Case Study: Read the case study Running a Business:
Part: Graeter's Adds MIS and Financing to the Recipe
Using information from the written case and the video, thoroughly answer the following questions:
1. Graeter's uses information to track cash, sales revenue, and expenses on a daily basis. How does this type of accounting system encourage effective decision-making and discourage store-level theft? Be specific and detailed in your response.
2. While Graeter's uses Facebook and Twitter to nurture customer relationships, assume that management wants to increase its social media presence. Describe at least two types of social media activities that could help Graeter's develop its brand loyalty and monitor what people are saying about the company and its products. Who within the company should be in charge of the firm's social media activities? Why?
3. Which of the financial ratios might Graeter's, as a small privately-held corporation, want to track especially closely? Why?
4. Graeter's needed to raise several millions of dollars to buy out its franchisee after borrowing to build its new plant. One of the strategies it did not use to raise the needed funds was going public, that is, issuing an initial public offering or IPO to sell ownership shares in the firm.
What are the advantages and disadvantages of issuing stock to obtain the money needed to expand a business? Be specific and detailed in your response.