Question

Case study 4 (10 Marks
Ameer, an entrepreneur, based in Muscat, forayed into fitness business by setting up a gym in May 2016.
Since then, he has been struggling to get customers at his Gym. He has been burning a lot of money on
promotion and advertisements than he has earned. Later, Ameer was trying to reduce his promotional
expenses and find effective ways to generate leads. Ameer couldn't get any result. Ameer needs more money
to carry on his business activities.
Further, Ameer wants to expand his business to Malaysia. Ameer discussed the problem with his friend
Kamis, a manager in Bank Muscat, to get his advice in getting a loan from the bank. During the meeting
with Ameer, Kamis mentioned the following; banking is an industry that handles cash, credit, and other
financial transactions. Banks provide a safe place to store extra cash and credit. They offer savings accounts,
certificates of deposit, and checking accounts. Banks use these deposits to give loans. These loans include
home mortgages, business loans, and car loans. Banking is one of the key drivers of most of the world
economies. It provides the liquidity needed for families and businesses to invest in the future. Companies
use loans for future demand and expansion.
Questions:
1. What is the role of accounting, finance and banking in this case study?
(3 marks- Answer in 75-100 words)
2. Examine the services that Bank Muscat can provide to Ameer to improve his business. Explain.
(4 marks- Answer in 100-125 words)
3. Do you agree that Ameer wants to expand internationally? What are the main services of the bank
that he can get to protect his business internationally? Justify your answer.
(3 marks- Answer in 75-100 words)

Answer 1

1)   The role of accounting, finance and banking has a very important player to play in this case study.

• As Mr. Ameer has open an entrepreneur open a gym in 2016 has been burning cash in promotional activities or advertisement to woo customers. But he has failed.
• If Mr. Ameer had done proper accounting of his expenses he does not have to suffer loss or cash burn. In a business accounting, finance and banking plays an important role
• .Where accounting check your books of account and finance will tell you from where you can get cheap borrowing and source of capital and at last Banking plays an important role in providing assistance to business in terms of providing loans or any other assistance.

2)   The service that Bank Muscat can provide Ameer to improve his business are as follows -

• As Mr. Ameer is burning lots of cash and I think he need to cash to self-sustain his dream pet project i.e. Gym. So bank can provide loan after verification of documents and formal due diligence of books of accounts.
• Bank can appoint professional members to his management, who will guide him in taking proper decision about his expansion or cutting down unnecessary expenses. Banks normally appoint its personal in the company when bank give huge ticket size loan. It’s normally do that bank loan never got Bad Asset.
• Bank Muscat can open a saving account or current account, whatever cash is generated from a gym can be deposited in bank of Muscat. It’s a win situation for Mr. Ameer he can track all his income and bank will get money apart from the loan amount. So that money can be used to give loan to other party.
• Bank Muscat can help in analyzing financial transaction. Financial transaction give clear pictures whether the company is going into loss or profit. So bank can give services to Mr. Ameer in analyzing financial transaction.

3)   I don’t think Ameer should expand his business internationally at present now. The reasons are that his present business is not performing well and he has lost most of his cash in promotional activities or advertisement still could not find satisfaction results. I would suggest Mr. Ameer not to expand internationally now, focus on restarting on present business with the help of any professionally personal. It’s been seen earlier those business who has making loss several years tried to expand, after few year they have close all their stores gradually.
If even Ameer still wants to expand business in internationally Bank Muscat can provide with various services are as follows –

• He can get cheap loan from bank to start his business internationally. He should do proper negotiation with the bank so that he can get cheap credit for raising capital.
• Bank can open account of his new international business so that all the transactions made by new business will be stored preserved securely.
• Bank can give expertise team to his company initially so that his company can grow quickly on how to manage his business and its strategy on how to trap the market.
• Bank can help in documentation of paper work in international country, bank have contact with the local government, so it will be easy for Mr. Ameer to open his store in the international country with the local norms.