Case Scenario

Case Scenario- Decision-Making
Name:
Institution:
Operating a successful business requires both realistic and profitable strategies and commitment to the strategies. Any business person who is faced with a business decision must be committed to ensuring he or she comes up with the best solution possible, a solution that will ensure the business gains profit and remains sustainable in the market. In this regard, this paper responds to questions from a case scenario where the owner of small printing company is faced with a number of business decisions to make for the sustainability and profitability of her company.
Diagram summary of the projected profits
Projected Profits
When sales are high When sales are low
Purchased Equipment $90,000 $40,000
Un-purchased Equipment $70,000 $50,000
Question 1:
Apart from the purchase of extra equipment, there are other options that the owner of the small printing business should consider when choosing to expand or grow her business. However, before considering any options, it is important for her to put into perspective the demand for the products and services rendered in her company. Purchasing extra new equipment only gives her the ability or capability to handle the increase in sales. But, having the ability o capability to handle increased sales does not guarantee an increase in revenue for the business. The most important thing is to consider the demand probability- if it is low or high for her products and services. Therefore, the owner has three other options at her disposal.

First, she should consider keeping the existing equipment and refrain from making any decisions to expand. Second, she should consider hiring or outsourcing some aspects of the company’s work or services. Third, she should consider leasing out her equipment which could negate the need for more equipment with the business still making a good profit and have more jobs.
Question 2:
If the business owner has optimism about the future sales of her company, then the best move is to expand the business by purchasing more equipment. Ideally, all the possibilities should be weighed and all options considered when making this decision. Buying the new equipment will increase the profits of the company by a big margin. For instance, the projected profits with the new equipment are at $90,000 as opposed to $70, 000 when no purchases are made which consequently increases profits by more than 28%. In my opinion, the owner should take this risk because the company may begin to maximize the profits through investments made in the long run.
Question 3:
The owner’s pessimism or optimism should not be considered the sole factor that may influence the profits of the company. Like in any other business, the cost of purchasing new equipment and their durability should be one of the major points of concern for the owner (Hickson, 1986). . Also, understanding the warranties and cost of maintenance for the purchased equipment should be factored in the analysis of the company’s operations. Lastly, added costs such as extra workforce required to maintain sales should also be considered when expanding as well as the cost of implementation of the new equipment and practices in the company. All these aspects must be addressed when analyzing the projection of the profits.
Question 4:
Since the new equipment has a five-year useful life, the operations of the printing company will be greatly impacted. Ideally, the major focus of the owner will be to recoup the cost of purchasing the equipment within the five years and gain profit from it- the options are to either expense or depreciate the equipment for the time frame. In this regard, she has to have optimism when it comes to revenues and sales. The owner of the business has two options to make. She can either expense the whole cost of purchase within the first year and maybe lower profits with the anticipation of future high profits or spread the profits within five years and maintain her profits. Either way, the useful life of the new equipment will impact the operations of the business.
Reference
Hickson, D. J. (1986). Top decisions: Strategic decision-making in organizations. Jossey-Bass.