Finance Final Exam
Overview
This exam requires students to examine the case study More Vino: The Expansion and recommend a solution to the problem identified in the case. Specifically, students should be putting themselves in the shoes of Mr. Greenway as it relates to the case study. After reading the case, students should be preparing a report detailing:
1. The problem.
a. What is the problem in the case study? Again, you need to put yourself in Mr. Greenway’s shoes.
2. The causes of the problem.
a. With the problem identified, what are some causes of the problem?
3. Alternative solutions to the problem.
a. As a group identify at least two different solutions to the problem. Usually these can be understanding as “do something” or “do nothing”.
4. Evaluation criteria.
a. With the alternative solutions identified, how will your group decide which solution to implement? Keep in mind, making a good decision is based on multiple sources of evidence or support to said decision.
5. Financial analysis.
a. Ca
y out a financial analysis (capital expenditure decisions methods) based on your evaluation criteria.
6. Recommendation(s).
a. Based on the causes of the problem, alternative solutions and evaluation criteria, propose a recommendation that uses the results of your financial analysis as a justification.
7. Conclusion.
a. Provide a
ief conclusion summing up the report.
This assignment requires students to make a financing decision related to a foodservice-oriented problem. While there is a great amount of detailed information in the case study, in some cases, students may be required to make some assumptions (educated or justifiable guesses) regarding some aspects of More Vino LTD.
Students will use course content (concepts relating to financial statements, ratios, risk, return, cost of capital, time value of money and capital expenditure decisions making method) presented in class to analyze and complete this case study. Students must submit a report, following the format given above and the results of the analysis conducted in appendices, following the report. The appendices do not count towards the final page count. The report should be a minimum 1.5 pages, single spaced using a profession style font and tone.
The marking
eak down is as follows:
Criteria
Marks Available
Co
ectly identifying the case study’s problem and its causes. Alternative solutions identified should be able to logically solve the problem based on the causes identified.
Out of 20 marks
Identifying appropriate evaluation criteria with which each alternative will be measured with a general discussion about how said criteria will be used to compare the alternatives.
Out of 10 marks
Analysis of the alternatives using the evaluation criteria. Analysis should be ca
ied out in good format using co
ect information, stating assumptions where needed. Results of the actual analysis should be contained in appendices with the details of the results in the report.
Out of 40 marks
Recommendations and conclusions should be presented based on the problem and alternatives identified. Recommendation should be well justified based on the evaluation criteria and results of the analysis.
Out of 20 marks
Spelling, grammar and co
ect case report format. Reports should be free of spelling and grammatical e
ors, presented in a logical and professional tone. Each report should follow the outline given above, conforming to the minimum page count.
Out of 10 marks
More Vino Ltd.—Expansion Proposal
908N04
MORE VINO LTD.—EXPANSION PROPOSAL
Julie Gosse wrote this case under the supervision of Elizabeth M. A. Grasby solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.
This publication may not be transmitted, photocopied, digitized, or otherwise reproduced in any form or by any means without the
permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights
organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western
University, London, Ontario, Canada, N6G 0N1; (t XXXXXXXXXX; (e) XXXXXXXXXX; www.iveycases.com.
Copyright © 2008, Richard Ivey School of Business Foundation Version: XXXXXXXXXX
It was late March 2017, when Arthur Greenway reviewed the TT$600,0001 request for additional funding
to help finance the renovation of an outdoor patio area from Christian and David Stone, founders of More
Vino Ltd. Greenway was an accomplished businessman, shareholder and silent partner of More Vino, a
wine retailer located in Port of Spain, Trinidad. Greenway, along with his investment partner Ross Moore,
had provided a major portion of the start-up capital for the Stone
others to open the business. Since then,
More Vino had grown in popularity and was now considered the newest local hot spot for food, drink and
entertainment. Greenway believed More Vino was a good investment, and he knew that Christian and
David were relying on him and his partner for funding, but he was uncertain whether lending additional
capital at this time was the best thing for the business.
TRINIDAD AND TOBAGO2
The Republic of Trinidad and Tobago comprised two islands located at the southern-most end of the
Cari
ean, 10 kilometres from the east coast of Venezuela (see Exhibit 1). Trinidad, the larger and more
populous of the two islands, had an area of 4,800 square kilometres and a population of 1.3 million.
Tobago was 32 kilometres off the northeast coast of Trinidad with a substantially smaller area (300 square
kilometres) and a population of just over 54,000. The Republic was primarily English speaking, with 40
per cent of the population being of African descent, 40 per cent of Indian descent, and the remaining ethnic
mix a combination of European, Chinese or Middle Eastern ancestry.
While Tobago was the centre of the Republic’s booming tourism industry, Trinidad was an industrialized
island with a diversified economy based, to a large extent, on oil and agriculture. In the past 10 years, the
country had shown consistent growth in its tourism and service industries. Trinidad was equally known for
its cosmopolitan lifestyle and many festivities. The capital city and centre of government, Port of Spain,
was the epicentre of business activity and the Republic’s major financial hub. It was also host to Carnival,
a ritual over 150 years old, where partygoers (locals and tourists) participated in a widespread week-long
1 All funds are expressed in Trinidad & Tobago dollars. CA$1:TTD$5.80 (approximately).
2 The information represented in this paragraph was largely comprised from material accessed from the Trinidad and
Tobago Tourism Development Company, www.tdc.co.tt/index.htm and Welcome to Trinidad and Tobago
www.visittnt.com/index.asp.
This document is authorized for use only by Dave Cleary (david.cleary@george
own.ca). Copying or posting is an infringement of copyright. Please contact
XXXXXXXXXX or XXXXXXXXXXfor additional copies.
mailto: XXXXXXXXXX
http:
www.iveycases.com
http:
en.wikipedia.org/wiki/Petroleum
Page 2 9B08N004
cele
ation with elaborate parade costumes, dancing and singing to native calypso, soca and steel band
music. Overall, the Republic exhibited and cele
ated a vi
ant cultural heritage, expressed through dance,
music, art and cuisine, originating from the mix of different ethnic groups.
COMPANY BACKGROUND
The Stone Brothers
Christian was the eldest of the two Stone
others. Born and raised in Trinidad, he had always had
aspirations to be an entrepreneur. Christian came to Canada to complete his university education, where he
graduated with an honors degree in business administration from the Ivey Business School at Western
University. Upon graduation, Christian moved back to Trinidad to explore a number of entrepreneurial
ventures that he and his
other could pursue as co-owners. David also graduated from The University of
Western Ontario with a degree in economics, and he joined Christian in the search for a viable business
opportunity.
Although he had lived outside of Trinidad for a number of years, Christian remained interested in returning
home to start a business. Through his travels, he had observed that there remained a large disparity in
Trinidad’s standard of customer service and the service he had experienced in other parts of the world.
Consequently, he believed there was a unique opportunity to combine a more advanced concept of service
with the traditionally relaxed attitude of the Cari
ean, and he therefore sought to incorporate this
competitive advantage into his own entrepreneurial venture.
The Opportunity
While in Ontario, Christian had become familiar with the province’s beverage alcohol industry and noted
that wine sales, in particular, represented a major portion of the market. Christian had also visited a number
of Canadian bars and restaurants that specialized in mass selection and specialty vintage wines to
accommodate their customers’ growing appreciation for wine and wine culture.
In Trinidad, locally made rum and beer tended to dominate sales; however, with rising income levels,
premium imported products were gaining in popularity. Individual consumers could purchase wine and
other alcohol products at bars, restaurants, grocery stores, variety stores or at one of the few specialty
etailers on the islands. Commercial consumers could source their large orders from a few well-established
distributors. Although liquor was widely available through these many channels, there were few retail
establishments in Trinidad that specialized exclusively in imported wine and wine products. The Trinidad
and Tobago retail market for wine was estimated at TT$48 million with considerable growth anticipated
for the next five years.3 Sensing the opportunity to meet an emerging market need, Christian believed that
he and David could build a successful wine-retailing business emphasizing good service and unique
entertainment.
More Vino’s original entry into the market was the establishment of a dedicated liquor store to serve both
etail and wholesale customers with exclusive
ands and the widest variety of wines available in the
country. The business would operate four subunits: wholesaling and distribution, a retail store, a bar and
estaurant, and a delivery service. The retail store business was deemed necessary to appeal to individual
consumers, but the
others believed that the greatest portion of revenue would come