The Royal Printing and Packaging Company which has been around for 25 years and deal with multinational clients. The company can use these assets to advertise their name to exporting companies in the sugar and coconut Industry. The removal of monopolies will allow more companies to engage business in these industries which would entail more possible customers. The company can advertise through the use of business cards which they currently produce. Another form of advertisement would be the use of word-of-mouth, using the many connections of Richard from the company’s previous clients.
These modes of advertisement are not costly for these are already within the company’s current procedures. There would also be a large target market because of the removal of monopolies in the sugar and coconut industries. The increase in clients, though, Mould entail an increase in complexity of running the company, which could lead to problems in terms of Joke’s capability as a new manager. The company could also choose to lower the price to attract the purchasing department of institutional buyers.
This strategy would highly depend on the selling price of paper set by the suppliers, meaning the maximum decrease in price the company can afford would also highly depend on the suppliers because majority of the production cost comes from the cost of paper. The company cannot lower the price too much without sacrificing their net income. In the long run, though, if the company is able to form stable contracts with institutional buyers, profitability would increase because of constant Job orders from these customers.
The company can also focus on the growing need for basic school textbooks, and other Job offers that only require I-color offset presses. The company will have an easy time implementing this strategy since this will only require to increase its sales, and in effect, its profitability. The only hindrance the company will encounter with this strategy is the number of competitors, but they would have an edge against other renting companies since they use premium machineries that produce one color quality printing and this could probably lead to getting more clients.
Another approach that can be adapted to increase profitability is to invest in multistoried machineries. It is expected that it would result to a decrease in the production cost since these machineries would be capable of catering to greater complexity and varieties of Job orders in the long run. The time needed to finish Job orders would also decrease, leading to faster production of materials in demand. The acquisition of these assets would also give them a greater competitive edge compared to other companies, since most to their competitors only use I-color and 2- color printing presses.
However, purchasing these equipment require large amounts of money that the company may not be able to procure if current profitability is low. Obtaining a loan, however, in order to pay for these facilities could help ease payment terms. The company, in return, can pay back the borrowed funds once their clients have paid them for the services they obtained. The group decided to use the following decision criteria. A. Increase in Profitability (1: least profitable – 5: most profitable) 3. Return of Investment (1 : slowest return – 5: fastest return) C.
This strategy would not be very costly, as majority of the additional cost that the company would have to shoulder are those that are involved in buying shares of the sugar and coconut companies that would become their customers. If the company cannot handle the additional capital, especially the increase in paper that they would have to buy from suppliers, they can opt to loan money especially since they currently do not have any substantial liabilities. They can avail of the 3% cash discount offered by the suppliers and pay their debts as soon as their customer has paid for the Job orders.
Advertisements would not cost the company that much because they would be using methods that are already part of their current operations. The cost of investment is minimal, meaning it would take a short time for the company to earn the amount of money that was needed to cover the investments. It would be acceptable to the management because the machineries will not be sold and it would still be a profitable strategy. It would also be easy and inexpensive to implement this strategy because there would be minimal changes in the operations of the firm.
The strategy is possible to implement within the firm’s current abilities, and the strategy itself is quite flexible because the company can opt to find other customers as well. Implementation Plan The first thing the company has to do is to survey the local market for possible clients, giving higher priority to export companies. There is a suspected rise in the number of companies exporting sugar, coconut, and products after the dismantling of the monopolies on these commodities The company should then create advertisements emphasizing the company’s existing multinational clientele, and 25 years of experience to entice possible clients. E company will incorporate these advertisements to the business cards and stationeries that they already manufacture, and give them out to their possible clients. After making deals with the company’s new clients, the company will then procure needed materials for new Job orders. If necessary, the company can take loans from banks to produce extra capital. The company can then avail the 3% discount their suppliers are offering, and then pay off their loans right after their clients pay for their Job orders.
Using this method, their loans will not gain too much interest, and hey will save some money with the 3% discount from their suppliers. Rhea next best strategy to adapt if the first plan fails is to invest in multistoried machineries. The company will be able to increase their profitability because multistoried printers would be able to cater to more demanding Jobs, giving them a competitive edge since most of their competitors use one-color machineries. It would be hard for the management to accept this strategy because it is very costly, and in the first place, Jose actually wanted to sell the current assets of the company.
It would to be easy to implement this strategy because it would entail increasing the complexity of the production line, and it would also be very costly because of the money needed to obtain the new machineries, as well as the training of workers who Nil be using these new ones. The company can opt to loan money, and this would be easy because the company currently does not have any substantial liabilities. The return of investment would be slightly slow because the company has to pay for a substantial amount of money, including the cost of the machineries, as well as the interest rate to the loan they acquired it they opted