Posted by & filed under Cost Accounting, Marketing & Strategy.

Description:  It’s an old story for small town entrepreneurs. The new road takes your customers into the city for better prices, better selection and you’re facing a crisis. But Dave Callahan, owner of an independent station in St. George’s Newfoundland, is striking back. As the Fred Eaglesmith song puts it, “Then they built that overpass and they stay out on the highway.” Dave is hoping to prove the song wrong.

https://www.youtube.com/watch?v=96ugqNZt8g4

Date:  April 6, 2019

Source:  cbc.ca

Discussion points:   

Link: https://www.cbc.ca/news/canada/newfoundland-labrador/dave-callahan-st-georges-1.5082657

1) What do you think of Dave’s new corporate strategy? Do you think it will work?

2) Can you think of some other strategies Dave or a similar small business owner can use to combat this type of situation?

3) Illustration 5-8 in Wiley’s Financial Accounting: Tools for Business Decision-Making explains the way to calculate a company’s gross profit margin. If Dave cuts his prices, what will happen to his gross profit margin?

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