Environmental Scan Essay Example | Topics and Well Written Essays - 1000 words

Environmental Scan - Essay ExampleTheir focus for the past few months has been to form strong relationships with their current customers, including gondola dealerships, repair shops, and the used car market, through strategic marketing and PR platforms. But at the moment they cannot gain customers in the car manufacturing sector as they dont have the capacity to bring in large orders of the quality demanded by those. The major players all have private negotiations with the larger touch on plants or they source them directly through imports. The current financial standing of the business is not luxuriant to ensure profitability or expansion, modification strategies. inconstant Cost per month- $ (100*70*20) + 2000 142,000 Average Variable Cost- $ 142,000/6000 23.67 Total revenue per month -$ 32*6000 192,000 The calculations indicate that the firm is not performing enough to generate a steady profit as the revenue is less than the total cost of producing. However, it would not be a dvisable for the firm to shut down operations as the loss being incurred now might thoroughly be less than the total fixed costs, which is what the firm would suffer if the management decides to shut down. The revenue per social unit received is $32, according to economic rules an in the short run, a firm will maximize profit or minimize by producing the output at which marginal revenue equals marginal cost (as great as producing is preferable to shutting down (McConnel et al., 2008) The firm is producing output at the MC of $30, which is near enough to the marginal revenue of $32 and is following economically sound practices. From the calculation, we can see that the Average variable cost is $23.67, which means that the MR of $32 coers the ATC as well as contributing $8.3 to covering up the fixed costs incurred in the process... As the variable cost of workers is the greatest cost they incur in production, unrivalled possible venue is to bring greater automation in the plants a long with the implementation of software like ERP or specific manufacturing software to take over the manual jobs in the factory. While the process requires hiring experts as consultants (or creating a new position in the firm) along with the capital requirements for new hardware and software, in the long run, the variable costs will go down and the increase in fixed costs will be offset by greater revenue and profits. Financial formulas can be applied to forecast the expected change in profit and cost structure including interest expenses from the loans that will be interpreted or the bonds which will be floated to fund the project. Another way to generate liquid capital can be through making the firm earthly concern and floating shares in the market, but the current standing does not indicate that the response will be good and the owners are better off by taking liabilities and keeping control of their business in their hands.