Enigma Escape Rooms Ltd.: Horror-Themed Expansion?
(6 pages of text)
In 2016, the founder of Enigma Escape Rooms Ltd. (Enigma) was investigating an opportunity to expand his business to a second location. A new location would offer three additional escape rooms, and Enigma would enter the horror-based genre of the market. Enigma had strong demand for its adventure-themed escape rooms during its first year of operations. With escape room popularity at an all-time high and new competitors in or entering the market, the owner wondered if this was the best time to grow his business. He planned to complete a business size-up, assess the competition, and then project the costs and benefits of opening a second location before making a final decision.
This case is suitable for an introductory management accounting course at the undergraduate university level. After completing the case, students should be able to
- perform a business size-up of the company;
- analyze the opportunity for the company to expand at a second location;
- assess the cash flows associated with the opportunity and determine which are
relevant (future, cash, and different) and which are recurring or one-time;
- perform a differential analysis to evaluate the opportunity in both the high and low scenarios;
- calculate the return on investment and payback period for the second location; and
- justify their decision based on their analyses.
Arts, Entertainment, Sports and Recreation
Canada, Small, 2016
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