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AAN1 Study Guide Wilde's Bramble
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Tamara Cutler AAN 5/6/ Analysis: Wilde’s Bramble is an organic food company that was built by Alder and Calla Wilde, a married couple in rural Vermont. The couple decided the best way to utilize the farmland they had inherited was to grow and sell organic products. Local demand quickly turned their small business venture into a demanding and profitable business. To continue to meet demand, the Wilde’s obtained more land and more equipment and began to rely heavily on credit cards and loans against their mortgage, as well as Calla getting a second job, all of which contributed to financial strain. Their sales increased, but so did their debt, and as a result they find it more difficult to turn a consistent and sustainable profit. Iceberg Tool Analysis Key Events: Wilde’s Bramble experienced a rapid increase in customers and demand for their products. The Wilde’s expanded to accommodate by leasing additional land and purchasing equipment. The expansion was financed by savings, a credit card, and an additional mortgage on their property. More equipment and property lead to an increase in financial obligations. Calla Wilde found a job outside the farm to help supplement their income, but the stress of their impending debt continued. Patterns: Sales grew which lead to their business expanding, but along with the increased sales came the increased costs to continue to run the business. Temporary solutions to the income issues contributed to the family’s long-term financial instability. Additional income and an outside revenue source still could not fix the financial stressors. While initially the company profited, it began to decline when the expenses of running the business began to increase. Underlying Structure:
The Wilde’s lacked a solid financial plan, which impeded their ability to expand properly. So while their business grew quickly, their gains lacked any long-term sustainability. The business depended on credit cards and mortgage loans as opposed to reinvesting its earnings into the business. Sales increased, but were hindered by the cost of running the business and loan repayments. Calla took a job outside the farm, which detracted from the amount of time she could spend contributing to the business, which decreased efficiency. Behavior Over Time Graph Analysis The red line shows the Wilde’s debt rising consistently. It shows how the company depended on credit cards and leveraging a mortgage to finance the company’s growing costs, which impacted the mounting financial problems. The green line demonstrates the growth of the company and its sales, which steadily increased and the pressure to increase production.. However, the growth does not mean profit due to the high cost of operating. The blue line rises initially, which showed how successful the company had started out, but begins to decline due to expenses, loan payments and problems with fund management. The Wilde’s financial difficulties are evident in the rising debt line in the graph. Utilizing unsustainable financing caused the debt to grow without much profit, proving unsustainable. They struggled with profit margins which is evident by the profit line, and the fact that the cost of running the business, loan payments and poor management of the incoming cash vs the mounting debt.