1. Frame the Key Problem in your own words: What's the Case About? What is
important about the Case Context? What is the Key Issue?
Who are key stakeholders?
- Jack Martin, Bank, employees, etc.
When is the case taking place?
Where geographically and in business cycle?:
- Central warehouse outside Worcester, Massachusetts (fill orders by stores within 24
- 10 shops in eastern Massachusetts, southern New Hampshire and northern Connecticut
What are key activities of the business:
- Retail distributor of auto tires in northeastern US
- excellent service and competitive pricing = high customer satisfaction (means that they
probably have a solid customer base or at least return clients)
Role: Jack Martin
- Company want 5-year loan to finance anticipated growth of company & expansions of
warehouse facilities should they take a loan? Are there other ways?
Past Relationship with Bank (gives you an idea of whether bank will want to pay them back)
- Borrowed funds in 1991, repaid yearly with 125,000/yr
- End 1995, owe 875,000
- Have unused line of credit
2. What alternatives are available to address the key issue (list them)?
What the company wants: Finance anticipated growth of company & expansions of
warehouse facilities because current warehouse cannot meet needs of company
Options to get what they want: Take out a loan, Use line of credit
3. Quantitative Analysis - what are the key metrics that we can use to compare the
alternatives? Attach your analysis as an Exhibit.
• How fast is TC growing? – Steady growth
Sales 0.25 0.15 0.20 0.20
Gross Profit 0.24 0.17 0.20 0.20
Net Income 0.28 0.19 0.18 0.20
• How profitable is TC?: Ratios show little to no change. I think they are maintaining their
- How liquid is TC?: not much change in current ratio and quick ratio – maintaining their
liquidity 4. Qualitative Analysis - Create a list of important Qualitative factors in comparing
alternatives. Why does each factor matter? How important is it? Create a Pros &
Cons list for all alternatives, possibly as an Exhibit.
a) List of qualitative factors
- Can they continue to provide excellent service?
- Can they continue to retain customers?
- Can they meet their needs?
- Flexibility in borrowing money?
*please see exhibits for pros and cons list for alternatives
5. Make a Reasoned Recommendation -stating which alternative is preferable, based
on your analysis.
I would see how much they can take out on their line of credit and then consider
taking out a loan. I can understand the value of expanding as it allows them to maintain
their profitability and growth. I think they may want to consider what they will need in
the future so that they can make accommodations now. I don’t think it’s wise to get a
loan every few years to make renovations.
I would build an expansion with either money from the line of credit or the loan
(or both- ie. Can use line of credit to pay off loan).
6. Implementation & Risks- comment on the key risks in implementing your
recommendation, and how they can be mitigated.