Raven’s Sun Enterprise Ltd.

Description

Raven’s Sun Enterprise Ltd.: Abstract

Raven’s Sun Enterprise Ltd. is a small oilfield and construction site delivery business operated by firefighter Mike LaPlante on his days off. Mike is the firm’s only driver, so scheduling his time profitably is the critical success factor. Students will have to consider an unusual measure of volume, Mike’s available work days, to assess potential profitability and risk during a recession. They will have to apply constrained resource analysis and cost-volume-profit analysis (CVP) to three different sales mixes, which in this service business involve combinations of in-city and long haul deliveries. Finally, their recommendations will relate the CVP analysis to work/family balance and safety issues.

Teaching objectives

• Illustrate the relevance of CVP analysis to entrepreneurs in a service industry.
• Illustrate a creative application of CVP analysis, specifically an original choice of volume: work days per month.
• Encourage students to think about how CVP analysis is related to work/life balance, whether an expected financial return is enough to justify continued investment in a small family business, and safety considerations. Risk calculations become more meaningful in this context.

Main themes covered

• Cost volume profit and risk analysis
• Work life balance issues

Concepts and theories related to the case

• Cost volume profit analysis
• Risk assessment through margin of safety calculations
• Constrained resource analysis
• Work life balance issues

Additional information

Teaching notes are available for professors. Contact HEC Montreal Case Centre.