Consultancy Report for Portsmouth Leather Company Essay

Consultancy Report for Portsmouth slash Company - Essay ExampleConsultancy Report for Portsmouth Leather CompanyPortsmouth Leather is one of the renowned names when it comes to selling fashionable and high fashion executive briefcase and travel case. The confederation portray strong financial outlook as during the last financial year the profit of the caller-out increased by 10% to an impressive 1,800,000. Following its marketing strategy of exploring new market, the company participated in the Frankfurt International Trade Fair. Eastern express, after being impressed by the quality of the companys commodities in the fair, approached with an offer. The following report identifies the problems which the company is likely to face and the corresponding solutions to such problems. Portsmouth Leather needs to have additional finances in stray to be capable of producing additional briefcases and travel cases. As per the cash-flow forecasted by the management, the company requires 49 5,000 to finance the tender. The company has non incorporated, in the forecasted cash flow, the finance charges on the financing. Another problem that the company is likely to face is the fact that it does not have the additional proceeds capacity to cater the tender. The company currently produces 2,000 units per month, but in order to pose 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 bargain 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 significant. POSSIBLE SOLUTIONS AND THEIR STRENGTHS AND WEAKNESSES Solution 1 In order to finance the proj ect, the company needs to acquire short condition 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 beneficial rather than acquiring a long term facility. The cocksure point in acquiring a short term financing facility is that the company would be required to pay mark-up at a discredit rate as compared to that if a long term facility would have been acquired. The company can also raise finance through issuance of shares in the market. The advantage of raising shares in the public market is that the company will avoid the finance charge, which it would have paid on the financing facility. Issuance of neat 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 likely share holder to subscribe to th e shares and transfer their money to the company. Moreover, the statutory requirement regarding the floating of shares in the stock market is far more intricate 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 somehow increase its production capacity or shift its resources towards manufacturing items