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1. Setting up Kristens Cookie Company minus the benefit of a business partner will adversely affect the start-up partnership if one will only consider the operational effects. Evidently, from a financial standpoint, a sole proprietorship does away with having to share earnings and is consequently more beneficial to the lone owner (provided that the reduction in profits owing to reduced capacity is not overly significant).
Having said that, the operational effects of putting up the cookie company without the assistance of a roommate would include:
– reduced capacity to accept orders
– increased preparation and production time
– extended waiting time (between the time an order is placed and subsequently accepted to the time the order is delivered)
– losing the capability to attend to other matters while the roommate is addressing a particular stage of the production process, particularly the baking and post-baking steps (oven-baking the cookies, cooling, packing, and accepting payment)
– reduced man-hours = reduced output within a given period
Other forgone benefits if one were to push through with a solo operation include ideas that would not have been generated if one were to brainstorm with a business partner (with regard to process improvement, marketing/advertising strategy, etc.). In connection to the operational effect of an extended waiting time, another adverse effect is lost business; after all, the market is comprised of Ðstarving students Ð- a longer waiting time could potentially deter them from ordering from Kristens.
2. Special (higher) rates must definitely be offered to customers placing rush orders. This prevents them from expecting that their additional demands will be catered to at the same price as that of a regular, non-rush order.
Rush delivery entails additional constraints to the operation/production process (if the company keeps up with accommodating such orders, additional equipment eventually has to be brought in, which is not necessarily a feasible option for a start-up, “dorm-room” operation). Kristens Cookie Company must always have the main customer base