Question

In: Accounting

For this assignment, assume the project below is being proposed, and then conduct a pre-mortem for...

For this assignment, assume the project below is being proposed, and then conduct a pre-mortem for that project. Remember that a pre-mortem starts with the assumption that the project has failed, and tries to explain why this happened.

The proposal: Jaime and Jessica are planning on opening a bar/restaurant near the Sames Auto Arena in Laredo that specializes in contemporary Mexican food and drinks. They will be leasing a building that will be constructed to their specifications by the owner ("build to suit") and hope to open their doors next fall, or possibly in the following winter. They are funding their new venture with some of their savings, an investment from Jaime's uncle Rey (who is a successful cardiologist in Laredo and is contributing 2/3 of the equity), and a loan from Texas Community Bank. Both Jaime and Jessica have worked in the restaurant business quite a while, working their way up from servers to managers at separate casual dining chains (Olive Garden for Jaime and Cheddar's for Jessica).

Solutions

Expert Solution

The project failed due to various reasons -

1) The bar was open near a well established restaurant Sames Auto Arena in Laredo that specializes in contemporary Mexican food and drinks. The competitor is a well established player in the market and Jaime and Jessica did not have a plan to displace market share of Sames Auto Arena.

2) Jessica and Jamie failed to research about the market they were going to enter into, they are opening a casual bar in an area where there the population is bit formal. Presence of well established contemporary Mexican suggests that the place is not suitable for a casual bar.

3) lack of capital could also have been a result of failure, as the flow of capital was very limited for Jessica and Jamie.

4) Jessica and Jamie grew from servers to managers, but they did not have any experience in kitchen. Thus, this suggests that they did not have any specialized product to offer.


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