QUESTION 1
SWOT Analysis Matrix
Using Table 1 Profit and Loss account and balance sheet we can forecast a healthy profit in the year 2008 for Vin ‘X’ordinaire, basing this prediction on data given on previous years. We can see profit after taxation drop by almost £1000 from 2005-2006 although profit retained in this period has almost doubled. Years 2006-2007 display a large increase in profits, despite start up costs of a new, second shop which would suggest profits would only increase in 2008, especially since start up costswouldn’t need to be included with the shop being open and retailing for a year already. This is obviously a strength, displaying the positive financial position of Vin ‘X’ordinaire although it is important to consider the current economic state and how it will affect the spending of potential customers. The economy is currently suffering from a downturn causing a ‘threat’, with the ‘credit-crunch’ reducing and limiting the amount people can afford to spend on ‘luxury’ products such as winewhich may result in Xaviar (owner of Vin ‘X’ordinaire) seeing a slight decline in sales in the latter half of 2008. It is also be possible for the ‘credit-crunch’ to have a completely opposite effect, as background information in the case study suggests ‘staying in is the new going out’ which the credit-crunch will only support as the price of going out becomes unaffordable in comparison to a night in with a bottle of wine or two. The economic state would also have detrimental impact on any borrowing and loans taken out to start up the business
Although being in a strong financial situation, certain assets are depreciating in value, in particularly the van. The van is necessary to Xaviar’s business as they provide an additional delivery service, free of charge to customers in a 5 mile radius. This is a weakness to the business with assets (the value of the van) decreasing yearly with a relatively high running cost when considering its use over the 2...