Financial Management of Amalgamated Industries Limited - Case Study Example

Financial Management no. Amalgamated Becoming a winner at anything worthwhile requires a game plan. This idea applies to organizations, departments, teams and even to individuals. Being successful entails making good use of the available resources to the best advantage. For the profit making company, such as the Amalgamated Industries Limited (AIL), competition and profitability are much important aspects. The Amalgamated Industries Limited (AIL), require a strategy which would help them to increase their profitability, gain more market share and increase their approval ratings. In order to determine the best strategy for the company, there is the need to understand fully the external and internal environmental factors that affect the company1. The analysis of the company production and pricing for a certain period should be based on influences by the external and internal environmental factors. In order to come up with a good plan for the coming year, the Amalgamated Industries Limited (AIL) should reflect on the previous year’s activities on their production and pricing. Developing an improved strategy for production and pricing would help in maximizing the overall AIL profits in the upcoming year. The production speed should ensure quality of the materials. Quality materials would buy the customer trust and thus establish a long lasting relationship with the customers. The company should also ensure minimal expenditures on its production. Production process should take the cheapest means possible. This would allow for improve profits which would enable the company to cater for other internal and external expenses. The company should only adopt assets which give significant annual returns. The recommended changes may have some slight effect on the individual divisions. Elimination of some assets from the current organization would change the structure of the company’s portfolio. Dormant Investments from within the company should be eliminated while the company should adopt new assets which would keep records of the highest percentage of annual returns. Another recommendation is that the Compubase Inc. (CI) should offer a reduced price to $1.800 for all chips supplied to the PTL. However, these would affect the expected profits by the PTL Company. Production of quality materials would mean increasing the company’s investment on raw materials and of its services of production. This would win their trust by customers. However, this would affect the expected profits by the divisions in their short term plans. Ensuring minimized expenditures would cut off the bonus policies. Although managers would feel less motivated, it helps to improve the division savings2. Recommendations for change should take the transformation f the distributed company policy to a single company. The company should come together and work under a single division. This would ensure a sole and coffined management and the allocation of assets in a convenient manner. The divided divisions should be brought down to a single division which manages its resources together. The company should not only sell its products to distributers but it should practice both the retail and the whole sales. The sale of commodities should also be made an international endeavor rather than making sales within North America and Europe alone. The company should use its products to somewhat offset its business exposure into foreign currency and interest rate risk. The company can also enter to onto forward contracts, swaps optio contracts or other product instruments to eliminate some risks on their expected future cash flow and on net investments in their foreign subsidiaries. In order to protect the gross margins from fluctuations in the foreign currency exchange rates, the company’s subsidiaries should hedge a portion of the forecasted foreign currency revenue. The newly formed European Distribution SpA. (EDSA), whose functional currency is not the U.S dollar and sells in local currencies, should hedge a portion of the forecasted inventory purchases that is not dominated in the subsidiaries functional currencies, The Company’s new strategy for the year defines how they will win; however, winning is framed by the satisfactory of the customers. AIL is a profit company and thus must keep their shareholders and customers happy. The company should identify its clients and shareholders. It is very vital to understand what its clients want and who the major stakeholders in its success are. The AIL company should identify a range of projects that it should run. The company should give a priority to countries which would tax their profits at a lower rate. Reduced prices would also help the company to remain in its competitive margin. For example, in the European market, where competition is extreme; the company would not pass along high prices and thus, its reduced convenient prices would help in establishing a viable long-term market share. 3. Northern The Northern Regions public school system was restructured in an attempt to make it simpler for the Northern School Division (NSD) to make relevant budgets for the school activities. These efforts transformed the school community and consolidated a large number of community schools into three regional schools. This engagement was aimed at achieving some community goals specifically in the allocation of resources. It would have been a difficult activity distributing funds and other resources to a large number of schools within the region. The consolidation of numerous schools to the formation of three regional schools is a significant in enabling the Northern School Division to make adequate allocations in quite a simpler manner. With the reduced number of schools, the superintendents would be faced with a simpler task of overseeing the school community (Brigham et al. 24)3. Funds provided by the provincial government to the NSD are equally distributed among the three regional schools. The funds are allocated to the schools at a fixed rate. The restructuring of the NSD also included the centralization of numerous services into two departments; the administration and the academic. One of the main reasons of restructuring was to achieve a centralized society. This would facilitate easier management of the schools in areas of allocation of resources. The superintendent manages a strict budget and requires each department to operate within the assigned budget. This report seeks to address the principals’ grievances regarding poor allocation of funds. The school principles have had complains that they have faced many troubles with maintaining the quality of the existing programs in their schools. They questioned the allocation of central services and claimed that there had been much unnecessary costs. Before any resources have been allocated to the schools, the Northern School Division (NSD) must receive the resources from the provincial government. Depending with the amount received from the provincial government, the Northern School Division (NSD) engages into a justified distribution of the resources to the schools. The allocation of funds to different schools takes up some consideration. In most cases, funds have to be allocated to a certain school with the bases of the available number of students and teachers. Some schools are found to accommodate twice as many students as they are in a different school. On sharing resources to thee two different schools, a lager percentage of the total resources should be allocated to the highly populate school. Distribution of resources to the three schools is based on student enrollment. In the case of two schools, A and B, with the number of enrolled students as nine hundred and two hundred respectively, sharing of the available resource among the two schools would not take up the same ratio, as this would be unfair to the school A. sharing resources with the consideration to the school population would portray a justified endeavor. The Northern School Division has established strategies whereby, more than 50% of the revenue for schools comes from the local community. The provincial government makes little contribution of about 7 % of the entire educational revenues for specific programs which do not generate any property taxes. If fully established, this pattern would make the northern schools much vulnerable to influences from taxpayers, interest groups, business interests as well as the middle and the upper class residents4. Northern School Division (NSD) is an organization that is comprised of different heads. The organization receives orders from the provincial government. It is responsible for the Northern Regions Public school system. There are two associate superintendents of the Northern School Division (NSD). Under the two superintendents, there are two departments including the administration and the academic. The school principals and the students finish on top of the line. The performance evaluation is found to have no critic. The organization has laid down numerous strategies, all aimed at improving the status quo of the schools. There has ben notable academic excellence over the years caused by the availability of learning resources as distributed by the organization. The organization has genuinely worked with the provincial government to ensure the protection and upholding the students and teachers rights. The organization has taken part in restructuring the curriculum and narrowed down the number of schools in the region. This was meant to ensure improved management of resources. Part of the long-term opportunities for improvements that the northern school division should initiate is working with the school principles. The principals should take part in all discussion about resource distribution and on any modification planned for the school. Bibliography Brigham, Eugene F, and Michael C. Ehrhardt. Financial Management: Theory and Practice. Mason, Ohio: South-Western, 2013. Read More