Academic journal article Entrepreneurship: Theory and Practice

The Fraud Investigation Detective Agency

Academic journal article Entrepreneurship: Theory and Practice

The Fraud Investigation Detective Agency

Article excerpt

The Fraud Investigation Detective Agency presents the problems faced by Ken and Barbara Wilson as they established their new business and, after achieving an initial success, the issues that the Wilsons faced as they attempted to expand the business. This case deals with the importance of creating competitive advantages as a strategy in starting a new venture. The case continues as the owners recognize the effects of their competitive advantages on the successful launch of the company. Finally, the case deals with strategies to expand market share by utilizing these competitive advantages. Financial data from the actual company are included.

**********

In January 1992, Ken and Barbara Wilson, owners of the Fraud Investigation Detective Agency (FIDA), sipped hot chocolate at an outdoor table on the deck of a restaurant atop Aspen Mountain. Their ski vacation was the first long break from work since their graduations from college 15 years earlier. Ken and Barbara had worked hard, putting in long hours, and felt reasonably satisfied with FIDA's success since its 1987 founding. In spite of making a strenuous effort to increase the number of cases worked, though, FIDA's revenues and net profits had leveled off over the past 4 years.

The Wilsons agreed that they had developed a very efficient process for managing FIDA's business. If they were back in their Florida offices, Barbara would be opening the mail, assigning cases to private investigators, and processing case records. She was responsible for FIDA's administration. Ken would be working in the field, either on surveillance to gather evidence of a suspect's fraud, training an agent, or meeting with clients to report on current cases and obtain new ones.

FIDA is organized as a C corporation, and the stock was owned equally between Ken and Barbara. As with most small businesses, the owners tried to maximize the benefits to themselves as owners. Barbara decided that it would be prudent to understand the actual costs of operating the business and paid Ken a salary for his role as manager of field operations and paid herself as administrative manager. In addition, Ken and Barbara also received separate compensation for their roles as officers of the company.

The aim of their conversation in the cool, pine-scented air was to discuss how Ken and Barbara could improve their company's performance (Exhibit 1 provides FIDA's financial statements to date). They agreed that their current approach had taken FIDA as far as possible. Both partners thought that the company could enjoy a greater success if only they could find a way to get more cases assigned to FIDA.

Basking in the bright sunlight, Barbara asked her husband, "What do you consider the major problem standing in the way of growing the company?" Ken cleaned his sunglasses, sipped from his hot chocolate, and replied, "Getting more cases assigned to FIDA from new clients. I feel we're working as many cases as possible from existing clients." Passing him an oatmeal cookie, Barbara agreed, then added, "I believe our customers are very satisfied with our work." They talked a while longer, deciding that they needed a strategy to obtain case assignments from new clients.

The Private Investigative Industry

The term "private investigator" (PI) conjures up images of plainclothes detectives, private eyes, covert surveillance, and intrigue. These images have some truth, but surveillance is only a small part of a PIs' services. A PI might also locate suspects and witnesses, conduct interviews, examine records, and prepare detailed reports. (The range of services offered by PIs is listed in Table 1.) According to James Hamilton, president of the Florida Association of Licensed Investigators (FALI), PIs could offer 400 subcategories of activities. (1) The private investigative industry is composed of numerous independent companies called agencies that offer such services. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.