J & J Hot Dog Stand Jack, a college business student, is back home in his scenic
ID: 334846 • Letter: J
Question
J & J Hot Dog Stand
Jack, a college business student, is back home in his scenic costal town for the summer. Jack has been looking for summer employment. His father mentions that his friend, Bob, has a fairly new high quality hotdog stand that he will not be using this summer. Jack’s father suggests that Jack run a hot dog stand for the summer since it will give Jack a taste of being an entrepreneur since Jack would one day like to own his own business. Plus, the town has a boardwalk along the seas that offers rides, games, and different food vendors, and draws lots of visitors to the area. A perfect place for a hotdog stand!
Bob offers Jack the use of his hotdog stand for the summer at a rental cost of $1,800 and wants all the money due upfront. Jack is also responsible for securing the town’s $1,400 permit to sell food on the boardwalk. The amount for the permit must also be paid in full prior to opening the hotdog stand.
Jack is a little concerned since this is a considerable amount of money that must be paid upfront prior to opening the hotdog stand. Jack can cover the upfront costs through his own personal savings and a loan for half the amount from his father that he must repay by the end of the summer plus $200 of interest.
Jack has also been talking with his best friend, Alan, about going into business together for the summer. Alan is willing to split half the upfront costs and work with Jack running the hotdog stand during the summer. Jack and Alan will then split the business profits evenly at the end of the summer. Under this scenario Jack will not need a loan from his father since he and Alan will have enough to cover the upfront expenses.
Jack realizes that he will need some help covering the hotdog stand if he goes into business by himself. His younger sister, Jess, is willing to work with him for $6.00 an hour plus any tips she makes. Jess will work with Jack for all the hours the hotdog stand is open for the summer. If Jack goes into business with Alan, he will not need to hire Jess since Jack and Alan will be able to handle the business themselves.
Jack plans to run the business from 10 AM to 6 PM Sunday through Saturday on the boardwalk for the next 12 weeks. His main product will be a premier hotdog loaded with chili, cheese, mustard, ketchup, relish, pickles, and onions for $3.00. Jack estimates that a hotdog will run him $0.50 each and an extra $0.50 for all the toppings for a total cost of $1.00. Based on his talks with Bob, Jack believes that he can sell anywhere from 200 to 800 hotdogs per week.
Case Questions:
Develop a mission statement for this hotdog business. Put some thought into this, Think about the service you provide and your product sell. Keep your mission statement simple but effective.
Jack would like to know the following before he commits to starting this business under the scenarios where 1) Jack runs the business by himself or 2) Jack and Alan partner together to run the business.
The variable and fixed costs for the business. Explain why they are fixed and variables costs.
The number of hotdogs that will need to be sold in order to breakeven.
An estimated income statement for the hotdog business for the summer period if Jack sells 200, 400, 500, 600, or 800 hotdogs each week. Use provided template.
3) What are the common forms of business ownership? Discuss the advantages and disadvantages of each. If you were Jack, would you go into business by yourself or partner with Alan? Explain your reasoning.
4) Discuss the marketing mix for the hotdog business. Be sure to include your use of social media. Which site(s) you will use? What basic marketing strategies would you use to promote your business?
5) Is this a good business for Jack to start? Discuss the advantages and disadvantages and possible risks to starting this business.
Explanation / Answer
MISSION STATEMENT FOR HOT DOG BUSINESS:
To establish and provide a wide variety of hotdogs at affordable price and fine dinning for the residence of scenic costal town and the board walk visitors etc; To offer friendlier and easier environment and offer services with lower cost, good quality, hygiene food and service at later hours.
1) Jack runs the business by himself or 2) Jack and Alan partner together to run the business.
In my perspective Jack can run the business by himself is safe for him. He can get loan from his father itselt. And he can pay the loan amount to his father only. For help he can appoint his own sister, Jess, for $6 pper hour. That too he can pay the amount to his own sister only. So that she also can have gain experience of hotdog business. This will be helpful for Jack to own the same business in the future and run business by joining his sister Jess as a partner who is having working experience if she works now. This may prevent from the competition in future from Alen if he works as a partner now. Jack can take risk now to start up with hotdog business and gain good experience this summer. Its a good opportunity for Jack to run the hotdog business by own and appoint his sister for help.
QUESTION: The variable and fixed costs for the business. Explain why they are fixed and variables costs.The number of hotdogs that will need to be sold in order to breakeven. An estimated income statement for the hotdog business for the summer period if Jack sells 200, 400, 500, 600, or 800 hotdogs each week. Use provided template.
SOLUTION:
VARIABLE COST : The cost which varies according to the number of units to be produced.These costs have very high dependency on the units to be sold. In serivce sectors (food) the variable costs are considered as prime costs. Variable costs includes material costs and labor costs which incurred for the food production, services rendered for the same, manufacturing equipments and the utilities used for the food production.
FIXED COST:
Fixed costs are not directly involved in business production units or the sales numbers. Fixed costs or expenses are incurred if they produce any number of units or increase or decrease in sales rate. Fixed expenses are common in nature. Rent, tax for property, salaries, labor or staff costs, administrative expenses for communication and promotions like phone costs, internet, landline expenses and advertising expenses etc;
BREAKEVEN :
Break even is point where the sales equals the expenses, that is the units to be sold to meet all the expenses. BEP is the point where there is no profit and no loss.
BREAK EVEN POINT = FIXED COST / CONTRIBUTION MARGIN
3) What are the common forms of business ownership? Discuss the advantages and disadvantages of each. If you were Jack, would you go into business by yourself or partner with Alan? Explain your reasoning.
FORMS OF BUSINESS:
There are three types of businesses and three basic forms of business ownership.
Three business types :
* Hybrid Business - the business which comes under more than one type of business type. Example - restaurents, hotels etc;
Three forms of business ownership :
Others:
If I am a Jack, i would like to run business by my own. reason explained in first solution.
4. Discuss the marketing mix for the hotdog business. Be sure to include your use of social media. Which site(s) you will use? What basic marketing strategies would you use to promote your business?
MARKETING MIX FOR HOTDOG BUSINESS:
7 P's in marketing mix to be considered for the success of any business.
For promotion i would like to use social medias for the promotion of hotdogs. Social sites like Facebook, Twitter, Instagram etc; and Google ads etc; mobile marketing, target marketing, geo targeting, e-marketing are techniques i would like to use for my hotdog business.
5) Is this a good business for Jack to start? Discuss the advantages and disadvantages and possible risks to starting this business.
Yes, this hotdog business is a good business for Jack to start in the summer time by himself.
Advantages:
Disadvantages:
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