Consultancy Report for Portsmouth Leather Company Essay

Consultancy Report for Portsmouth Leather familiarity - Essay ExampleConsultancy Report for Portsmouth Leather CompanyPortsmouth Leather is one of the renowned names when it comes to sell trendy and high fashion executive briefcase and travel case. The familiarity portray strong financial scene as during the last financial year the profit of the company increased by 10% to an brilliant 1,800,000. Following its marketing strategy of exploring new market, the company participated in the Frankfurt International Trade Fair. easterly express, after being impressed by the quality of the companys commodities in the fair, approached with an offer. The following embrace identifies the problems which the company is presumable to face and the corresponding solutions to such problems. Portsmouth Leather inescapably to have supernumerary pecuniary resource in order to be capable of producing additional briefcases and travel cases. As per the cash-flow forecasted by the management, the company requires 495,000 to pay the tender. The company has not incorporated, in the forecasted cash flow, the pay charges on the financing. Another problem that the company is likely to face is the fact that it does not have the additional production capacity to cater the tender. The company before long produces 2,000 units per month, but in order to acquire the tender, the company will be required to produce an additional 2,200 units per month for three months. The company needs to negotiate the overtime with the workforce. In addition, the company needs to stipulation the cost of raw material with the supplier in order to increase its contribution margin.... The company needs to negotiate the overtime with the workforce. In addition, the company needs to bargain the cost of raw material with the supplier in order to increase its contribution margin. Negotiating the price of the tender is also signifi corporationt. POSSIBLE SOLUTIONS AND THEIR STRENGTHS AND WEAKNESSES Soluti on 1 In order to finance the project, the company needs to acquire unretentive term running finance facility from a bank or any other financial institution. Since the project is of a short term nature, obtaining a short terms running finance facility would be much honorable rather than acquiring a long term facility. The plus point in acquiring a short term financing facility is that the company would be required to pay mark-up at a lower rate as compared to that if a long term facility would have been acquired. The company can also raise finance through issuance of sells in the market. The advantage of raising shares in the man market is that the company will avoid the finance charge, which it would have paid on the financing facility. issue of capital significantly improves the gearing of the company and strengths its equity. The disadvantage of raising finances through issuance of share capital is that it takes comparatively longer time for the existing and prospective share holder to subscribe to the shares and enchant their money to the company. Moreover, the statutory requirement regarding the floating of shares in the stock market is far more compound as compared to the procedure involved in the sanctioning of a financing facility. Solution 2 The companys current production capacity will not allow it to produce additional units unless it in some way increase its production capacity or shift its resources towards manufacturing items