Jalvarez_Deliverable2BUS_041324

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May 11, 2024

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Deliverable 2 – KBL Business Case 1 Deliverable 2 – KBL Business Case Jazmin Alvarez Rasmussen University COURSE#: GEB3422CBE Project Management Professor David Jones Due Date: 06/14/2024
2 Deliverable 2 – KBL Business Case Business Purpose The business purpose of KBL purchasing Frida’s Furniture can be multi-faceted and includes the following reasons: 1. Market Expansion. By acquiring Frida’s Furniture, KBL can expand its market reach and customer base. This can help increase sales and revenue for the company by tapping into new markets and demographics. 2. Increased Efficiency: By merging with Frida’s Furniture, KBL can streamline its operations, reduce duplication of efforts, and improve overall efficiency. This can lead to cost savings and improved profitability for the company. 3. Diversification: Acquiring Frida’s Furniture can also help KBL diversify its product offerings and services. This can help mitigate risks associated with relying on a single product or service line and can help the company adapt to changing market trends and customer preferences. 4. Synergies: The acquisition of Frida’s Furniture can also create synergies between the two companies, such as combining complementary skills, resources, and capabilities. This can lead to improved innovation, product development, and overall competitiveness in the market. 5. Competitive Advantage: By acquiring Frida’s Furniture, KBL can gain a competitive advantage in the market. This can help the company differentiate itself from competitors, attract new customers, and strengthen its position in the industry. Overall, the business purpose of acquiring Frida’s Furniture is to drive growth, increase profitability, enhance competitiveness, and create value for KBL and its stakeholders. It is important to carefully plan and execute the acquisition process to ensure that the desired business objectives are achieved within the allocated budget and timeline. Business Benefits The acquisition of Frida’s Furniture by KBL can bring about a range of benefits that can positively impact the company's performance, market position, and overall strategic objectives. Some of the key benefits were already listed in the business purpose portion. Because the purpose is aiming towards the
3 Deliverable 2 – KBL Business Case benefits. With that being said some of the project’s benefits include: 1. Market Expansion, 2. Increased Competitive Advantage and 3. Synergies, are as explained at the beginning. 4. Economies of Scale: Through the acquisition, KBL may be able to achieve economies of scale by combining operations, streamlining processes, and reducing costs. This can lead to improved efficiency, profitability, and financial performance. 5. Strategic Growth: The acquisition is part of KBL's overall growth strategy, which aims to expand the business, increase shareholder value, and achieve long-term success. By strategically acquiring Frida’s Furniture, KBL can accelerate its growth and achieve its strategic objectives more quickly. 6. Talent and Expertise: The acquisition may also bring in new talent, expertise, and capabilities to KBL. This can help the company strengthen its team, enhance its capabilities, and drive innovation and growth. Overall, the project benefits of acquiring Frida’s Furniture for KBL include market expansion, increased competitive advantage, economies of scale, synergies, strategic growth, diversification, and access to talent and expertise. By successfully executing this project, KBL can realize these benefits and position itself for long-term success and sustainable growth. Budget & Funding Schedule Developing a comprehensive budget and funding schedule involves careful planning and allocation of resources. We have a budget of $5 million for the acquisition project. The allocation of this budget can be broken down as follows: 1. Acquisition Cost: The largest portion of the budget will likely be allocated towards the acquisition cost itself. This includes the purchase price of Frida’s Furniture, any associated fees, legal costs, due diligence expenses, and other transaction-related costs. This could account for approximately 60-70% of the total budget, depending on the specifics of the deal.
4 Deliverable 2 – KBL Business Case 2. Integration Costs: Another significant portion of the budget will be allocated towards integration costs. This includes expenses related to merging operations, systems, processes, and teams of the two companies. Integration costs include IT system upgrades, training programs, rebranding, marketing campaigns, and other activities to ensure a smooth transition. This will account for approximately 10-20% of the total budget. 3. Working Capital: It is important to allocate a portion of the budget towards working capital to support the ongoing operations of the combined entity post- acquisition. This includes funds for inventory, accounts receivable, accounts payable, and other operational expenses. Working capital allocation accounts for approximately 10-20% of the total budget. 4. Contingency Fund: It is advisable to set aside a portion of the budget as a contingency fund to account for any unexpected expenses or challenges that may arise during the acquisition process. This could be around 5-10% of the total budget to provide a buffer for unforeseen circumstances. 5. Strategic Investments: A portion of the budget will be allocated towards strategic investments to support growth and innovation. This will include funds for research and development, new product launches, marketing initiatives, or other strategic projects. Strategic investments will account for approximately 5-10% of the total budget. The funding schedule for the acquisition project will depend on the availability of internal resources and external financing options. It is important to secure the necessary funding sources in advance and ensure that the budget is allocated effectively to maximize the benefits of the acquisition. In summary, the $5 million budget for the acquisition of Frida’s Furniture is allocated towards acquisition costs, integration costs, working capital, contingency fund, and strategic investments. By carefully planning and managing the budget and funding schedule, KBL can successfully execute.
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