Twin brothers Ryan and Mike co-own Stamps and More, an independent shipping busi

Question

Twin brothers Ryan and Mike co-own Stamps and More, an independent shipping business they established shortly after graduating from college. While initially struggling during the first two years of operation, the business eventually turned a profit in the third year. Unfortunately, just as the business was starting to take off, the economy took a down turn. Sales are plummeting, and cash flow is down. The brothers are now faced with the decision of whether or not to close the business. Ryan, the optimistic twin, wants to consider every alternative available to save the business. Mike, the pragmatic twin, wants to cut their losses and close the business.

Which brother would you side with, and why? If you side with Ryan, what options do you have to save the business? If you side with Mike, what is your backup plan to wind down the business? Justify your response.

Explanation / Answer

I would side with Ryan to save the business and not close it down as there might be some fixed cost linked with the business that might have to be paid even after shutting down the business. Moreover, shutting down the business would not solve the problem of downturn in business. Economic downturn are cyclical in nature and it would improve sooner or later. Meanwhile the brother can focus on reducing their cost base and increase profitability. In order to increase the sales they can focus on advertising and sales promotion through offers such as low price and credit for the clients. Or if the things are going too bad they can also consider partnering with other business to create synergies and also increase the client base.

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