Case 2_Tenalpina Tools.docx - Table of Contents I CASE 2...

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Table of Contents I. CASE 2: TENALPINA TOOLS - THE ENTREPRENEUR'S DILEMMA ........................................... 1 A. Case Summary .............................................................................................................. 1 B. Point of View ................................................................................................................ 1 C. Statement of the Problem ............................................................................................. 1 D. Theoretical Framework and Assumptions ..................................................................... 1 (1) Option 1: Outsourcing the pitons ................................................................................ 2 (2) Option 2: Buying the forge and producing the pitons ................................................. 2 E. Computation and Analysis ............................................................................................. 4 (1) Profit ............................................................................................................................ 5 (2) Break-even Orders and Sales ....................................................................................... 6 (3) Target Profit in Orders ................................................................................................. 6 (4) Margin of Safety .......................................................................................................... 6 (5) Degree of Leverage ...................................................................................................... 7 F. Conclusion and Recommendation .............................................................................. 7-8 Reference and Bibliography: .................................................................................................... 9 0
CASE 2: TENALPINA TOOLS – THE ENTREPRENEUR’S DILEMMA A. Case Summary Giulia Ferrato took an internship at a well-established company that specialized in retailing mountaineering equipment, both online and in a large store in Denver. While there, she developed the idea that led to her current business. A critical tool for rock climbers is the piton, a device like a flat spike that the climber hammers into crevices in the rock wall in order to attach support lines. She has developed a high-quality, lightweight titanium piton, a tool used in mountain climbing and established TenAlpina Tools. She is currently outsourcing the production of the pitons. At the present time, her sole customer has made an offer of significant demand guaranteed for a two-year period. She is presented the opportunity to assume the forge operation of her contract manufacturer. Point of View The group considered the point of view of Giulia Ferrato, founder of TenAlpina Tools because she will decide on what strategies to make and who would be responsible to ensure that all aspects of the business are considered B. Statement of the Problem What would you advise Giulia to do between two opportunities (owning a factory or continued outsourced manufacturing? C. Theoretical Framework and Assumptions To tackle the case, the group mainly used a direct approach on short-run decision making by

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