UCSD Katys Business Idea Essay

You have been quarantined in your parents’ house for the past 3 weeks with your Mom, Dad, and older sister Katy. She attended UCSD and graduated in 2015 with a degree in Philosophy but is in the process of starting a business selling LuluLemon type sports clothes. She asks you for general help in this venture that seems to have many complexities. Katy states she has been working as a marketing specialist at the ABC Company for 5 years and has developed a passion for designing women’s athletic clothes. She feels confident in combining her marketing experience and design passion into a new start-up company.

Katy’s plan is to export clothing to the U.S., Canada, and possibly London, England. Clothes will be made by a contract manufacturer in Thailand to her design specifications. She envisions the operations being headquartered in Texas (a state with no personal income tax); and a sales office in Beverly Hills, California; Toronto, Ontario (Canada) and one possibly in London, England.

Since she has never been to any of these foreign countries, Katy asks you to explain what factors to consider including

a.What is the best form of organization to use for this type of operation including factors such as formation, stock ownership, board of directors, annual meetings, subsidiaries, etc.?

b.How will her unfamiliarity with the foreign locations impact her launch of this enterprise?

c.Does finance and accounting need to be considered from the early stage of her planning; the meaning of “Financial Statements”; and why her friends tell her to borrow all the money she needs to finance the company?

d. The meaning and significance of internal control systems; and

e.Any other factors of relevance, including general cultural differences.

Write an essay explaining what you would tell Katy.

Question #2 is separately printed on Page 2

Question #2:  30 Points (2 Pages Double Space)

Katy, from Question 1, is very optimistic about this being a successful venture. She asks you the following question – “If, in say, 5 years I have a successful business with strong sales, profits and cash flow, what is the general rule on how to determine the value of my business? Based on the material in your International Business class, can you give me some general rules on how to value an ongoing business?”

Write an essay explaining what you would tell her. Include in your answer the significance of how the concept of the growth of GDP, or alternatively the decline of GDP, may impact the valuation 5 years from now.