1. Explain why might the Finance team’s estimates of profit for the pop-up bars be inaccurate?
(2 marks)
2 marks for providing a valid explanation why estimates of profit for the pop-up bars could be
inaccurate. Stude
...
1. Explain why might the Finance team’s estimates of profit for the pop-up bars be inaccurate?
(2 marks)
2 marks for providing a valid explanation why estimates of profit for the pop-up bars could be
inaccurate. Students could discuss, for example:
- Using the laneway bars as the benchmark for the pop-ups (e.g. differences in their
operations mean that the estimates and assumptions of costs and revenues should be
different)
- The simple averaging of annual figures (dividing by 4) does not properly account for
fluctuations in seasonal demands
- Not all the pop-up bars (e.g. Perth) have comparable city data
- The team is reliant on historical data to project future demand, which is problematic given
that the pop-ups are a new venture for the organisation, and thus might have unusual
patterns in costs and revenues in their first year.
2. Describe three factors the Finance team should consider to develop a more accurate sales
forecast for each pop-up bar? In your answer be specific about the information, assumptions or
calculations required. (3 marks)
1 mark for each factor.
Factors listed must be distinct from one another and relevant and specific to the sales of Liqudity’s
pop-up bars. Examples:
- The sales prices of the pop-up bar products
- The expected customer demand for the pop-up bar products
- The broader trends in customer demand for alcoholic beverages, hospitality services
- Changes in regulation regarding bar opening times
- The pop-up bars product mix
- Planned advertising and marketing activities
- Competitor pressure on pop-up bars demand
- City specific factors influencing demand
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