Business Report outlining internal & external factors contributing to a business

Essay by davidwwood May 2006

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Alan Budday bought Botany Cans one year ago on the bases that it was a successful business. However in the past year there have been some major influences affecting the business. This report is going to outline internal and external problems that face Botany Cans. The changes management can take to counteract these problems. How management will effectively implement these into the business.

Internal problems

Decrease in cash flow due to the decrease in sales because of the 30% increase in overseas competition. Negotiating new enterprise agreements for the administrative and manufacturing divisions will be time consuming process and usually involves making costly changes to the business environment.

External problems

Government introducing new trade agreement and reduced import tariffs will affect Botany Cans due to the increase in overseas competition. As a result market share and profit will inevitably decrease. The new technologies developed by Allentown technologies is a problem because overseas American companies could introduce these into their company and therefore lower their own per unit cost price.

Changes proposed

Introduce the new production machinery that Allentown technologies have developed. This will in the short term be an expensive venture due to the retrenchment of a lot of manufacturing employees and paying their redundancy packages as well as purchasing this new equipment. Another cost involved would be training the employees in running the new equipment. However in the long term this will slowly increase sales due to the decrease in per unit costs of production.

As a positive result of the USA trade agreement this enables Botany Cans to expand into the overseas market. Before doing so you must get information on many things for example: weigh up establishment costs, check out American market and whether or not the American companies are making a profit or not. It is...