Tenalpina 1 and 2 Case Slides - TenAlpina Tools 1 The...

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TenAlpina Tools 1: The Entrepreneur’s Dilemma Managerial Accounting ACC 312
Apply cost behavior and CVP concepts to an entrepreneurial opportunity (single product). Break-even analysis and target profit Identify limitations and opportunities related to outsource vs production business models. Use relevant cost concepts to project the effects of alternative business decisions. TenAlpina: Entrepreneur’s Dilemma Primary Case-Study Objectives
Giulia Ferrato, a recent MBA graduate, has developed a high-quality, lightweight titanium piton, a tool used in mountain climbing. She is currently outsourcing production of the pitons. At the present time, her sole customer has made an offer of significant guaranteed demand for a two-year period. Giulia is presented the opportunity to take over the forge operation of her contract manufacturer. Giulia is trying to decide what the impact to her business model would be under such a scenario. TenAlpina: Entrepreneur’s Dilemma Background
If Giulia were to accept the customer’s contract offer and take over the forge, how would TenAlpina’s business model change? (Consider the entire business model but pay particular attention to revenue stream and cost structure .) TenAlpina: Entrepreneur’s Dilemma Case Question 1
Key partners Key activities Key resources Value propositions Customer relationships Channels Customer segments Revenue streams Cost structure TenAlpina: Entrepreneur’s Dilemma Business Model Effect: Key Elements from Strategyzer.com, “Business Model Canvas” Handout Piton
Using Kowalchek’s operating costs as your best- estimate data about the forge’s cost of operation, perform a break-even analysis for the two business models – the current outsourcing arrangement and operating the forge . TenAlpina: Entrepreneur’s Dilemma Case Question 2
TenAlpina: Entrepreneur’s Dilemma Break-even Analysis Outsource Model Follow-up Question : (a) Does FC seem realistic? What is missing? Current Strategy 1,000 units/mo
TenAlpina: Entrepreneur’s Dilemma Projected Profit Current Strategy (1k units/mo) Outsource Model
TenAlpina: Entrepreneur’s Dilemma Production Flow Cold Roll/ Cut Heat/ Drop Forge Bore De-burr/ Polish Package Production Model
TenAlpina: Entrepreneur’s Dilemma Break-even Analysis Production Model Alternative Strategy: Operate Forge 4,000 units/mo Follow-up Questions : (a) Where does Utility cost come from?

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