The Leeds Livery Essay

1546 WordsFeb 1, 20157 Pages
Problem Statement/ Objectives: Hugh Tudor, a retired office manager wants to invest in a small business that provides him with additional income and a challenging entrepreneurial experience. Should he invest in the local British pub? What is the best investment strategy that can help him attain additional income with minimum risk? Porter's Five Forces Analysis 1. Buyer Power Who? Individuals and businesses Low switching cost for customers Customers are attracted by low price with high quality standards high 2. Supplier Power Who? Labour, food and drink providers Low cost of switching suppliers 3. Substitutes High number of substitutes such as restaurants, hotels, motels, bars Substitute products entry is high Maintain customer…show more content…
Hold on to his savings and look for investing in a more secure and stable business than The Leeds Livery Analysis of Alternatives 1. Investing the savings at guaranteed annual interest rates with the bank: Hugh is at an age where borrowing debt for investing into a business that offers no guarantee of profits is probably not a good idea. He can invest his savings with the bank at guaranteed annual interest rates that will provide him with a secure income combined with his pension. The Leeds Livery operates in a competitive and unstable industry and it has failed to fain attractive profits in the recent past years. There is a lot of work required to increase the profitability of the business which might give Hugh a hard time especially when he is borrowing money to invest in the business. Following are the pros and cons of this alternative: Pros Cons Close to no risk of investment loss There will be no magnified profits with the savings account Earnings from investment together with Hugh's pension will provide him a secure income Hugh's desire to manage a business will be unmet No need of borrowing money that saves the risk of debt accumulation at his age The opportunity of earning potential profits with The Leeds Livery will not be availed Annual interest rate is guaranteed at 5%, no risk of unstable returns during low interest environment The Leeds Livery is a high risk and competitive business, there is no guarantee of profits Hugh

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