The Academy: Evaluating Growth Alternatives
(7 pages of text)
The Academy, a local CrossFit gym in Kitchener, Ontario, was determining how best to expand its business in order to continue its growth trajectory in a highly competitive industry. The gym’s co-owner and head coach needed to decide whether to invest in upgrading The Academy’s existing facility or open a second location. He wanted to complete a qualitative industry size-up, competitive analysis, consumer analysis, and corporate capabilities size-up, in addition to a quantitative size-up, including statement of cash flows and ratios analyses. He required the chosen growth strategy to meet a hurdle rate of 20 per cent.
This case is best suited for a managerial accounting or strategy course at the undergraduate level. Students should have a good understanding of and ability to use fundamental business analysis tools before working on this case. The case could also be used as a testing vehicle. After working through the case and assignment questions, students will be able to
- make a growth strategy decision including a potential business expansion;
- consider various methods of managerial accounting analysis in order to produce the information necessary to make an informed decision;
- incorporate qualitative analysis (i.e., industry, competitive, consumer, and corporate capabilities) with quantitative analysis (i.e., statement of cash flows, ratio analysis, differential analysis, and projected statements); and
- consider the risks and potential mitigations associated with pursuing a particular decision.
Arts, Entertainment, Sports and Recreation
Canada, Small, 2017
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