Case Study Analysis

The Case Study
New Guildford Nursery Project
Tiny Toes Ltd provides nursery care to young children across the country. The company wants to expand and to open a new nursery in central Guildford. The plan is for the new nursery to be able to hold up to 120 children. It will be costly to open the new nursery especially as rent in Guildford is expensive, but Sandra the owner of Tiny Toes thinks she can make the idea work. Sandra has decided that she can cut costs for the nursery by for example providing fewer music lessons and other activities for the children, and by only having a very basic food menu for the children. Tiny Toes Ltd usually charges much higher rates than other nurseries in the country. Sandra wants to provide a first-class service and to persuade wealthy parents in the Guildford area to become clients.
Below is some data that Sandra has collected as a part of her financial planning for the new Guildford nursery.
? Annual fixed costs £310,000
? Variable costs per child per month £710
? Average monthly price to charged for each child at the nursery £1,550
? Average monthly price charged for each child by other nurseries in the area £1,100

Sandra has not as yet drawn up a cash-flow forecast for the new Guildford nursery.
New Company Childcare Centres Project
The business also plans to start a new company childcare service providing nursery care on the premises of a variety of businesses throughout the country. So far 20 businesses across the country have signed up to the new service. The new service will allow the employees of the various companies to have childcare on site while they work. Tiny Toes Ltd plans to open the first company childcare centre in 9 months and the remainder within 18 months. The companies are willing to pay high prices for the on-site childcare services provided by Tiny Toes Ltd. However, Tiny Toes already has some rivals and their competition is increasing.
Sandra has prepared a basic budget for the new company childcare service and this is shown below. She also wants to prepare a budget for each company childcare centre.
Company Childcare Centres Budget
January February March April

Sales Income 310,000 390,000 410,000 420,000

Costs

Insurance, Rent, Rates etc 81,000 289,500 195,000 186,000
Recruitment & Training 72,850 145,950 253,600 258,900
Interest payments on loans 45,300 76,500 98,300 110,520
Staff wages 145,600 185,000 210,000 251,000
Other costs 152,000 148,500 148,500 143,620
Total Costs 496,750 845,450 905,400 950,040
Profit or Loss -186,750 -455,450 -495,400 -530,040

Sandra believes that she will need £17 million to fund the entire new company childcare centres project. She also recognises that at least two-thirds of the money will need to come from the retained profits of Tiny Toes Ltd.
So far, Sandra’s expansion plans have put a lot of pressure on the cash-flow of the whole of Tiny Toes Ltd. As a consequence, the bank has been very reluctant to give the business any more loans, as it believes that the business is trying to expand too quickly.
Required:
You are required to write a report which discusses the following;
? Explain and discuss how having accurate financial information can help with the decision making process in Tiny Toes Ltd (15 marks).
? Explain and discuss the benefits to Tiny Toes Ltd of preparing a detailed business plan as well as accurate cash-flow forecasts and budgets before beginning their new Company Childcare Centres and the new nursery in Guildford projects (15 marks).
? Identify and discuss the problems with the financial information that Sandra has prepared so far, and give some suggestions as to what further information may be needed in order for the company to make the right decision about the Company Childcare Centres and the new nursery in Guildford projects (10 marks).
? In order to have enough money for both projects Tiny Toes Ltd will need to generate additional finance. Identify and discuss any problems that you believe Tiny Toes Ltd may have when trying to generate internal finance in the form of retained profits, and external finance from lenders (10 marks).
? Based on the information provided in case study, explain any other problems that you think Tiny Toes Ltd may have with the development of these new projects, and give your opinion as to whether you think based on information provided in the case study whether Tiny Toes Ltd should continue with their Guildford Nursery and the Company Childcare Centres projects. Explain your opinion in full (10 marks).

10 marks – up to a further 10 marks can be awarded for the structure and clarity of the report, the use of appropriate headings and/or sub-headings, organisation of points, and use of English and fluency.
Case Study Analysis Report 70 Total Marks
Guidance Notes:
? You must prepare your answer in a report format.
? The report must be written in your own words
? You should not copy and paste from websites.
? Your report should be a minimum of 1000 words.
? Read the case study carefully and think about all of the issues being faced by the company, and consider these when completing your report.
? If you need to do further reading and research around the key topic areas in the case study then do so before writing your report.

Additional Information:
GLOBAL ASSESSMENT CRITERIA
The following provides details of the global assessment criteria for the IFY.

Subject Knowledge Application of Knowledge Academic Skills
85%-100% • Demonstrates breadth and depth of knowledge that is exceptional and informed by extremely high levels of reading
• Demonstrates and awareness of the full range of appropriate principles, theories, evidence and techniques • Goes beyond the source material displaying exceptional ability in conveying issues identified
• Conveys Exceptional application of theoretical and technical knowledge to achieve learning outcomes. Displays originality in thought
• Exceptional presentation using an expansive range of resources which inform the work but do not dominate
• Demonstrates an excellent ability to convey a coherent and concise argument within the level of study;
75% -84% • Demonstrates an excellent grasp of the subject content
• Demonstrates excellent breadth and depth of content knowledge
• Identifies new information from sources which are consistently appropriate • Draws on a wide range the full range of relevant ideas, theories and models with excellent levels of accuracy, analysis and synthesis
• Consistently selects, evaluates and responds to a variety of source material using techniques and methods with excellent levels of confidence and accuracy
• Makes extensive use of new information- has the ability to read efficiently and critically
• Work demonstrates an excellent response to the demands of the assignment • Written and oral work show excellent command of format, structure, language (including lexis) and referencing
• Makes consistently sound judgements on how to complete work
• Is nearly always able to address tasks independently and reflects fully upon feedback
• Demonstrates excellent time management

65-74% • Demonstrates a very good grasp of the subject content
• Demonstrates a very good understanding of the breadth or depth of content knowledge
• Identifies new information from sources which are generally appropriate • Draws on a good range of relevant ideas, theories and models with very good levels of accuracy, analysis and synthesis
• Generally selects, evaluates and responds to a variety of source material using techniques and methods with very good levels of confidence and accuracy
• Makes some use of new information- has the ability to generally read efficiently and critically
• Work demonstrates a very good response to the demands of the assignment • Written and oral work show very good command of format, structure, language (including lexis) and referencing
• Generally makes good judgements on how to complete work
• Is in most cases able to address tasks independently and reflects fully upon feedback
• Demonstrates very good time management

55-64%
• Demonstrates a good understanding of the subject content
• Demonstrates an awareness of the breadth or depth of content knowledge
• Identifies new information from selected or given sources
• Draws on a range of relevant ideas, theories and models with some level of accuracy, analysis and synthesis
• Can select and respond to a variety of source material using techniques and methods with some level of confidence and accuracy
• Makes use of new information- has the ability to read efficiently and critically though may require guidance
• Work demonstrates a good response to the demands of the assignment
• Written and oral work show good command of format, structure, language (including lexis) and referencing
• Is sometimes able to make judgements on how to complete work
• Is sometimes able to address tasks independently but only occasionally reflects on feedback
• Demonstrates some time management

40-54%
• Demonstrates some understanding of the subject content
• Demonstrates little awareness of the breadth or depth of content knowledge
• Has a limited ability to identify new information from selected sources
• Draws on a limited range of relevant ideas, theories and models with some level of accuracy but no independent analysis or synthesis
• Can respond to given source material using techniques and methods with limited accuracy
• Makes little use of new information- the ability to read efficiently and critically is limited
• Work demonstrates a limited response to the demands of the assignment
• Written and oral work show restricted command of format, structure, language (including lexis) and referencing
• Needs guidance to be able to make judgements on how to complete work
• Is dependent on others to address tasks and is rarely reflective
• Lacks consistent organisation and time management

0-39%
• Demonstrates little or no understanding of the subject content
• Demonstrates no awareness of the breadth or depth of content knowledge
• Is unable to identify new information from selected sources
• Draws on limited ideas, theories and models with occasional accuracy but no independent analysis or synthesis
• Responds to given source material using techniques and methods with limited accuracy
• Makes no use of new information- is unable to read critically
• Work demonstrates a poor response to the demands of the assignment
• Written and oral work show little or no command of format, structure, language (including lexis) and referencing
• Needs support to be able to complete work
• Is entirely dependent on others to support learning and participation in tasks
• Lacks time management
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