Academic journal article Journal of the International Academy for Case Studies

The Shoppes at Riverside

Academic journal article Journal of the International Academy for Case Studies

The Shoppes at Riverside

Article excerpt

CASE DESCRIPTION

This case asks the students to recommend a decision to a group of individuals on whether or not to pursue purchasing The Shoppes at Riverside, even when the purchase price is minimal ($1). It is based on the actual experiences of one of the authors. The Shoppes at Riverside is a unique business located in a historic building in a downtown area. The store occupies approximately 5,500 square feet of space (leasedfrom a local foundation) and subleases space to dealers selling upscale merchandise including art, antiques, home accessories, and gift items. The store charges a monthly rent to each dealer (based on their booth square footage) along with a 10% commission on sales. The students are given basic information provided by the present owner and are asked to evaluate the information given to project monthly cash flows and then to make a recommendation to the potential purchasers. They are also asked to evaluate and suggest other lines of business that might be added to the present business to increase the profitability of the store. This case is appropriate to use in an Intro to Small Business Class as the size of the business is ideal for any course that emphasizes entrepreneurs or small businesses. This assignment can be completely individually or as a group assignment.

CASE SYNOPSIS

The primary focus of the case is a purchase decision. The information given to the students to utilize in formulating their decision includes store sales by month for each of the last three years as well as operating expenses. From the information given, the students are asked to construct proforma cash flows for the year 2007 by month based on their assumptions regarding sales and occupancy levels. They are also asked to research other product lines the potential buyers could add to the store to complement the present merchandise presently being sold by dealers. Although the store does collect rental income, there is a cap on percentage rents at 10% of sales which in turn limits the total revenues of the store. The students are given some ideas on lines of business to research within the questions of the case. They may have others they would also like to research.

A second phase of the case analysis would be to break the case into group assignments and have each group research and prepare presentation on such topics as (1) the various type of advertising options and the related costs applicable to small retail businesses in order to develop and implement a marketing plan; (2) the type of business formation available to small businesses (i.e. Corporation, Sub-S Corporation, Partnership, LLP; (3) additional product lines to add to increase revenues of the business; and (4) the advantages and disadvantages of developing a website and selling "on-line" with this type of business. As a result of the individual and group projects, classroom discussions could be held based on the findings of the groups as well as other current issues faced by small businesses. The advantage of this case is that it presents students with a real-life purchase decision and presents relevant topics for in-class discussions.

INTRODUCTION

Laura Lewis, Patricia Robbins, and Mary Farley were eating lunch at a local delicatessen. The ladies were excited about a recent business opportunity that was presented to them by Lucy Taylor, the owner of The Shoppes at Riverside. Lucy wanted to sell her business to someone that would take over her vision for an art and antique store in the uptown Columbus, Georgia area.

Laura: "So what do ya'll think?"

Patricia: "I'm pretty excited about it. I think we can do this."

Mary: "I don't want to jump into this purchase without considering all the facts."

Laura: "Mary what do you mean? Lucy has given us all of the fact as she has given us a copy of a letter (originally written to the local real estate company handling the new lease) outlining all the employees and their pay rates; all of the operating expenses for the store; and the sales by month for the last three years. …

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