Carribean Internet Cafe
Assignment #1:
Caribbean Intern Café
Date: November 14, 2012
1. There are many issues that Mr. Grant should consider before proceeding with the CIC. There are several things that Mr. Grant should examine before even looking at the projections given to him. Total capital is $2,250,000, $1,000,000 in investments and $1,250,000 in the form of a long-term loan. $1,573,000 is immediately spent leaving $677,000. If he has no customers, he can afford to remain open for 3 months. As well, they are not attractive to individuals who seek to use the Internet for longer periods of time and the customer base that they are attempting to attract is the more affluent and educated of the population. They are also the most likely to either already own a computer or will be purchasing a computer in the near future. Mr. Grant must have a business plan that is either for the short-term or able to readily adapt to future circumstances as he expects private usage to increase in 3 years. Mr. Grant should also examine factors external to his business. These issues include his mention of the relatively low demand for coffee in Jamaica as well as changes in levels of private Internet usage. His management plan should include contingencies to replace coffee if it is not making a profit as well as plans for the computer area when future demands for Internet café’s start to decrease. A final issue that Mr. Grant should also examine is the terms of agreement for the long-term loan. If CIC is very profitable they may want to pay off the loan as quickly as possible instead of incurring unnecessary interest.
2. The fixed costs remain constant within a relative range of finished products produced. The fixed costs amount to an annual rate of $2,479,400 and the break down of each fixed cost is shown in Appendix 1. The fixed costs include the manager, employees, rent, telephone and utilities, link to Internet, insurance, advertising, interest on loan and miscellaneous administration and
Caribbean Intern Café
Date: November 14, 2012
1. There are many issues that Mr. Grant should consider before proceeding with the CIC. There are several things that Mr. Grant should examine before even looking at the projections given to him. Total capital is $2,250,000, $1,000,000 in investments and $1,250,000 in the form of a long-term loan. $1,573,000 is immediately spent leaving $677,000. If he has no customers, he can afford to remain open for 3 months. As well, they are not attractive to individuals who seek to use the Internet for longer periods of time and the customer base that they are attempting to attract is the more affluent and educated of the population. They are also the most likely to either already own a computer or will be purchasing a computer in the near future. Mr. Grant must have a business plan that is either for the short-term or able to readily adapt to future circumstances as he expects private usage to increase in 3 years. Mr. Grant should also examine factors external to his business. These issues include his mention of the relatively low demand for coffee in Jamaica as well as changes in levels of private Internet usage. His management plan should include contingencies to replace coffee if it is not making a profit as well as plans for the computer area when future demands for Internet café’s start to decrease. A final issue that Mr. Grant should also examine is the terms of agreement for the long-term loan. If CIC is very profitable they may want to pay off the loan as quickly as possible instead of incurring unnecessary interest.
2. The fixed costs remain constant within a relative range of finished products produced. The fixed costs amount to an annual rate of $2,479,400 and the break down of each fixed cost is shown in Appendix 1. The fixed costs include the manager, employees, rent, telephone and utilities, link to Internet, insurance, advertising, interest on loan and miscellaneous administration and