The writer of this paper evaluates the current environment scan factors as whether to continue or discontinue operations, evaluate the financial performance of the company looking at the profit or ass for both the short and long term, recommend how the company can improve profitability and evaluate the circumstances in which the company should terminate operations.
Briefly describe the details of the fictitious business that you created for this assignment. The fictitious business that have created is a wireless technology business called Saw’s Wireless Technology (AWT). AWT is one of the primary providers of consumer businesses in wireless technology. AWT offers services and products related to entertainment, item tracking, navigation, emote, networking, and many more.
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Products related to entertainment are wireless headphones, speakers, microphones and home theatres; Item tracking involves Radio Frequency Identification (RIFF) tags that allows the tracking of items in the store, vehicles or other products; Navigation entails the Global Positioning Systems (GAPS) that helps direct the consumer to where they need to go; Remote which consists of TV remote controls, ceiling fan remotes, garage door openers, and video game controllers; and lastly Networking such as the Local Area Network, better known as LANA which lows multiple laptops and/or computers to share one internet connection.
AWT currently employs 100 workers and has hired a managing consultant to give suggestions that might assist in helping make a very important company decision when it comes to moving forward with its operations or shutting down indefinitely. AWT is a partnership that was established in 1980. Customer service, sales and productivity has played an important role in the business for many years contributing to its success. AWIT uses 100 workers to produce 6,000 units of output per month (working 20 days / month).
The daily wage (per worker) is $70, and the price of the firm’s output is $32. The cost of other variable inputs is $2,000 per day. The firm’s fixed cost is “high enough” so that the firm’s total costs exceed its total revenue. The marginal cost of the last unit is $30. Assess the current environment scan factors. Determine the factors that are relevant to the decision making process. Determine the factors that will have the greatest impact on plant operations and management’s decision to continue or discontinue operations. Provide a rationale for your determination. With the Assessment
Of the current environment scan factors, it can be decided as to what the greatest impact would be on business operations and what management decides as to whether to go on with its operations. According to the Society for Human Resource Management (SHIRR) (201 2), “Environmental scanning is a process that systematically surveys and interprets relevant data to identify external opportunities and threats. An organization gathers information about the external world, its competitors and itself. The company should then respond to the information gathered by changing its strategies and plans hen the need arises” (Para. ). Twat’s financial, operations and the market will include the biggest impact on the operations Of the business and the decisions management makes as to continuing or discontinuing its operations. The businesses finance office is in charge of making sure they contain the resources available to give competitive prices in their favor and distribute those funds throughout the business. Strategic planning and understanding of budgeting, analytics, and management over the operational costs is necessary. Operations are key in producing goods and providing revise that the business offers. A company’s operations segment is the unit that manages and supports the company. It is often called the “back office” because these employees take care of all of the background activities that keep a company running efficiently behind the scenes” (Babble C n. D. Para. 1). The businesses focal point is on the levels of management and the change in processes that make up those products and services. Robinson (n. D. ) explains that “market is a means by which the exchange of goods and services takes place as a result of buyers and sellers being in contact with one another, either directly or through mediating agents or institutions”.
Markets help to examine how prices are created and the information from it is transmitted. If we look at markets for what they are which is places where people trade goods and get information in order to be in a position the where the force of supply and demand determines prices. Evaluate the financial performance of the company using the information provided in the Scenario. Consider all the key drivers of performance, such as company profit or loss for both short and long term and how much each factor influences managerial decisions. Be sure to show the calculations that helped you reach the conclusions.
Twat’s financial performance is slow and heading in a downward slope and is in trouble. My job as the managing consultant is to provide the business with advice as to whether or not business operations should be closed down. Michaels explains, (2011), “the financial analysis of the downsizing decision is very difficult. The decisions depend on comparing the cost savings from lowered labor costs to be produced in the future to the current lay out for restructuring and obtaining added technology’. Following is the calculation in which a conclusion was reached. 00 employees produce 6000 units in a month 30 marginal cost 6,000/30 = 200 units produced per day by 100 workers = a price of $32 The total revenue per day 200*32 $6,400 The daily wage per employee = $70 100 employees x $70 = $7,000 for wage bill Variable cost = $2,000 per day given which leads a total variable cost per day = $7,000 + 2000 = 59,000 per day. The income received each day is $6,400. Based on the numbers Outlawed probably be in better shape if they close down its operations especially if the equines continues to head in its current operational position.
Recommend how the company can improve its profitability to deliver more value to its stakeholders. Then, develop a brief plan to implement the recommendations. Profitability can be Improved in all businesses, but using the methods that work to get there is the ‘bottom line’. From time to time one component can increase the profitability of a business. Sometimes for a lot of today’s businesses in order to increase profitability, changes in daily operations have to take place.
For instance, change by transaction cost can be beneficial to the business as well as cutting transaction cost because it can add to the benefits available to those involved and might also make it possible for them to make an exchange. ‘ ‘Transaction costs affect the economic value an exchange can create and the distribution of its benefits between the parties. The innovator who cuts transaction cost potentially benefits both herself and the buyer and seller. Lower transaction costs can make some trades possible that were formerly not (Michaels, 201 1, p. 56). So, all businesses can improve reparability by working to add to profitability, minimize costs, and raise productivity and efficiency. Also, AWT can now consider expanding and reaching out into new market sectors, or producing new products and/or services. Assess the circumstances in which the company should discontinue operations and how management should react when confronted with these circumstances. Provide a rationale with your response. Saw’s Wireless Technology should stop operations because of the company’s financial position and failure to provide services and produce products at a marginal cost.