Question 1

  • Uncategorized


RamonCardenas gets himself in a confusing situation of whom to leave hisrestaurant after the death of his wife, Maria Cardenas in the year2002 (RedIguana 835).Roman became older hence unable to run the business and opted to sellit despite its booming state. Ramon and the late Maria Cardenas hadone daughter, Lucy who is married to Bill. When Roman became moreexhausted, the two were ready to take up the business and manage itfor the family. However, according to Roman Cardenas traditions, itis taboo for ladies to inherit family property. Lucy says &quotmyfather would have given my brother the business because he was aman.&quot To overcome this challenge and stay true to the spirit ofhis tradition, Ramon Cardenas opts to sell the business to hisdaughter at $ 560, 000 (RedIguana 835).


Thevalue of the company isestimatedin several ways. The evaluation process helps one to establish theworthiness of business.Different people may have varying viewpoints about the cost ofparticular business. For instance, Lucy and Bill may consider theirbusiness connection with the community around is worth. On the otherhand, the investors in Red Iguana may find its value depending on theactualoutcome. In this case, the three top ways to measure the worth ofany business are market approach, income approach and finally assetapproach. To begin with the market approach: it depends on indicatorsas they come from the market area to establish the business worth.Second, income approach it delves deep on the main reason to havethe business running – making the profit. And lastly asset approachit describes the business as a collection of liabilities and goodsthat are in place as the construction block to understanding the realimage of the commercial value. Two factors make the process ofsetting a value difficulty include rate capping and not easy toproduce different results.


Lucyand Bill can open a second location for their business. However,before they decide on which location to start the business, severalfactors must be given attention. First,it is ideal to focus on whether their business is going to be elegantor formal.The second factor is demographic that deals with the proximity oftheir business to their customers. Third, foot traffic Lucy and Billshould consider whether locating their business in an area with ahigh number of pedestrians or not. Fourth, parking and accessibility,they should deliberate on the location of their business tothemselves, their supplier and their customers. The parking will besubstantial too. And finally, competition, Lucy,and Bill should carry out research to enable themtounderstand the number of hotels within the location before startingthe business.


Lucyand Bill should open the new business far away from the original RedIguana. It will enable the firm in old Red Iguana to run smoothlywithout being cannibalized. Also, they have an upper hand since theyhave received several requests from different towns` officials onhaving restaurants in their respective cities (RedIguana 835).


Lucyand Bill should convince the skeptical officers at Zion’s Bank onhow opening a new restaurant few meters away from the originalrestaurant will make. However, opening a new restaurant in anothertown would be easy for them to get the loan(Red Iguana 835).


RedIguana. ShouldA Family Owned Restaurant Open a Second Location Nearby toAccommodate the Crowds that Appeared after it wasFeaturedon the Food Network?Pg. 835. Print.

Close Menu