Assignments

Answer the following that assigned to you.

Case study 1: Urban Decay: Finding an Entrepreneurial Opportunity

Sandy Lerner cofounded Cisco Systems in 1984 with her former husband,
Leonard Bosack. It became a world leader in sales of computer routers.

When she was ousted from the company in 1990, Lerner had the time and
financial resources to focus on charitable activities and other business

possibilities. By 1995, she was ready to start another company that would
fill a market void.

Lerner believed that there was an opportunity in the beauty market for
quality, nontraditional products. According to the Urban Decay Web site,

“Our story opens 15 years ago, when pink, red and beige enslaved the
prestige beauty market. Heaven, forbid you wanted purple or green nails,
because you’d either have to whip out a marker, or risk life and limb with
that back-alley drugstore junk.” She had seen a Chanel polish that was a
deep red color, nearly black, but found little else in high-end products

that met the need she identified.

Lerner’s business manager introduced her to a creative businesswoman

and self-described makeup addict, Wende Zomnir, and the business began
to take shape. “Over high tea, the two forged a pact that led to renegade
nail polish mixing sessions in Wende’s Laguna Beach bungalow.” Urban
Decay launched in 1996 with 12 nail enamels and 10 lipsticks. “Inspired

by seedier facets of the urban landscape, they bore groundbreaking names

like Roach, Smog, Rust, Oil Slick and Acid Rain. The first magazine ad
queried ‘Does Pink Make You Puke?’ fueling the revolution as cosmetics
industry executives scrambled to keep up.” Today, the company describes
itself as, “Urban Decay is beauty with an edge. It is feminine, dangerous

and fun . . . appealing to anyone who relishes her individuality and dares to
express it.” Even after the ’90s grunge style faded, Urban Decay thrived.
The company became a global organization; it is a popular full cosmetic line
at major retailers such as Sephora, Macy’s, and Ulta and is found on the
Internet through Beauty.com. Urban Decay is sold by retailers in the Middle

East, the United Kingdom, Italy, Canada, France, Singapore, and Spain. After
several transitions, it is currently owned by L’Oreal Cosmetics, and Zomnir
continues to work at the company. Urban Decay notes factors contributing
to its success: “And although UD fans around the world might approach our
products in wildly different ways, we’ve noticed they share an independent

spirit that unites them. Maybe this hunger for something unique explains
the passionate support we’ve received over the years.” Clearly, Lerner and
her cofounders saw opportunity in beauty.

Case Study Analysis

1- What unmet needs of the consumer contributed to the success of Urban

Decay?
2- Was founding Urban Decay an expected next step after leaving Cisco
Systems for Sandy Lerner? Why or why not?
3- What characteristics made Urban Decay an opportunity rather than
simply an idea? Which of the five roots of opportunity apply here?
4- Is there a future for Urban Decay? What might that future look like?
Case study 2: A Family Affair
From as long as Deanna could remember, she had helped her
mother in The Pantry, a small but successful bakery and restaurant
that was known for unique desserts and pastries. When she was
young, she helped clean tables in the small area for customer
seating. As she grew older, she helped take phone orders and
worked at the bakery counter. Although succession plans were
never discussed, Deanna had always planned to work full
time in the business after college and eventually take over the
company management when her mother retired. Deanna’s mother
and father had divorced when Deanna was very young, and
because she was an only child, there were no other siblings to take
control of the company. If Deanna did not assume ownership, the
business would have to be closed or sold to an outsider.
In 1999, Deanna went off to college to study restaurant
management. She enjoyed being away from home more than she
had anticipated and did very well in her courses. She also became
aware of other career opportunities in the food industry that she
had never considered. She realized she would gain valuable
experience by working for other companies before she returned
to her mother’s business. At about the same time, however,
Deanna’s mother remarried. Her new husband had two daughters
of his own, aged 16 and 17. Because employee turnover at The
Pantry was always a concern, Deanna’s mother was more than
happy to have his daughters work in the business part time while
they were in high school. To Deanna, though, this was a cause for
concern. Now that she had stepsisters, the ownership of The Pantry
was not necessarily hers when her mother retired. She was
concerned that, if she accepted a position with another company
after college, her mother might interpret that as a lack of interest in
The Pantry. Once, when she was home during a spring break, she
tried to initiate a conversation about the future of the business.
Her mother’s response was, “I’m only 45 now, and I’m not going
to retire for a long time. So don’t worry about it.” Deanna also
realized that, in the future, if her mother and stepfather gave equal
ownership to all three daughters, this would result in her owning
one-third, whereas the two stepsisters together would own two-
thirds. If the relationship did not work well, she would always be
outvoted. She would not have control of the business, and even
under the best of circumstances, this was not appealing.
Case Study Analysis
1- If you were in Deanna’s position, what would you do?
2- Identify options that Deanna’s mother and stepfather could
consider rather than dividing business ownership equally among
the children.
3- How could this business serve to provide entrepreneurial
opportunities for Deanna?
Case study 3: SarahCare of Snellville— A Franchise Opportunity
in Adult Day Care
Aysha Treadwell Cooper transitioned from her role in advertising
sales in Tampa, Florida, to the ownership of a SarahCare franchise
in the Atlanta area in 2010. For Cooper, an Indiana native, this was
a return to her professional roots and personal passion. Cooper has
a degree in public health and worked in a children’s hospital prior
to leaving Indiana. She also has strong feelings for her community
of Snellville, Georgia. She became active in the community prior
to opening her franchise, saying, “I knew that to open the business,
I needed to learn about the community. . . . It taught me about how
to make a difference as an individual and a community advocate.”
Today, she is the owner and Executive Director of SarahCare of
Snellville. SarahCare of Snellville is a franchisee of SARAH Adult
Day Service, Inc., a Canton, Ohio based franchisor that has
franchisees in 18 states. The company “offers a franchising
opportunity that meets the two criteria for a successful and socially
responsible business: a booming demographic market with even
more potential for growth, and excellent senior care. The
SarahCare Adult Day Care Services franchise allows entrepreneurs
to become part of this expanding industry, while enriching their
lives as they help seniors age in place.” Currently, the company is
adding locations through the existing network, rather than through
new franchisees. Specifically, Cooper describes her Sarah- Care
facility as “a place that provides a stimulating environment and a
place for entertainment and relaxation for those whose lives are
impaired by cognitive impairment, such as Alzheimer’s disease
and dementia. It aims to keep communities strong and families
together.” According to the SarahCare Web site, the Complete
SarahCare® Franchise Package includes:
• State of the Art Operational System
• Site Selection Assistance
• Space Design
• Adult Day Care Business Plan Template
• SarahCare Marketing System
• Advertising and Promotional Materials
• 5-Day Operations Training
• Ongoing Support and Training by Experienced Professionals
The company was founded in 1985 by Dr. Merle Griff,
gerontologist, when she opened her first center. She opened a
second center in nearby Massillon, Ohio, after a few years. In
2004, the second center was relocated for growth and named
SarahCare of Belden Village. That same year, SARAH Adult
Services began offering franchises. The company now
recommends that there should be a defined driving radius that
includes about 10,000 adults aged 60 and above for each facility
that opens.
SarahCare works with franchisees and their real estate brokers to
find sites and make them ready for a SarahCare Adult Day Care
facility. The franchisor provides guidelines, checklists, and
answers to frequently asked questions. It also offers prototype
centers and will create an initial space plan as part of the franchise
fee. The décor has been designed for the SarahCare centers with
two color palettes and a preferred vendor who offers equipment
and furnishings. The centers are meant to “offer [a] warm and
home-like environment and are designed to accommodate the
varied needs of our participants.” A final site inspection is
performed by SarahCare personnel.
SarahCare of Snellville is managed by Cooper, who has a
background in healthcare. However, this is not required. Some
centers are managed by executive directors who are not the
owners.
In these instances, the franchisor assists in the hiring process. One
benefit that the franchisor promotes is that center hours are from
7:00 a.m. to 6:00 p.m. on Monday through Friday, leaving time for
family. For Cooper, the mother of a young child, this is quite
appealing. SarahCare of Snellville is Cooper’s opportunity to
combine her interests in healthcare, the elderly, and her community
into her profession through franchising.
Case Study Analysis
2-1. What type of franchise is SarahCare?
2-2. Using the Web sites listed under Case Sources or others that
you can find, identify each of the following for a SarahCare
franchise: franchise fee, net worth requirement, total initial
investment, and ongoing royalty fee.
2-3. What are some of the distinctive advantages that would lead a
franchisee to select a SarahCare franchise?
2-4. What might be some potential concerns about buying a
SarahCare franchise?
 Case study 4: Credit Policies—Harold Import Company
If you like to cook, have ever purchased a gourmet cooking item, or ever shopped
in a gourmet kitchen store, chances are you have a Harold Import Company (HIC)
product in your kitchen. Since its start in 1957, HIC has sold over 20 million

pieces of porcelain dinnerware worldwide. When Harold Laub launched HIC, it

became the first company to import the 10.25-inch white coupe dinner plate into
the United States from Japan. But that was only the beginning. Soon, HIC was
importing a wide range of white porcelain items that included bakeware as well
as dinnerware. When Harold’s wife, Mildred, joined the company in 1962, she
helped expand the business further, with imports of kitchen gadgets.

Today, HIC distributes more than 3,500 houseware, gourmet food, and kitchen
products from 25 different countries, including the original 10.25-inch white
coupe dinner plate. HIC is still run by members of the Laub family, who continue

to diversify the product lines while maintaining high quality. As a standard

procedure, HIC asks each new business customer to fill out a form containing

basic company information. Items on this form include mailing, shipping, and e-
mail addresses; contact names and telephone numbers; the type of business and
its resale tax identification number; and the customer’s desired method of

payment. If the customer wishes to establish an account with terms of net 30

days, a credit application must also be completed. This form requires the contact
information for three vendors from whom the customer has previously purchased

goods. Harold Import Company calls each of the provided trade references to find
out the customer’s payment history. If responses are positive, an HIC account
with credit is set up. The credit limit is determined by a combination of factors.
HIC staff look at the amount of credit the customer is requesting and the amount
of credit its references currently provide to determine their level of comfort. If
feedback indicates late payments, HIC asks the customer to provide banking
information. In these questionable cases, the customer may pay with a credit card
or send a prepayment, which is almost always a company check. By using this
process, HIC can provide multiple payment options to potential buyers, while
keeping risk at a minimum. For established customers, the credit limit

is typically 40 percent of their yearly sales volume. The reason for this level is that
if HIC’s customer fails to pay its obligation, on average, HIC’s loss is limited to its
expected profit. If an established customer needs credit beyond the 40 percent,
the HIC staff examines the situation on an individual basis and makes the
determination based on factors that include payment history, frequency of
ordering, length of time as a customer, and general creditworthiness within

the industry.

Case Study Analysis

1- What types of credit does HIC offer?

2- What types of general information does HIC ask all new customers to
provide?
3- Describe the process used by HIC to evaluate credit risk and to determine an
acceptable means of payment.
4- In general, what are the pros and cons for HIC to offer credit options?

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Deadline 18/04/2022