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Business Management Strategy: Case Study


Maria Chavez owns a catering company that serves food and beverages at parties and business functions. Chavez's business is seasonal, with a heavy schedule during the summer months and holidays and a lighter schedule at other times. 

One of the major events requested by Chavez's customers is a cocktail party. She offers a standard cocktail party and has estimated the total cost per guest as follows: 

Food and Beverage
Labour (0.5 hours @$10 per hour)
$ 5.00
 Overhead (0.5 hours @$13.98 per hour)
Total cost per guest

The standard cocktail party lasts three hours, and she hires one worker for every six guests, which works out to one-half hour of direct labour per guest. The servers work only as needed and are paid only for the hours they actually work. 

When bidding on cocktail parties, Chavez adds a 15% markup to yield a price of $31 per guest. Chavez is confident about her estimates of the costs of food, beverages, and labour, but is not as comfortable with the estimate of overhead cost. The overhead cost per guest was determined by dividing total overhead expenses for the last 12 months by total labour-hours for the same period. Her overhead includes such costs as annual rent for office space, administrative costs (including those relating to hiring and paying workers), and so on. 

Chavez has received a request to bid on a large fundraising cocktail party to be given next month by an important local charity. (The party would last three hours.) She would really like to win this contract—the guest list for this charity event includes many prominent individuals she would like as future clients. 

Other caterers have also been invited to bid on the event, and she believes that one, if not more, of those companies will bid less than $31 per guest. She is not willing to lose money on the event and needs your input before making any decisions. 


Write a memorandum to Ms. Chavez that addresses the validity of her concern about her estimate of overhead costs and whether she should base her bid on the estimated cost of $26.99 per guest. (Hint: Start by discussing the need to consider cost behaviour when estimating costs. You can safely assume that she will not incur any additional fixed costs if she wins the bid on this cocktail party.)


Title: Business Management Strategy: Case Study
Length: 2 pages (550 Words)
Style: APA


Business Management Strategy: Case Study

The nature of management in a particular business determines its general performance and can affect its productivity either negatively or positively. Sales and marketing strategies must be devised so that the best results can be achieved. Catering firms have been subject  to varied business management issues, and some considerations must be made before deciding to venture into such kind of a business. Ms Chavez, an owner of a catering firm that serves food and beverages at business functions and parties, confirms that the business has issues and constraints that must be considered before applying a tender to offer its services.


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