CanGo Essay

Issue 1: No clear strategy for expansion CanGo has had its success, and now they are looking into the future. Their question is, â€Å"What’s going to help them grow?† and as Liz said, â€Å"Turn them into a mighty oak.† CanGo recognizes that branching out and delving into new territory will be profitable and its popular with investors since they’re thinking of going for an IPO. The possibilities of adding e-books, streaming audio and video is hip but they also recognize that the online gaming industry is on the cutting edge for growth. With all of the brainstorming ideas CanGo has they do recognize there’s a scarcity of resources such as capital and people. Recommendation: The management team at CanGo is full of ideas related to expanding its product line. Liz has mentioned the possibility of E-books, music and video, and Andrew suggests online gaming. Expansion is just one topic, as the company is considering offering IPO (initial public offering). The brass is contemplating major decisions without professional guidance. The employees will soon be asked to juggle more responsibilities, without the appropriate resources. CanGo should seek additional consultation specific to the objectives it wants to achieve. In addition, the company must consider the risk and where to allocate resources to be maximize profit. Furthermore, there will have to be some degree of advertising and marketing to generate interests. CanGo feels that the best way to handle new ventures is to use in-house employees. Pulling employees from jobs they are already doing will no doubt take away from quality. We recommend that Warren and Liz take into consideration the opportunity cost of expanding at this time. Will the benefits outweigh the cost of expanding. Issue 2: No capital for expansion CanGo must consider how to combine its limited resources to produce the best mix of goods and services. A cost-benefit analysis will help them measure the cost and the benefits correctly. They will need to think about two types of analysis (1) Marginal Analysis and (2) Cost-Benefit Analysis. Recommendation: Performing a marginal analysis will examine how the costs and benefits change in response to their incremental changes in actions. Any additional action that CanGo does will bring about additional cost so, type of analysis will determine if the expected benefits of their actions exceed the added cost. It was mentioned casually that the only source of capital as an IPO. This point was expounded upon by the poor sandwiches being provided. I don’t think Warren made the comment to be rude, but to illustrate the point that financial capitol is limited – especially in terms of expansion. CanGo is generating interest in its industry and community. The time is ripe to offer an initial public offering. CanGo needs professional guidance in analyzing what is value and assess the possibilities of an IPO. It may consider taking advantage of its success in Japan. CanGo’s IPO does not have to be confined to its locality; it has to start thinking international in scope. Its popularity in Japan alone may generate the capitol necessary to expand in product, personnel, and infrastructure.