Summer Swim Academy: Expansion Options

Description

In October 2016, the founder of Summer Swim Academy—a provider of swimming lessons and lifeguarding services to families in Burlington, Ontario—was reflecting on the organization’s second full season of operations. The founder had been providing services in Burlington for the past six years and had been operating the business formally under the Summer Swim Academy brand for the past two years. She wanted to evaluate the possibility of expanding her business, either geographically or to a year-round operation, in order to achieve a profit goal of $50,000. To determine whether this goal was attainable, she needed to assess geographic and service-delivery expansion options for Summer Swim Academy.

Learning Objective

The case is intended for an introductory financial or management accounting course at either the undergraduate or graduate level. Before completing the case analysis, students should be familiar with the structure of an income statement, the process of projecting an income statement, and the concept of incremental cash flows. Students should also be accustomed to incorporating qualitative analyses into their decision-making processes. After completing the case, students will be able to do the following: ·Assess the expansion alternatives for a swimming instruction and lifeguarding business, considering the risks and opportunities of the swim instruction industry. ·Conduct a consumer and competitor analysis to determine which expansion option is most attractive. ·Project and interpret income statements. ·Calculate and interpret the incremental net income for each expansion option. ·Make an expansion recommendation utilizing both quantitative and qualitative information.

Keywords

cash flows Expansion Growth strategy projections target profit