Page 134 - THE CARIBBEAN ADVANCED PROFICIENCY EXAMINATIONS

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INSTRUCTION: Read the case study and answer the questions that follow.

CASE STUDY

Tasts of Barbados Ltd

John Smith was until 1990, the sole proprietor of Taste of Barbados Ltd which was a family owned business DO NOT WRITE IN THIS AREA
that specialized in the production of hot pepper sauce. The business was started by John’s grandmother
who initially made the product for her neighbours using peppers grown by her husband on their farm. As
word spread about the product, demand increased and the business expanded beyond the boundaries of the
home to cover the whole of Barbados and over into Trinidad. That transition also included the handover
of the management of the business to qualified and highly paid specialized managers, the investment
in new equipment, the adoption of a more formal structure for the business, the registration of Taste of
Barbados as a private company with the Ministry of Trade and sale of shares to private individuals to the
tune of $60 million. With this registration, Taste of Barbados Ltd acquired its own legal existence, with
John Smith as Managing Director.

Over the last 20 years the production of hot pepper sauce has become a major component of the manufacture
of condiments in Barbados. Hot pepper sauce is produced, branded and sold by numerous small and
medium sized manufacturers. Although all Barbados hot pepper sauces are similar, each manufacturer
uses her own “secret” recipe. Production in the industry (in Barbados and Trinidad) is estimated at $50
million annually and there are 15 manufacturers. Taste of Barbados Ltd has annual sales of $25 million
and is currently producing at 75% of its full capacity and controlling 50% of the combined Barbados and
Trinidad market. DO NOT WRITE IN THIS AREA

Hot pepper sauce which is a household product for all Barbadians has become very popular with visitors to
the island. Based on this observation, Invest Barbados (the national export development agency) sponsored
a five day trade mission to New York, USA in search of markets for the hot pepper sauce produced by the
various producers from Barbados. Mr John Smith attended this mission on behalf of Taste of Barbados
Ltd. There, he met with some major American food distributors and conducted sampling and cooking
demonstrations with pepper sauce as a condiment at selected locations in New York City. Impressed by
the demonstration, a major US food company has decided to partner Taste of Barbados Ltd but is asking
for a feasibility analysis of the company.

Taste of Barbados Ltd, like any other viable venture would go through a venture life cycle. It could also
be subject to valuation at any time for various purposes including raising growth capital. DO NOT WRITE IN THIS AREA

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