Ken Romaniszyn, the owner of Lady M Confections is faced with two difficult decisions: (1) whether to open a new boutique in the new World Trade Center; and (2) whether to accept an offer of $10 million and a line of credit from a Chinese investor, in exchange for an equity stake in the company and exclusive franchising rights in China. The decision of whether or not to open the new location is dependent, in part, on the decision of whether or not to accept the Chinese investor’s offer. If Romaniszyn decides to open the new location, the funding must be secured either from the investor, or from another source.
Imagine that you are advising Romaniszyn on this situation.
Please respond to each the following questions:
1. What course of action would make Romaniszyn better off? Why do you think so?
2. How will others be impacted if Romaniszyn acts on your recommendation? Who else will be made better off? Will anyone be negatively impacted?
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