The executives of your company met. They are organized in 3 regions: Americas (South & North), Europe, and Asia/rest of the world. For 2021, there is a limited amount of money that can be assigned to the Marketing Budget. Pick one of the regions, and justify why your region should be funded, instead of the others. If you want to increase your budget for new launches, please use the payback template and share what’s the payback for your investment in the comments.
Discussions
Borrow from a bank or get an equity investor?
Jenny sells 10 pairs of shoes made to order for $1,000 each. For Christmas, she could sell 50. She gets the shoes from a supplier who told her that if she wants him to produce 50 pairs of shoes, she needs to give him $15,000 to buy the raw materials. Jenny doesn’t have any cash.
Her Marketing friend recommends she asks her family for money. She is worried. There is a chance that she will only be able to sell ten pairs, be forced to keep the other 40 in Inventory for months and be unable to pay back her Friends & Family.
Her Finance friend recommends to borrow from a bank or the Small Business Administration (SBA). He is also willing to give her the cash she needs if she agrees to share all profits. He says that is called Equity.
What would you recommend her to do, to borrow $15,000 from a bank or get an investor? Think of your response from the point of view of a bank or an investor first, and then Jenny’s.
Join the other discussions:
Client prioritization: old or new clients?
Should Jenny take credit cards?
Why 79% of contractors don’t want to be full-time employees?
Should we pay severance in the US?
Small businesses and inflation
How would you find information to justify a marketing investment and payback?
Please mention the company you are researching and what tools did you use that information, this will enable more students to benefit from it.
Why did you buy this product?
Foreign exchange
Luis has three friends whose parents want to purchase a Rolex, which is unavailable in Mexico. Each Rolex costs $10,000 or MXP 180,000. The exchange rate is $1=MXP 18. The friends offer to pay him an additional $1,000 or MXP 18,000 for each watch he buys for them.
They give him the total amount in pesos, MXP 594,000, worth $33,000. Luis was going to exchange the Mexican pesos for dollars, but he forgot.
Luis routinely goes to visit his girlfriend Jenny in NYC. He goes to the Rolex store and takes a photo of the Rolex they want, to make sure he will get the correct one (photo below). While at the store. Jenny tries on a necklace. It looks great on her. Luis figures with the $3,000 profit he will make, he would buy Jenny a necklace.
Five weeks later, on his flight to NY, he reads in the newspaper that the Mexican Peso keeps depreciating. He panics. He gets off the plane and exchanges the money at Newark Airport. He gets $20,600. The teller confirms that on Valentine’s Day, February 14th, the rate was 18. Today is April 4th, 2020, and the rate is 26, plus a 10% fee.
What can Luis do? He just lost 58%. What can small businesses procuring goods from foreign countries in foreign currency do, if they have already collected payment in full? Please leave your comments below.
Note: one participant said that Luis should get Jenny the necklace, regardless.
Join the other discussions:
Why 79% of contractors don’t want to be full-time employees?
Should we pay severance in the US?
Small businesses and inflation
Should Jenny accept credit cards?
Jenny is a student who runs a high-end shoe business on the side. A friend of hers produces high-quality, made-to-order shoes, which Jenny then sells to wealthy shoppers in NYC for $1,000 each. The cost to make each pair of shoes is $300.
Jenny gets paid in cash. A friend told her that she should accept credit cards.
Another friend works in Marketing. She told her clients may not have $1,000 cash on them. By accepting credit cards, she could also take orders in advance.
One friend works in Finance. He told her that if she accepts credit cards, she will have to pay credit card fees, duties, sales tax, and income tax. There will be an electronic trace of the transaction. She doesn’t mind paying all taxes but is worried about all the paperwork she will need to fill in.
Would you recommend Jenny to accept credit cards?
Join the other discussions:
Why 79% of contractors don’t want to be full-time employees?
Should we pay severance in the US?
Small businesses and inflation