Swot Analysis Of Bradbury Company

The rising value of the rupee is more threatening to the profitability of Banbury than the rise in cotton prices. The increase in the cotton prices will affect every producer, it will increase the company’s overall cost that will result in a decrease in the company’s profitability, but the raising value of the rupee only will affect the Indian producers and it will have a larger affect on the company’s profitability. Based on facts, Banbury’s sales almost come from exports, (Middle East 50%, South America 30%, and Europe 10%), If the rupee’s value continues to increase, it will be damaging to the profitability of Banbury and it could make the company go out of business. Such a situation will affect negatively the exports of India and it will make India’s product more expensive with respect to other countries. In addition to that the appreciation of the rupee will affect the company’s future cash flow since it represents an operating expense that will negatively affects sales volume and future sales. …show more content…
But hedging cotton futures is not necessary, given that the cotton prices are expected to fall. However, since Banbury is presently facing profitability problems, a chance to decrease the risk could be recommended. The company could take a short position and sell cotton future contracts, based on the assumption that cotton prices will fall. I would also recommend that since cotton future are not stable, we could try to change the operations of the company instead of trying to control the cost of cotton. For example, the company could advise its suppliers to apply a program that would protect the cotton fields by creating barriers around them, this would reduce the cost of