to the actual results presented in Exhibit II – how was Dream Dinners performing? What expenses did the pro forma statements conveniently leave out?

⦁    Given the recent performance calculate the breakeven point in sales. With the size of the market and level of competition is it reasonable to expect to reach this level of sales?

⦁    Based on Exhibit I prepare a discounted cash flow analysis (NPV). Assume the different scenarios in Exhibit I represents year one through four. Are there any other operating costs that should be considered? Assume a 35% tax rate, depreciation rates as presented in Exhibit II, a cost of equity capital of 20%, and an operating profit valuation multiple of 5. Apply the valuation multiple to the projected cash flow in year four add it to the projected cash flow for year three. Does the venture appear profitable?

⦁    Use a Monte Carlo simulation approach to gain a better appreciation for the risk of the venture. Assume that the average number of monthly customers will vary between 187 and 350 and COGS will vary between 45 and 60 percent of sales. Based on running 5,000 iterations what is the expected NPV and standard deviation? How do these results compare to the analysis conducted in question 1 above?

⦁    What are the lessons learned?

Appendix
Monte Carlo Simulation
Effectively evaluating any investment opportunity requires estimating potential cash flows, the risk associated with those cash flows, and evaluating the potential return relative to risk. Net Present Value (NPV) and the Internal Rate of Return (IRR) are two methods widely used by businesses throughout the world to evaluate investment opportunities. NPV requires an estimate of likely cash flows discounted back to the present at the appropriate cost of capital, while the IRR equates the initial investment to the present value of future cash flows. The decision rule calls for the acceptance of projects with a positive NPV or IRR greater than the cost of capital. Adjustments for risk typically take place through an adjustment of the cost of capital. For example, assume the following investment opportunity in which a $250,000 investment generates expected annual cash flows of $200,000 per year:
Exhibit 1

Assuming a 12 percent cost of capital the project generates an NPV of approximately $470,000. With no capital constraints and a positive NPV, we would proceed with implementing the project.
Given the uncertainty underlying the revenue and expense projections, the point estimates for NPV and IRR only tell part of the story; by themselves they tell us nothing about the distribution around the point estimate. Simulating the projected results by allowing key inputs to vary over a large number of iterations is one approach for generating a probability distribution of possible outcomes. Monte Carlo (MC) simulation is one of several techniques available to assess the risks surrounding the investment decision.
Simulation
Extending the above example by simulating the results utilizing a MC approach let’s assume that the expected number of units sold is 7,000 per year with a range from 4,000 to 8,500 and that the expected cost of a key input is $150 per unit with a range from $130 to $200. Using the random number generator in excel, it is possible to simulate product demand and variation in the cost of the key input. (Exhibit 2 illustrates this point).
Exhibit II

Demand = $D$10+RAND()*($E$10-$D$10). Where D10 is the minimum units sold and E10 the maximum units sold. RAND() generates a random number between 0 and 1. The cost of the input is calculated in a similar fashion.
Tying the demand functions to the NPV analysis and hitting the F9 key will “reset” the random number generator and calculate a new NPV estimate each time the F9 key is hit. Exhibit 3 illustrates one possible outcome.
Exhibit III

On a separate worksheet we can set up each row to generate an NPV estimate. Again, each time F9 is hit a new NPV value is generated.

Exhibit VII

Finally, we can calculate a number of descriptive statistics based on the distribution of NPVs. This example yields a range of possible NPV values from a negative $640,000 to $749,000 with a standard deviation of almost $200,000. Not only does the simulation provide a more conservative point estimate of the NPV and IRR, but it also provides the decision-maker with a much richer understanding of the characteristics of the possible outcomes. All of the measures calculated below are done with standard excel functions. The probability of the positive NPV is calculated as the number of positive NPVs divided by the number of iterations (5,000). While the initial analysis looked positive, a deeper analysis suggests that significant risk exists that the probability of losing money on the venture is significant—64 percent based on this simulation!
Exhibit IV

The Final Paper (30%)
In this final assignment, you will design a total rewards program based on an existing organization that you have studied earlier in the course or, with the instructor’s permission, a different organization.
Before creating the final projected total rewards program, you will have conducted a research project in which you have obtained thorough and detailed information about organizational goals, objectives, and challenges. In addition, you will have obtained information about the current monetary and non-monetary rewards and work environment of the organization and the challenges or changes (such as expansions, downsizing, changes of services or products) the organization anticipates. You will have also designed metrics to evaluate the total rewards program.
In the final paper, you will provide the research findings in a report of at least 10 pages plus a title page, reference page, and appendix documents including implementation timeline and metrics. Provide at least eight sources (in APA format) in a reference list and respective in-text citations. Please be sure to use topic headings and include the following:
1.  Provide a Title Page in Academic Format
2.  Give the Introduction and Purpose for the Paper
3.  Summarize and describe the organization, including its capabilities, key goals, objectives, challenges, values, and core competencies required for success.
4.  Show your knowledge of the total rewards model by describing the current total rewards philosophy of the organization and its three categories of offerings.
5.  Identify and describe the segmentation of the workforce (drawing up our study of how to differentiate employee groups depending on their drivers, such as flexible schedules, growth potential, desire for demonstrating individual expertise or team success, low obligation and easy income, or high obligation and high income).
6.  Describe further the current requisite capabilities of the organization and the competencies (knowledge, skills, and abilities) of the employees and, in your opinion, an analysis of whether the current needs will change given the issues faced by the organization.
7.  Recommend changes to the total rewards program, along with specific plans, including plans for communicating the changes and metrics that should be used by the organization to evaluate the success of the new program.
8.  Present the justification for your recommendations.
9.  Assess and discuss the risks of not implementing the program and the opportunities the program will give the organization.
10.  Provide your metrics for evaluating the total rewards program and share why you chose the ones you did. Be sure to include how you will collect the data for each metric and how you will set the targeted goal for each metric.
11. Present a general explanation for the timeline for implementation in the paper. You may refer to the implementation task list and timeline in the paper and share that it is in the appendix (but submit the implementation task list and timeline as a separate assignment for grading).
12. Describe your conclusions and a summary of knowledge gained about total rewards through the activity of writing this paper, designing the implementation task list and timeline. .
13. Reference Page (with at least 8 scholarly sources).
14. Appendix for any supporting documents (such as organization charts, copies of the implementation task list and timeline, metrics chart, sample of communication) you want to include (the appendix is not required if you have no documents to share).

Instructions
Timeline and Implementation Plan
To supplement the final paper, you will develop an action plan for implementing the recommendations for the total rewards program. You are encouraged to use a Gantt chart or Pert or similar graphic to display a timeline and the interdependence or sequence of the activities.
A good action plan contains specific and quantifiable steps; the order in which those steps are to be taken; the individuals responsible for each step; the individuals responsible for overall segments as applicable; the required resources for each step; and the funding sources as applicable.
The timeline adds to the presentation/paper and aids in the identification of success measures and issues/problems encountered and overcome.
Be sure to include specific tasks from start to finish (from identifying the need for the changes to using the metrics to evaluate the implementation for any further revisions).

Select a topic of interest. 2. Look up 5 peer-reviewed journal articles from the  scholar library to support the topic of interest. 3. At this point you are only expected to analyze the papers briefly, you will be required to provide an in-depth analysis of each article in the final term paper. 4. This paper should be no longer than 1.5 pages. Due Date: November 2, 2015
PH 601 Public Health Systems and Practice Paper Instructions Identify an area within public health that peaks your interest (e.g., maternal and child health, communicable diseases, public policy etc.) and write a five-page paper, not including a title page or Reference page. • Reference 5 peer reviewed articles from the library scholar
. • Cover page, Abstract, Introduction, body of the paper of no less than five (5) full pages, Recommendation, Conclusion, and References. • Papers must be carefully reviewed to avoid plagiarism issues; all paper should be posted via turn-it-in.
• Abstract: Should briefly review major highlights of the paper discussed withinintroduction, body, recommendation and conclusion sections. Word limit for abstract is150 words.
• Introduction: should include the significance of the issue explored within the paper. The introduction should be brief, interesting and motivate audience to read the paper further.
• Body of the paper: o Include a brief history of the issue of interest. o It is important to conduct an in-depth analysis of the topic. o Five peer-reviewed articles should be cited to support the topic analysis.
• Recommendation: this is your opportunity to make recommendations based on your research.
• Conclusion: the concluding paragraph should briefly summarize the major highlights of the issue explored. Due Date: November 29, 5 pm.
Writing Assessment Rubric Student Name: Effective (10-8 points) Adequate (7-4 points) Inadequate (3-1points) Score Analysis of the issue Demonstrates above average analysis of the issue. Demonstrates average analysis of the issue. Demonstrate below average analysis of the issue. Paper format (Abstract, Intro, body, recommendation, conclusion) Follows recommended paper format: Abstract, introduction, body, recommendation and conclusion. Doe not include 1-2 sections. Fails to follow the format instructions. Peer-reviewed articles cited Cites 5 peer-reviewed articles. Cites at least 3-4 peer-reviewed articles. Cites 1-2 peerreviewed articles. Analysis of peerreviewed articles Above average critique of all 5 peer-reviewed articles Average critique of all 5 peer-reviewed articles. Below average critique of all 5 peerreviewed articles. Correctness Adheres to standard rules of grammar usage, mechanics, punctuation and spellings; may include no more than two minor errors. Generally adheres to standard rules but includes three or more errors. Contains significant errors that detract from understanding or compromise writer’s credibility. Support/Exhibits (APA Citation) Include thorough documentation as necessary; supports all claims within either text or appendix; properly labels/identifies outside material. Correctly uses APA citation style. Generally supports claims with properly cited material; may omit occasional supporting documentation or material. 1-2 errors in APA citation style. May fail to include required supporting materials or documentation; may include irrelevant addenda. Did not follow APA citation style. Presentation/ Document Design Includes proper formatting of margins, spacing, indentation etc.; typeface and use of emphasis are appropriate to task Mostly includes proper formatting and limits errors or inconsistencies Distracts readers with errors or inconsistencies in formatting

6 pages
APA
SOURCES:11

Requirements
Assignment Leadership and management
Review the materials you prepared in Weeks 4 and 5.
1. Design a simple leadership profiling tool aimed at enabling project managers to understand which of these key skills and attributes they already possess and which skills they need to build on as part of their future development.
2. You may directly quote or paraphrase questions used in any of these exercises, but you must acknowledge your sources.
3. Use questions that you have sourced from a number of profiling exercises rather than relying on one or two sources.
4. Explain why you chose to include the questions that you did and what each is designed to measure .

Resource materials Week 4 and 5:
Bennis, W.G. (1959) ‘Leadership theory and administrative behavior: the problem of authority’, Administrative Science Quarterly, 4 (3), pp.259-301.

Keegan, A. & Hartog, D.N.D. (2004) ‘Transformational leadership in a project-based environment: a comparative study of the leadership styles of project managers and line managers’, International Journal of Project Management, 22 (8), November, pp.609-617.

Meredith, J.R. & Mantel, S.J., Jr. (2012) Project management: a managerial approach. 8th ed. Hoboken, NJ: John Wiley and Sons.
Chapter 3, The project manager’ (pp.101-144)
Northouse, P.G. (2013) Leadership: theory and practice. 6th ed. Thousand Oaks, CA: Sage.
Chapter 1, ‘Introduction’ (pp.1-18)
Chapter 2, ‘Trait approach’ (pp.19-42)
Chapter 3, ‘Skills approach’ (pp.43-74)
Chapter 4, ‘Style approach’ (pp.75-96)
Chapter 6, ‘Contingency theory’ (pp.123-135)
Chapter 9, ‘Transformational leadership’ (pp.185-216)
Mäkilouko, M. (2004) ‘Coping with multicultural projects: the leadership styles of Finnish project managers’, International Journal of Project Management, 22 (5), July, pp.387-396.

Müller, F. & Turner, J.R. (2007) ‘Matching the project manager’s leadership style to project type’, International Journal of Project Management, 25 (1), January, pp.21-32.

Müller, F. & Turner, R. (2010) ‘Leadership competency styles of successful project managers’, International Journal of Project Management, 28 (5), July, pp.437-448.

Rauch, C.F. & Behling, O. (1984) ‘Functionalism: basis for an alternate approach to the study of leadership’. In: Hunt, J.G., Hosking, D.M., Schriesheim, C.A. & Stewart, R. (ed.). Leaders and managers. New York, NY: Pergamon Press, pp.45-62.

Sorcher, M. & Brant. J. (2002) ‘Are you picking the right leaders?’, Harvard Business Review, February, pp.78-85.

Turner, J.R. & Müller, R. (2005) ‘The project manager’s leadership style as a success factor on projects: a literature review’, Project Management Journal, 36 (2),June, pp.49-61.

Tyssen, A.K., Wald, A. & Spieth, P. (2014) ‘The challenge of transactional and transformational leadership in projects’, International Journal of Project Management, 32 (3), April, pp.365-375.

You have been reading about current fraud cases in the news to keep up-to-date on the latest fraud schemes. Read the following case summary and then answer the questions that follow.

Case summary: An employee of Furniture World, a retail outlet based in North Carolina, has been charged with theft for allegedly embezzling over $250,000 from the company. Elizabeth Pine, 52, is scheduled to make her initial court appearance on Wednesday. According to Police Detective Dick Berry, Pine was Furniture World’s payroll clerk and was a trusted employee for over 15 years. Pine’s fraudulent activities, which included arranging payments for fictitious employees, had taken place over the last 16 months. The payments were electronically deposited into bank accounts controlled by Pine, Berry reported. Berry said the fraud was discovered when the company accountant had trouble reconciling the company’s accounts. An internal audit revealed several names on the payroll that did not have valid Social Security numbers. The company subsequently contacted police for help in the investigation. Berry also reported that Pine was recently divorced, has three children to support, and has several credit cards with high balances. Berry added that Pine has resigned from the company and intends to pay the money back.

Checklist:

1. How did the three components of the Fraud Triangle enable the fraud to occur?
2. Using Dr. Steve Albrecht’s fraud risk factors, which factors allowed this fraud to occur?
3. Based on your chapter reading, how would theorists Hollinger and Clark assess this fraud case?
4. What did the business do correctly in this situation?
5. What could have been done to prevent this fraud?

When analyzing new markets to enter, companies need to perform an environmental screening to be sure about which potential candidates would be the most likely to provide the right conditions for achieving expected results. In doing that, economic conditions and growth patterns always play an important role for decision making.

Using the University online library resources and the Internet, research recent growth trends for developed and emerging countries and answer the following:

• After the 2007/2008 world economic crisis, what has been different about emerging markets with regard to growth patterns, economic conditions, and trends? Justify your answer by providing some examples.
• If you were the person in charge of growth strategies for a retail company, what market(s) would be your primary targets for an expansion? Why? Explain your reasoning and substantiate your claims with citations from your research.

Give reasons in support of your responses. Be sure to cite any relevant resources.

Write your initial response in 300–500 words. Your response should be thorough and address all components of the discussion question in detail; include citations of all sources, where needed, according to the APA style; and demonstrate accurate spelling, grammar, and punctuation.

By Saturday, September 26 post your response to the below Discussion Area.

Assignment 2:Ethnocentrism

In M5: Assignment 1, you evaluated some aspects of the economic/market conditions that should be part of the environmental scanning that any company needs to perform before making a decision to enter new markets. In this assignment, you will focus on the social-cultural dimension of the analysis of international opportunities. Understanding a new culture and all idiosyncrasies and differences between the company’s original culture and that of the new market being considered as a new target is fundamental for achieving success. Your company should never assume that values, ethics, needs, and expectations are the same in all markets. Ethnocentrism can be a major problem when a company looks at new markets.

Using the University online library resources and the Internet, research the topic of ethnocentrism in business and answer the following:

• What is the impact of ethnocentrism on companies that want to expand their operations to new markets? Illustrate your answer with real-world examples.
• How can a company mitigate the impact of ethnocentrism? Provide suggestions and give examples to illustrate your points.
• If you were the person in charge of growth strategies for a retail company, what market(s) would be your primary targets for an expansion? Explain your reasoning.

The Historical Dispersion of a Popular Agriculturally Grown Food Product

Select one agriculturally grown food that interests you, such as a popular food item, a specific agricultural product, a cultural food staple, or a type of food.

Trace the history, development, global discovery, and diffusion of your selected food item into popular culture in a presentation.

Create or locate a map that illustrates the spatial distribution of your selected food product. This will be either a global or national map depending on:

1. Where the food has dispersed and spread over time or within a specific time frame.
2. Who was affected by the dispersion of this food and what human dispersion it may have caused.

Answer the following in your presentation:

• Where did your selected food item originate? Was it a part of the original locations’ cultural practices? What cultures is the food popular in today? Are there multiple language names for this popular food?
• Where did it spread and why? Discuss if the historical spread of this food is related to colonialism, trade practices, and/or the slave trade. Did groups of people migrate voluntarily or involuntarily due to the dispersion of this food?
• How did it spread? What types of transportation were/are involved?
• What are the commonalities of the geographic locations to which it spread? What are the commonalities of the cultures to which it spread?
• Are any historical, cultural, ethnic, or religious events associated with this food?
• How is it used today?

Submit your assignment in one of the following formats consistent with APA guidelines:

• A concise 8- to 10-slide Microsoft^® PowerPoint^® presentation with cited speaker notes and references in APA. Concise bullets must be on the slides along with cited notes if needed (in the Notes section below the slides). Be sure to spellcheck and edit your presentation, and ensure there are no issues with plagiarism.
• For other possibilities, please discuss with your facilitators.

Select two of the following theoretical approaches: psychodynamic, humanistic and existential, dispositional, or learning.

Obtain faculty approval of your selection.

Write a 1,400- to 1,750-word paper in which you compare and contrast the theories selected. Address the following:

• Describe the role of personality in affecting situational behavior.
• Examine the personality characteristics attributed to each theory in your approach.
• Explain the interpersonal relational aspects associated with the theories selected.
• Sectiond Bulleted

Include a reference page with a minimum of three to five peer-reviewed sources.

Format your paper consistent with APA guidelines.