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George’s Trains
BUS 650: Managerial Finance
name
Prof
April 29, 2013
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It appears that George is running a profitable business. George is aware you are in an MBA Managerial Finance class and comes to you for advice on his working capital practices. George asks: How you would describe my working capital practices, including my methods of capital budgeting analysis techniques? What are potential pitfalls in my Capital Budgeting practices that I should be aware of? Develop a simple Statement of Cash Flows for George’s Trains using any information gleaned from the video. What areas of improvement do you recommend?
George’s Trains is one of the largest and oldest established stores for model trains in North America.They are all about model trains, nothing else, and one of the few hobby shops online dedicated exclusively to model trains. George’s specializes in the sale, repair, and trade-ins of all makes and types of model trains. As well, George’s sells everything for layouts and sets, scenery, and model accessories. A family business, George’s Trains is based on traditional values of honesty, fairness, and integrity. With staff highly knowledgeable about model railroading, George’s Trains offers sales and service to both occasional customers and serious collectors around the world.Always fascinated with mechanical items, George Olieux began tinkering with and repairing model trains for others just after WWI. George’s initial interest in model trains grew after building a train layout for a young nephew.
He began repairing trains out of his basement for five model trains shops around Toronto. With a strong work ethic, attention to detail, and a keen mind, George developed an impressive expertise with model trains and an exceptional craftsman.His work became so well regarded, people wanting to have their model trains repaired were often lined up at his door when he got home from church. George did more and more work for Bob’s Toy Trains, and when it went up
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forsale, bought the store in 1962 the beginning of George’s Trains. George’s Trains became very successful and well-known after he took over, and in 1976, George bought the store next door, tripling his space. George’s style of doing business was based on common sense, customer service, and honesty. Once, at an estate sale, George offered the widow $75 for a box of train cars. “The price on the box is $52. You’re giving me too much”, said the widow. “No”, answered George, “I’m giving you today’s market price.” George built his reputation and success by offering fair prices, excellent service, honesty, and a friendly atmosphere, practices that are still followed with pride today.
Not just a businessman, but an avid collector of model trains, George’s favorite period was from 1901 to the 1950s. He even rented his collection to Disney Studios for the movie, One Magic Christmas. George’s needs no last name to identify him to model train collectors. In the early days, his catalogue reached model railroad aficionados around the world. Today, George’s Trains reaches enthusiasts around the globe through the internet. George’s Trains became one of Canada’s premier model railroad shops. George, known and loved by model railroaders and train hobbyists around the world, passed away in 1995.George’s sons, Richard and John, entered the business in 1981 and 1984 respectively, and carry on the George’s Trains legacy today. John managed the store from 1981 for several years, but his passions lay with sports, especially scuba diving, and he left only to return years later. Richard, originally involved in the auto trade, took over the management of the business in 1984.
Today, both brothers are fully involved, with Richard showing his passion and expertise for model trains, and John his passion and expertise for the family business. Together they have kept the original values of George’s Trains while moving with today’s age by making George’s
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one of the premiere hobby shops online.In January, 2007,Richard and John saw the need for a location outside of Toronto’s busy downtown core, and purchased Railview Trains and Crafts in Markham. With their parking lot located right beside the CN main line, the new location was already established as being one of North America’s best rail fanning spots. Customers can see trains traveling east and westbound at almost any time of the day from both outside and inside the store. In May 2009, the brothers leased out the unit next to the Markham location, and the downtown store was closed and amalgamated into one giant George’s Trains in Markham, Ontario (George’s, 2013).
In order to better understand George’s capital practices, we have to find out what exactly consists of capital practices. Capital practices is the way that a business runs their business. George’s methods for his capital practices were to ensure that he constantly had items in stock but he did not order too many because of slow seasons. The way George ran his business, he was able to get the trust from the bank which allowed him to ensure that he kept his business running. He made smart decisions by moving with the trend when trains wasn’t the hit item. He was able to keep his business up and running because he ensured that he budgeted well and that they always had enough funds to cover a new load if anything else had to be purchased. His method of not overstocking the shelves really has helped him in the long run. His business doesn’t require him to keep the shelves fully stocked because of the season. He isn’t always going to be busy but he keeps track of his busy times and ensures that during that time the shelves are packed and ready for customers.
Like all capital practices, there will be a time when a pitfall in business may be a concern. When it comes to George’s capital I would say that the pitfall may lie in the amount of products
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that are sold. George’s trains only sells trains. What if trains is no longer in business? What if people stop going there because they no longer have a desire to have a train in their house? The only issue I see with George’s Trains is the fact that they only sell trains. I understand that it’s a business and it has been functioning well however maybe selling cars and other types of electronics like trains, maybe planes and cars, they will help expand their business.
With any business, when you first start up, you don’t realize that you may have to change things up later down the line. Some areas of improvement that I will give to George’s trains is to increase the different products offered. I will increase it to bring in new customers. Upon going to their website, I found out that they have an online functioning store, I would offer free shipping to store to help those who are in the area for local pickup.
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References
Byrd, J., Hickman, K., & McPherson, M. (2013). Managerial Finance. San Diego, CA:
Bridgepoint Education Inc.
George’s Trains (2013) retrieved from website http://georgestrains.com/about-us/ on April 29,
2013.
INTELECOM. (Producer). Capital Budgeting. [Video File]. Retrieved from the Intelecom Video
Library.
Jermaine Byrant
Nicole Johnson
OVER
RATING
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