Reference no: EM131717006

The Poe Ranch Gift Shop

Charles Poe grew up on the 12,000-acre Poe Ranch in Montana that his great grandfather established with an initial 1,000 acres in 1929. Growing up on the ranch, Charles acquired a lot of practical skills through hard work and a lot of what he thought of as needless tasks. Of course, although he found the work boring, it was a good break from the hard physical labor he was used to doing on the ranch.

When Charles was twenty and attending college, his mother (Heather) decided it would be good for the family to turn part of the ranch into a tourist destination. Increasingly people were looking for unusual vacations that also connected them to nature and perhaps a way of life they had only read about or seen in the movies. Heather and David decided to capitalize on this trend and constructed the 9,000-square-foot Poe Ranch Lodge with eight bedrooms and a large dining hall that allowed them to accommodate from 8 to 30 guests at the ranch. The lodge was open for guests from May 1 through September 15. After the first season (2010), which had a total of 378 guests and generated gross revenue of $412,000, Heather began to talk to David about the possibility of opening a small gift shop.

During the summer of 2011, Charles was home for the summer after completing his junior year studying business at Colorado State University and helps his mother to plan the business. Charles suggests that perhaps the Poe Ranch Gift Shop should be an extension of The Poe Ranch Lodge.

Discussion Questions:

1. What type of merchandise should the Poe Ranch Gift Shop offer? Explain your rationale.
2. What should be the initial inventory investment? Explain how you arrived at this amount.
3. Evaluate the idea that Charles developed of using the Poe Ranch Lodge as an extension of the Poe Ranch Gift Shop.