After reviewing the information about A-1’s company, it is evident that due to it reaching capacity at its current facility and nearly exhausting its customer market, A-1 must make a change if it wants to continue to improve profits. Although there are several paths that A-1 could take, the best one is as follows: A-1 should purchase another facility in a location just outside of its current customer base. One facility should be used for the finishing of metal products and the other devoted to plastic products. Albeit a risk like all investments are, it is a calculated one that is likely to produce the greatest benefits for the company. Currently, A-1 is a successful business located in Grafton, WI. With 30 employees, a storage facility, and a finishing area for metals and plastics, A-1 has nearly reached its capacity limit. A-1 has a
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It is likely that operating expenses will nearly double with the acquirement of a new facility. This new facility will also be a significant expense. Since A-1’s net income ($123,858) is a great deal smaller than its total overhead expenses ($569,512), it will need a loan in order to make this business investment possible. If the future goes as projected with success and the sales from the two facilities nearly double that of A-1’s previous year, repayments on the loan will be possible without too much of a financial burden. Throughout the years, as the loan is paid off, A-1 will see significant increases in its net income. Although there are several growth strategies that A-1 can take, the one discussed above is the most beneficial to the company in the long-term. It poses risks and expenses for the current and near periods, but as the business grows, it will offer greater benefits and profits. A-1 is likely to experience a great deal of success with this
It is likely that operating expenses will nearly double with the acquirement of a new facility. This new facility will also be a significant expense. Since A-1’s net income ($123,858) is a great deal smaller than its total overhead expenses ($569,512), it will need a loan in order to make this business investment possible. If the future goes as projected with success and the sales from the two facilities nearly double that of A-1’s previous year, repayments on the loan will be possible without too much of a financial burden. Throughout the years, as the loan is paid off, A-1 will see significant increases in its net income. Although there are several growth strategies that A-1 can take, the one discussed above is the most beneficial to the company in the long-term. It poses risks and expenses for the current and near periods, but as the business grows, it will offer greater benefits and profits. A-1 is likely to experience a great deal of success with this