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Surplus/Deficit
($8,513)
$24,120
($1,635)
($1,460)
($812)
($5,065)
($4,811)
($1,171)
$936
$10,055
$3,674
$5,775
Case 8: Gitman Brothers https://www.gitman.com/
Related Chapters:
Chapter 9: Building a Powerful Bootstrap Marketing Plan
Chapter 10: E-Commerce and the Entrepreneur
1. Develop a list of at least five search engine optimization strategies to help
Gitman Brothers move up in search engine results. (Chapter 10, LO 3) (AACSB:
Application of knowledge)
2. Write a memo to the managers at Gitman Brothers that outlines the design
for a new Web site that will achieve the goals they have established. (Chapter 10,
LO 4) (AACSB: Application of knowledge)
3. Identify at least three specific measures that Gitman Brothers managers can
use to evaluate the quality of the company’s Web site upgrade. (Chapter 10, LO 5)
(AACSB: Application of knowledge)
Web sites offer entrepreneurs a treasure trove of valuable information about how well
Copyright © 2016 Pearson Education, Inc.
Case Solutions, Page 312
Visitor segmentation measurements – details about whether customers are new or
returning, etc.
Process measurements – understanding how their Web site attracts visitors, etc.
4. How can Gitman Brothers use social media to promote its line of quality
shirts and ties? (Chapter 9, LO 4) (AACSB: Application of knowledge)
Although social media networking sites such as Facebook and Twiter are better known as
products that consumers use, they can be used by an organization such as Gitman
1. What advantages do business buyers such as the Higginses gain over starting
a business fifrom scratch?” What disadvantages do they typically encounter?
(Chapter 7, LO 1) (AACSB: Application of knowledge)
The following are the advantages of buying an existing business rather than starting one
Copyright © 2016 Pearson Education, Inc.
Case Solutions, Page 313
Easier access to financing.
High value.
There are, however, disadvantages to buying an existing business, including:
Cash requirements.
The business is losing money.
Paying for ill will.
Employees inherited with the business may not be suitable.
Unsatisfactory location.
Obsolete or inefficient equipment and facilities.
2. What steps do you recommend the Higginses take to conduct their due diligence
on Seabreeze Property Services concerning their seller’s motivation, asset
valuation, legal issues, and the company’s financial condition? Do you spot any
fired flags” about this potential deal? (Chapter 7, LO 4) (AACSB: Application
3. Explain the various methods that the Higginses can use to determine a
reasonable value for Seabreeze Property Services. (Chapter 7, LO 5) (AACSB:
Application of knowledge)
There are three basic methods the Higginses can use to determine a reasonable value for
Copyright © 2016 Pearson Education, Inc.
Case Solutions, Page 314
Balances sheet method. This involves computing the net worth by deducting
liabilities from assets.
Earnings approach. This values a business based on its earning potential.
Market approach. This uses a market multiple to a company’s earnings.
The Higginses should know that within each of the above three methods there are
multiple approaches where each uses a variation.
4. In addition to investing their own money and tapping the capital of family
members and friends, what other sources of capital should the Higginses explore if
they decide to purchase Seabreeze Properties? (Chapter 15, LO 2) (AACSB:
Application of knowledge)
5. What advice can you offer the Higginses about negotiating a deal with the
Kellys to purchase Seabreeze Property Services? (Chapter 7, LO 6) (AACSB:
Application of knowledge)
The deal stage is a vital part of the acquisition process. Once the Higinses have come up
Copyright © 2016 Pearson Education, Inc.
Case Solutions, Page 315
Chapter 5: Crafting a Business Plan and Building a Solid Strategic Plan
Chapter 9: Building a Powerful Bootstrap Marketing Plan
Chapter 10: E-Commerce and the Entrepreneur
Chapter 17: Building a New Venture Team and Planning for the Next
Generation
1. What risks are present in Jeff Braverman’s figo big” strategy? What benefits
would it produce? How likely is the company to realize those benefits? (Chapter 5,
LO 7) (AACSB: Application of knowledge)
Jeff Braverman’s strategy of going from a $35 million to a $500 million company is an
example of a BHAG – big hairy audacious goal! It’s big – a 1,329 percent jump, its hairy
2. Considering the cost-benefit analysis you conducted in question 1, what
recommendations can you offer Braverman about the strategic direction in which
he should steer Nuts.com? (Chapter 5, LO 7, Chapter 9, LO 4, and Chapter 10, LO
3) (AACSB: Application of knowledge)
In terms of the generic strategies, nuts.com is a focused player currently, competing in a
small niche. While that is fine for a company with $35 million in sales, the niche may
3. What other strategies, including e-commerce and marketing strategies,
should Braverman pursue to increase Nuts.com’s sales, recognizing that reaching
$500 million in sales is extremely aggressive? (Chapter 5, LO 7) (AACSB:
Application of knowledge)
As indicated earlier, nuts.com’s current niche of selling nuts and related snack products
may not be large enough to generate $500 million in sales. In addition, this niche may be
highly seasonal, if people are buying nuts and snack products primarily as gifts for others
during the holiday season. Nuts.com and Jeff Braverman may have to look for adjoining
effect of his BHAG on the company’s financial position, more specifically on its cash
flow.
4. Should Braverman sell Nuts.com? Explain. (Chapter 17, LO 5) (AACSB:
Application of knowledge)
Selling nuts.com, while possible, is an exit strategy. As Jeff Braverman indicates, if he
