CASE ANALYSIS ASSIGNMENT Introduction The assignment is case 31. The organization under review in the assignment is called Build-A-Bear-Workshop. 2 Financial Data Analysis- Horizontal analysis According to According to Accounting Tools 2015, horizontal analysis is the comparison of historical financial information over a series of reporting periods, or of the ratios derived from this financial information. The intent is to see if any numbers are unusually high or low in comparison to the information for bracketing periods, which may then trigger a detailed investigation of the reason for the difference. The analysis is most commonly a simple grouping of information that is sorted by period, but the numbers in each succeeding period can also be expressed as a percentage of the amount in the baseline year, with the baseline 3 Income statement The income statement reveals there is a huge difference between the year of 2008 and the following year 2009. The revenue between 2008 and 2009 shows a big decline in net retail sales, a decline over 15%. 4 Balance sheet- statement of financial position The above statement reveals that the total assets have changed negatively over the last two years, and it was negative percent where it should have been positive if the company was succeeding. The statement points out the negative image that the company’s fixed assets are going down, in this case the company can’t expand and it shows their overall success is very poor at this time. 5 Key Success Factors Build-A-Bear’s success was in the previous years, when they had record breaking profits, and was in top magazines. The income statements show they had some positive income from 2009 through 2010. They had adapted a great overall success when people entered into the stores. They have succeeded product segmentation, and had a different product that entered into the business world. They were able to capture a full on experience from picking out an animal to make, stuff it, name it, and even clothe it. This was the first company to offer an overall experience like this. 6 Market Data Analysis In the beginning, Build-A-Bear workshop marketed their products for ages 3 to 12 years of age. This was their market segmentation, and it was working as profits were high. With very little competitors at the time, this workshop was in high demand, thus giving Build-A-Bear the competitive advantage. 7 SWOT-Strengths -First real company into the market with unique product. -Build-A-Bear name alone has a competitive advantage over other similar companies. -Great management and customer appreciation, hands on environment. -Great causes and charities for special occasions. -Ranked no. 94 in Fortune ’s “100 Best Companies to Work For” list in 2009 and moved up to no. 80 in the 2010. 8 SWOT -Weaknesess Lack of technology compared to similar stores. -Kids are seeking more sophisticated entertainment . . . ...

1. CASE ANALYSIS ASSIGNMENT
Introduction
The assignment is case 31.
The organization under review in the assignment is called
Build-A-Bear-Workshop.
2
Financial Data Analysis- Horizontal analysis
According to According to Accounting Tools 2015, horizontal
analysis is the comparison of historical financial information
over a series of reporting periods, or of the ratios derived from
this financial information. The intent is to see if any numbers
are unusually high or low in comparison to the information for
bracketing periods, which may then trigger a detailed
investigation of the reason for the difference. The analysis is
most commonly a simple grouping of information that is sorted
by period, but the numbers in each succeeding period can also
be expressed as a percentage of the amount in the baseline year,
with the baseline

2. 3
Income statement
The income statement reveals there is a huge difference between
the year of 2008 and the following year 2009. The revenue
between 2008 and 2009 shows a big decline in net retail sales, a
decline over 15%.
4
Balance sheet- statement of financial position
The above statement reveals that the total assets have changed
negatively over the last two years, and it was negative percent
where it should have been positive if the company was
succeeding. The statement points out the negative image that
the company’s fixed assets are going down, in this case the
company can’t expand and it shows their overall success is very
poor at this time.
5

3. Key Success Factors
Build-A-Bear’s success was in the previous years, when they
had record breaking profits, and was in top magazines. The
income statements show they had some positive income from
2009 through 2010. They had adapted a great overall success
when people entered into the stores. They have succeeded
product segmentation, and had a different product that entered
into the business world. They were able to capture a full on
experience from picking out an animal to make, stuff it, name
it, and even clothe it. This was the first company to offer an
overall experience like this.
6
Market Data Analysis
In the beginning, Build-A-Bear workshop marketed their
products for ages 3 to 12 years of age. This was their market
segmentation, and it was working as profits were high. With
very little competitors at the time, this workshop was in high
demand, thus giving Build-A-Bear the competitive advantage.
7
SWOT-Strengths

4. -First real company into the market with unique product.
-Build-A-Bear name alone has a competitive advantage over
other similar companies.
-Great management and customer appreciation, hands on
environment.
-Great causes and charities for special occasions.
-Ranked no. 94 in Fortune ’s “100 Best Companies to Work
For” list in 2009 and moved up to no. 80 in the 2010.
8
SWOT -Weaknesess
Lack of technology compared to similar stores.
-Kids are seeking more sophisticated entertainment . . . and
doing so at younger and younger ages.” Tastes were maturing
and becoming more sophisticated at a younger age.
9
SWOT-Opportunities
-Add new technology.
-Market to all age brackets of children.
-Add more R&D.

5. -Expand out of malls
-Make them unique, not like other competitors.
10
SWOT-Threats
Competitors entering the market at a lower price
-Competitors adding new technology.
-Changing fads.
Porter’s Five Forces
According to Mind Tools (2015), there are five forces which
shape competition in an industry in which an organization
operates. The five forces include new entrants into the industry,
supplier power, buyer power, competitive rivalry, threat of
substitution, and threat of new entry. Build-A-Bear failed to
enter into the new technology world, where competitors have
found ways to capture consumers. Overall their locations inside
malls was starting to lose consumers, people didn’t want to go
to the mall just to Build-A-Bear. Their targeting ages they
wanted to attract was not working anymore, as kids wanted new
technology gadgets.

6. 12
References
Accounting Course. (2015). Contributing Margin. Retrieved
from
http://www.myaccountingcourse.com/financial-
ratios/contribution-margin
Accounting Tools. (2015). Horizontal Analysis. Retrieved from
http://www.accountingtools.com/horizontal-analysis
Case 31. (2015). Build-A-Bear Workshop.
Mind Tools. (2015). Porter’s Five Forces. Retrieved from
http://www.mindtools.com/pages/article/newTMC_08.htm
Stuttle, R. & Demand, M. (2014). Define Market Segmentation
& Targeting. Retrieved from
http://smallbusiness.chron.com/define-market-segmentation-
targeting-3253.html
Income StatementExhibit 1 Income Statement2008-20092009-
2010Fiscal Yearpercentage change (%)percentage change
(%)201020092008Revenues: Net retail
sales$387,163$388,552$460,963-15.708636051-0.3574811093
Franchise fees3,0433,3534,157-19.3408708203-9.2454518342
Commercial
revenue11,2464,0013,19625.1877346683181.0797300675
Total revenues401,452395,906468,316-
15.46178221541.4008375726Costs and expenses: Cost of
merchandise sold239,556247,511270,918-8.6398836548-
3.2139985698 Selling, general, and

7. administrative163,910161,692185,608-
12.88522046461.3717438092 Store preopening708902,410-
96.265560166686.6666666667 Store closing—9812,952-
66.7682926829Interest expense (income), net(250)(143)(799)-
82.102628285474.8251748252 Total costs and
expenses403,924419,746461,089-8.9663817614-
3.7694224602Income before income taxes(2,472)(23,840)7,227-
429.8740832987-89.6308724832 Income tax
expense(2,576)(11,367)2,663-526.8494179497-
77.3379079792Net income$104($12,473)$4,564-
373.2909728309-100.8338010102Earnings per common share:
Basic$0.01($0.66)$0.24-375-101.5151515152
Diluted$0.01($0.66)$0.24-375-101.5151515152Shares used in
computing common per share amounts:
Basic18,601,46518,874,35219,153,123-1.4554858756-
1.4458085766 Diluted19,034,04818,874,35219,224,273-
1.82020407220.8461005708
Balance SheetExhibit 2 Balance Sheet (in thousands of dollars,
except share and per-share data)January 1, 2011January 1,
2010absolute changepercentage change (%)AssetsCurrent
assets: Cash and cash equivalents$58,755$60,399($1,644)-
2.7218993692 Inventories46,47544,384$2,0914.7111571738
Receivables7,9235,337$2,58648.4541877459 Prepaid expenses
and other current assets18,42519,329($904)-4.676910342
Deferred tax assets7,4656,306$1,15918.3793212813 Total
current assets139,043135,755$3,2882.422010239Property and
equipment, net88,029101,044($13,015)-
12.880527295Goodwill32,40733,780($1,373)-
4.0645352279Other intangible assets, net1,4443,601($2,157)-
59.9000277701Other assets,
net14,87110,093$4,77847.3397404141 Total
Assets$275,794$284,273($8,479)-2.982696211Liabilities and
stockholders’ equityCurrent liabilities: Accounts
payable$36,325$32,822$3,50310.6727195174 Accrued
expenses15,48811,185$4,30338.4711667412 Gift cards and
customer deposits28,88029,301($421)-1.4368110303 Deferred

8. revenue6,6798,582($1,903)-22.1743183407 Total current
liabilities87,37281,890$5,4826.694346074Deferred franchise
revenue1,7062,027($321)-15.8362111495Deferred
rent28,64234,760($6,118)-17.6006904488Other
liabilities361816($455)-55.7598039216Commitments and
contingenciesStockholder’s equity: Preferred stock, par value
$0.01, Shares authorized:—— 15,000,000: No shares issued or
outstanding at January 3, 2009 and December 29, 2007
Common stock, par value $0.01. Shares authorized:196204($8)-
3.9215686275 50,000,000. Issued and outstanding: 19,478,750
and 20,676,357 shares, respectively Additional paid-in
capital76,58280,122($3,540)-4.4182621502 Accumulated other
comprehensive (loss) income(9,959)(6,336)0 Retained
earnings90,89490,790$1040.1145500606 Total stockholders’
equity157,713164,780($7,067)-4.2887486345Total Liabilities
and Stockholders’ Equity$275,794$284,273($8,479)-
2.982696211Soutce: Build-A-Bear Workshop Inc. From 10-K
report
Sheet3
Running head: CASE ANALYSIS ASSIGNMENT 1
CASE ANALYSIS ASSIGNMENT 2
Case Analysis Assignment
Build-A-Bear Workshop

9. Introduction
The case study 31 is Build-A- Bear, in this case study there are
many factors that helped this company, one of them being a
high profit during the beginning stages of their opening. The
early years of Build-A-Bear Workshop were marked with great
success. The company’s physical locations grew from 150 stores
at fiscal year-end 2003 to 344 company-owned stores in the
United States, Canada, the United Kingdom, and Ireland by
2010. Due to this expansion, Build-A-Bear Workshop saw an
increase in its revenues from $301.7 million in fiscal year 2004
to $437.1 million in 2006. Its compound annual revenue growth
rate reached 20.4 percent, and its net income jumped from
$18.5 million in fiscal year 2004 to $29.5 million in 2006,
ultimately resulting in a compound annual net income growth
rate of 26.5 percent (Case 31, Build-A-Workshop).
Financial Data Analysis
This case study shows that the Build-A-Bear workshops
was a huge success, and made substantial money when they first
opened, however, financial income statements show that their
profits stated to decline several years later. This analysis is
going to show the financial statement periods, horizontal
analysis of the company, as why they had declining profits.
According to Accounting Tools 2015, horizontal analysis is the
comparison of historical financial information over a series of
reporting periods, or of the ratios derived from this financial
information. The intent is to see if any numbers are unusually
high or low in comparison to the information for bracketing
periods, which may then trigger a detailed investigation of the
reason for the difference. The analysis is most commonly a
simple grouping of information that is sorted by period, but the
numbers in each succeeding period can also be expressed as a
percentage of the amount in the baseline year, with the baseline
amount being listed as 100%. The following are the comparative
income statements of Build-A-Bear-Workshop:
Exhibit 1 Income Statement

10. 2008-2009
2009-2010
Fiscal Year
percentage change (%)
percentage change (%)
2010
2009
2008
Revenues:
Net retail sales
$387,163
$388,552
$460,963
-15.70864
-0.3574811
Franchise fees
3,043
3,353
4,157
-19.34087
-9.2454518
Commercial revenue
11,246
4,001
3,196

11. 25.187735
181.07973
Total revenues
401,452
395,906
468,316
-15.46178
1.4008376
Costs and expenses:
Cost of merchandise sold
239,556
247,511
270,918
-8.639884
-3.2139986
Selling, general, and administrative
163,910
161,692
185,608
-12.88522
1.3717438
Store preopening
708
90
2,410
-96.26556
686.66667
Store closing
—
981
2,952

12. -66.76829
Interest expense (income), net
(250)
(143)
(799)
-82.10263
74.825175
Total costs and expenses
403,924
419,746
461,089
-8.966382
-3.7694225
Income before income taxes
(2,472)
(23,840)
7,227
-429.8741
-89.630872
Income tax expense
(2,576)
(11,367)
2,663
-526.8494
-77.337908
Net income
$104
($12,473)
$4,564
-373.291
-100.8338
Earnings per common share:

13. Basic
$0.01
($0.66)
$0.24
-375
-101.51515
Diluted
$0.01
($0.66)
$0.24
-375
-101.51515
Shares used in computing common per share amounts:
Basic
18,601,465
18,874,352
19,153,123
-1.455486
-1.4458086
Diluted
19,034,048
18,874,352
19,224,273
-1.820204
0.8461006
From looking at the income statement, there is a huge difference
between the year of 2008 and the following year 2009. The
revenue between 2008 and 2009 shows a big decline in net retail

14. sales, a decline over 15%. The contribution margin, sometimes
used as a ratio, is the difference between a company's total sales
revenue and variable costs. In other words, the contribution
margin equals the amount that sales exceed variable costs. This
is the sales amount that can be used to, or contributed to, pay
off fixed costs (Accounting Course, 2015). From looking at the
income statement, this is case, the company had a decline in
their volume of sales, thus less product sold. Build-A-Bear’s
had a reduction in the net income column, their net income
declined by 373%.
Build-A-Bear had barely maintained from the year of 2009 and
the year 2010. It shows the net retail sales were $388,552 in
2009 and $387,163 in 2010. The company showed a small
margin of increase of total revenue of 1.4%.
Although there is a small increase of revenue between 2009 and
2010, the data provided below will show the changes in the year
and their comparison.
January 1, 2011
January 1, 2010
absolute change
percentage change (%)
Assets
Current assets:
Cash and cash equivalents
$58,755
$60,399
($1,644)

15. -2.7219
Inventories
46,475
44,384
$2,091
4.71116
Receivables
7,923
5,337
$2,586
48.4542
Prepaid expenses and other current assets
18,425
19,329
($904)
-4.6769
Deferred tax assets
7,465
6,306
$1,159
18.3793
Total current assets
139,043
135,755
$3,288
2.42201
Property and equipment, net
88,029
101,044
($13,015)
-12.881
Goodwill
32,407
33,780
($1,373)
-4.0645

16. Other intangible assets, net
1,444
3,601
($2,157)
-59.9
Other assets, net
14,871
10,093
$4,778
47.3397
Total Assets
$275,794
$284,273
($8,479)
-2.9827
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
$36,325
$32,822
$3,503
10.6727
Accrued expenses
15,488
11,185
$4,303
38.4712
Gift cards and customer deposits

17. 28,880
29,301
($421)
-1.4368
Deferred revenue
6,679
8,582
($1,903)
-22.174
Total current liabilities
87,372
81,890
$5,482
6.69435
Deferred franchise revenue
1,706
2,027
($321)
-15.836
Deferred rent
28,642
34,760
($6,118)
-17.601
Other liabilities
361
816
($455)
-55.76
Commitments and contingencies
Stockholder’s equity:

18. Preferred stock, par value $0.01, Shares authorized:
—
—
15,000,000: No shares issued or outstanding at
January 3, 2009 and December 29, 2007
Common stock, par value $0.01. Shares authorized:
196
204
($8)
-3.9216
50,000,000. Issued and outstanding: 19,478,750 and
20,676,357 shares, respectively
Additional paid-in capital
76,582
80,122

19. ($3,540)
-4.4183
Accumulated other comprehensive (loss) income
(9,959)
(6,336)
0
Retained earnings
90,894
90,790
$104
0.11455
Total stockholders’ equity
157,713
164,780
($7,067)
-4.2887
Total Liabilities and Stockholders’ Equity
$275,794
$284,273
($8,479)
-2.9827
Looking at the above balance sheet, Build-A-Bear is not
showing positive growth in the years, and their performance
shows they are hurting and could be in trouble. The above
statement reveals that the total assets have changed negatively
over the last two years, and it was negative percent where it
should have been positive if the company was succeeding. The
statement points out the negative image that the company’s
fixed assets are going down, in this case the company can’t
expand and it shows their overall success is very poor at this
time.
Key Success Factors
Build-A-Bear’s success was in the previous years, when
they had record breaking profits, and was in top magazines.
The income statements show they had some positive income

20. from 2009 through 2010. They had adapted a great overall
success when people entered into the stores. They have
succeeded product segmentation, and had a different product
that entered into the business world. They were able to capture
a full on experience from picking out an animal to make, stuff
it, name it, and even clothe it. This was the first company to
offer an overall experience like this.
Market Data Analysis
According to Stuttle, (2014) market segmentation is the
process of dividing an entire market up into different customer
segments. Targeting or target marketing then entails deciding
which potential customer segments the company will focus on.
Marketing segmentation always comes before targeting, which
helps a company be more selective about who they are
marketing their products to. Marketing segmentation and
targeting are equally important for ensuring the overall success
of a company.
In the beginning, Build-A-Bear workshop marketed their
products for ages 3 to 12 years of age. This was their market
segmentation, and it was working as profits were high. With
very little competitors at the time, this workshop was in high
demand, thus giving Build-A-Bear the competitive advantage.
Factors That Affected Financial Performance
The main factor that had a negative influence on the
company’s performance is new competition. Many companies
have entered into the market like American Doll, where it was
attracting new customers. Technology driven forces has also
put a damper on Build-A-Bears income statement. Consumers
want technology driven stuffed animals, and Build-A-Bear
couldn’t not keep up with competitors, which drove down sales
significantly.
SWOT Analysis
Strengths
-First real company into the market with unique product.
-Build-A-Bear name alone has a competitive advantage over
other similar companies.

21. -Great management and customer appreciation, hands on
environment.
-Great causes and charities for special occasions.
-Ranked no. 94 in Fortune ’s “100 Best Companies to Work
For” list in 2009 and moved up to no. 80 in the 2010.
Weaknesses
-Lack of technology compared to similar stores.
-Kids are seeking more sophisticated entertainment . . . and
doing so at younger and younger ages.” Tastes were maturing
and becoming more sophisticated at a younger age.
Opportunities
-Add new technology.
-Market to all age brackets of children.
-Add more R&D.
-Expand out of malls
-Make them unique, not like other competitors.
Threats
-Competitors entering the market at a lower price
-Competitors adding new technology.
-Changing fads.
Porter’s Five Forces
According to Mind Tools (2015), there are five forces which
shape competition in an industry in which an organization
operates. The five forces include new entrants into the industry,
supplier power, buyer power, competitive rivalry, threat of
substitution, and threat of new entry. Build-A-Bear failed to
enter into the new technology world, where competitors have
found ways to capture consumers. Overall their locations inside
malls was starting to lose consumers, people didn’t want to go
to the mall just to Build-A-Bear. Their targeting ages they
wanted to attract was not working anymore, as kids wanted new
technology gadgets.

22. Reference
Accounting Course. (2015). Contributing Margin. Retrieved
from
http://www.myaccountingcourse.com/financial-
ratios/contribution-margin
Accounting Tools. (2015). Horizontal Analysis. Retrieved from
http://www.accountingtools.com/horizontal-analysis
Case 31. (2015). Build-A-Bear Workshop.
Mind Tools. (2015). Porter’s Five Forces. Retrieved from
http://www.mindtools.com/pages/article/newTMC_08.htm
Stuttle, R. & Demand, M. (2014). Define Market Segmentation
& Targeting. Retrieved from
http://smallbusiness.chron.com/define-market-segmentation-
targeting-3253.html