Assess Boston Chicken¡¯s business strategy. Exactly what are its essential success elements and hazards?
Boston Chicken planned to be a residence meal replacement unit. Its key strategy comes with (1) give attention to franchising to larger local developers that will open new stores in the area; (2) focus on home prepare taste meals and keen on introducing fresh varieties of food choices; (3) rapid expand to open fresh stores; (4) keen on operation and method improvement.
Such a strategy made the business expand fast in term of the organization scale and number of Boston Chicken shops, either company owned shops or franchised stores.
The main risk was as well clear. While Boston Chicken breast financed the majority of its areas developers and competition with the fast-food marketplace was quite fierce, Boston Chicken¡¯s organization closely relevant to the business of its franchising stores. Besides, over 50% of the total revenue was your franchising related in year 1994 fiscal yr, including initial franchising charge and carrying on franchising fees. Besides, the financial supports from Boston Chicken was very vital to the system-wide business. As per the company¡¯s management¡¯s anticipation, both Boston Chicken breast and its location developers might have need for extra financing through the 1995 money year.
What are difficulties accounting plans that have a significant impact on the company¡¯s economical statements? Precisely what are the economical statement consequences of these coverage choices? Precisely what are the key presumptions behind these policies? Will be these assumptions justified presented the company¡¯s strategy and prospects?
1 . The policy of revenue recognition has a significant impact on the company¡¯s monetary statements.
Presently over fifty percent of Boston Chicken¡¯s earnings came from royalties & franchise-related income (such as fascination income, software revenue and etc. ) Nevertheless , some of the income recognition rules are aggressive. For example , just about every new operation store contributed $35, 500 one time franchise fee at its...