Should Summer Lawn Care change its name to Lawn and Tree Care in order to generate more customer interest?

  

Two partners own together a small landscaping business in North Carolina, called Summer Lawn Care. They have been specializing in summer grass seeding, installation, and maintenance. Recently, the partners acquired special technology and know-how for winter grass installations and maintenance. They also added a tree cutting service as recent storms in the area had caused demand for this service to soar. One of the partners insists that the name of the business should change to Lawn and Tree Care, so that it better reflects the range of services and, thus, generates more customer interest, and thus contracts. The second partner wants to keep the old name and argues, We have already paid for business cards, vehicle paint, signage, and ads in Yellow Pages. Evaluate the arguments of the two partners. Explain and illustrate their points by identifying the relevant and irrelevant costs for this decision.Guided Response:In 300 words or more, please, provide your response to the above discussion question. Identify all the costs in the decision process, including explicit costs, implicit costs and sunk costs. Respond substantively to at least two of your classmates postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.

Introduction:
Summer Lawn Care is a small business owned by two partners in North Carolina, which specializes in summer grass seeding, installation, and maintenance. With the recent acquisition of special technology and know-how for winter grass installations and maintenance, the partners have extended their business to include winter grass services and even tree cutting, due to high demand caused by recent storms in the area. The two partners now have a disagreement over changing the name of the business to Lawn and Tree Care to reflect the expansion of their services.

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Description:
The two partners of Summer Lawn Care disagree on whether or not to change the name of their business to Lawn and Tree Care. One partner believes that the new name would better reflect their expanded services for winter grass installation and maintenance, as well as tree cutting, which would help generate more customer interest and contracts. On the other hand, the second partner argues that changing the name would mean additional costs for reprinting business cards, vehicle paint, signage and ads in Yellow Pages.

In evaluating the arguments of the two partners, there are relevant and irrelevant costs, explicit costs, implicit costs, and sunk costs. Relevant costs include those that affect future business decisions, while irrelevant costs do not. Explicit costs involve actual payments for goods and services, while implicit costs refer to the opportunity cost of alternative choices. Sunk costs are costs that have already been spent and cannot be recovered.

The first partner argues that the name change would lead to increased customer interest and contracts. The relevant costs in this argument are the possible future returns generated by changing the name, while the irrelevant costs are the initial expenses related to the name change. The opportunity cost of not changing the name would be losing potential customers who are seeking tree cutting services or winter grass installation and maintenance, which could result in reduced future profits.

The second partner argues that changing the name would incur additional costs for reprinting business cards, vehicle paint, signage, and ads in Yellow Pages. The relevant costs in this argument are the actual expenses incurred, while the irrelevant costs are the potential future returns and lost customers. The opportunity cost of changing the name would be the additional expenses incurred, which would reduce the immediate profits of the business.

In conclusion, both partners have valid arguments, but the decision should be based on the relevant costs that affect future business decisions. The opportunity cost of not changing the name would be losing potential customers, while the opportunity cost of changing the name would be the additional expenses incurred. Ultimately, the decision should be made based on which option generates the highest return on investment in the long run.

Objectives:
1. Understand the decision-making process when it comes to naming a business.
2. Analyze the costs associated with changing the name of a business.
3. Make an informed decision based on a thorough cost-benefit analysis.

Learning Outcomes:
1. Identify relevant and irrelevant costs in the decision-making process.
2. Understand the concepts of explicit costs, implicit costs, and sunk costs.
3. Apply cost-benefit analysis to evaluate whether changing the name of the business is beneficial.

Cost Analysis:
Explicit Costs: These are costs that are directly incurred in making a decision. In this case, the explicit costs involved in changing the name of the business are the cost of printing new business cards, the cost of repainting the vehicles, the cost of changing the signage, and the cost of updating the ads in the Yellow Pages.

Implicit Costs: These are the opportunity costs of a decision. In this case, the implicit costs of changing the name of the business are the potential loss of brand recognition and customer loyalty that is associated with the old name, Summer Lawn Care.

Sunk Costs: These are costs that have already been incurred and cannot be recovered. In this case, the sunk costs are the expenses already paid for printing business cards, painting vehicles, signage, and ads in the Yellow Pages.

The First Partner’s Argument: The first partner argues that the name of the business should be changed to Lawn and Tree Care because it better reflects the current range of services offered. This would then generate more customer interest and increase the chances of getting more contracts.

The Second Partner’s Argument: The second partner wants to keep the old name, Summer Lawn Care because the business has already incurred significant costs in advertising.

Evaluation: It is important to weigh the relevant and irrelevant costs of changing the name of the business. While the explicit costs may be significant, the implicit costs should not be overlooked. If the new name generates more contracts, the benefits may outweigh the explicit costs incurred in changing the name, and the implicit costs associated with losing brand recognition can be remedied with a successful marketing strategy.

In conclusion, before making any decisions on changing the name of the business, a cost-benefit analysis should be conducted to determine if the benefits outweigh the costs. Both the explicit and implicit costs should be considered, and sunk costs should not be given undue weight in the decision-making process.

Solution 1: Changing the name of the business to Lawn and Tree Care

Changing the name of the business to Lawn and Tree Care can help to better reflect the range of services offered by the business and generate more customer interest, which in turn can result in more contracts. This change can also help in improving marketing efforts, search engine optimization, and attracting new customers. The relevant costs for this decision include the cost of updating the business cards, vehicle paint, signage, and ads in Yellow Pages. The irrelevant costs include the cost of paying for the previous business name as it is a sunk cost. Moreover, implicit costs such as the time and effort involved in changing the name should also be considered.

Solution 2: Keeping the old name of the business

Keeping the old name of the business can help in avoiding the cost of updating business cards, vehicle paint, signage, and ads in Yellow Pages. However, it might not accurately represent the range of services offered by the business, thus affecting customer interest and potential business growth. The relevant costs for this decision include the cost of lost opportunities for new customer acquisition due to the old business name not being representative of the current service range, which is an implicit cost. The irrelevant costs include the sunk costs such as the cost of paying for the previous business name.

In conclusion, both partners’ arguments have some merit, but the partner who suggests changing the name of the business to Lawn and Tree Care has a stronger argument. The relevant costs for both solutions include the cost of updating business cards, vehicle paint, signage, and ads in Yellow Pages, while the irrelevant costs are sunk costs. Additionally, implicit costs such as the time and effort involved in changing the name, or the opportunity costs of keeping the old name, should also be considered. Overall, changing the name is likely to bring in future business growth and opportunities, while keeping the old name could result in lost business and missed opportunities.

Suggested Resources/Books:
1. “The Lean Startup” by Eric Ries – This book provides insights on how to make decisions in a constantly evolving business environment.
2. “Managerial Accounting” by Ray Garrison – This book explains how to identify relevant costs in decision making.
3. “The Art of Business Nameology” by Sharon Numerologie – This book talks about choosing business names that reflect services and generate customer interest.

Similar Asked Questions:
1. What are the relevant costs in decision making?
2. How do sunk costs impact decision making?
3. What is the importance of business names?
4. How can businesses adapt to changing markets?
5. What are some strategies for expanding a small business?

Evaluating the arguments of the two partners:
The first partner argues that changing the name of the business will better reflect the range of services and generate more customer interest and contracts. This argument reflects a fundamental marketing principle that a company’s name should reflect the services offered to attract prospective customers. By changing the name to Lawn and Tree Care, potential clients can quickly understand the full range of services the business provides, thus increasing the possibility of business opportunities. However, the argument can be viewed as short-sighted as it does not take into account the financial implications of a name change. This brings us to the concept of relevant costs, which are costs that will be affected by a specific decision. Relevant costs, in this scenario, include reprinting business cards and updating all communication channels, such as websites and advertising, to reflect the new business name.

On the other hand, the second partner argues that they have already invested in marketing material and that changing the name of the business means discarding those sunk costs that cannot be recovered. This argument reflects another fundamental principle, which is that sunk costs should not be considered in decision-making analysis. Sunk costs are costs that have already been incurred and cannot be recovered, and as such, are irrelevant in evaluating the costs and benefits of a new decision.

In conclusion, while the first partner’s argument reflects a sound marketing principle, the second partner’s argument of not considering sunk costs in decision-making analysis holds merit as well. Ultimately, the decision whether to change the business name or not should be based on the analysis of relevant costs and benefits and whether the new name can generate enough additional revenue to justify the costs of making the change.

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