Issue 1: No clear strategy for expansion
CanGo has had its success, and now they are looking into the future. Their question is, “What’s going to help them grow?” and as Liz said, “Turn them into a mighty oak.” CanGo recognizes that branching out and delving into new territory will be profitable and its popular with investors since they’re thinking of going for an IPO. The possibilities of adding e-books, streaming audio and video is hip but they also recognize that the online gaming industry is on the cutting edge for growth. With all of the brainstorming ideas CanGo has they do recognize there’s a scarcity of resources such as capital and people. Recommendation:
The management team at CanGo is full of ideas related to expanding its product line. Liz has mentioned the possibility of E-books, music and video, and Andrew suggests online gaming. Expansion is just one topic, as the company is considering offering IPO (initial public offering). The brass is contemplating major decisions without professional guidance. The employees will soon be asked to juggle more responsibilities, without the appropriate resources. CanGo should seek additional consultation specific to the objectives it wants to achieve. In addition, the company must consider the risk and where to allocate resources to be maximize profit. Furthermore, there will have to be some degree of advertising and marketing to generate interests. CanGo feels that the best way to handle new ventures is to use in-house employees. Pulling employees from jobs they are already doing will no doubt take away from quality. We recommend that Warren and Liz take into consideration the opportunity cost of expanding at this time. Will the benefits outweigh the cost of expanding.
Issue 2: No capital for expansion
CanGo must consider how to combine its limited resources to produce the best mix of goods and services. A cost-benefit analysis will help them...