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What decisions does the firm face with continued growth? The company has to decide on how to expand the business but not to operate in their sub sites. The challenge in proceeding with this decision is the fact that finding new sand gravel sites in the new areas is hard because they are Scarce. The Company’s director Frank Wardlaw has found two sites at Celadon owned by the local council. However, they are leasing only one site hence the company has to decide which site to take. The first site, Bardon Farm, has sand and it is promising because of the development of Washington new town and also because in South Shields, the number of housing is increasing and therefore the market for sand is high. Cleadon Hill produces gravel and the positive side of this site is that it has a ready market where Tyneside Company can secure a four year contract with motorway contractors. The firm therefore has to decide which site to take. What are the risks associated with expansion in particular the operational risks John Hepple might, however, been justified by being against the expansion because of the operational risks that come with it. The one major risk is that the company might end up in debt thereby losing its property due to borrowing so as to finance the expansion. John Hepple, being the main shareholder, is against having new shareholders and hence that option of getting finances is out. The other operational risk is that the company has a lot of competitors whom it should keep in touch with to avoid being left behind. This will not be easy as the firm will be concentrating with expansion. Expansion also comes with a lot of work and everyone is working towards proving that they made the right decision (Sease & John, 1994). This may lead to the employees having a lot of pressure and their morale may be compromised. They may feel overworked and the firm may not be able to motivate them in the short run because all their finances will have been exhausted in the expansion. The firm also faces the risk of making losses if they are not able to attract new customers. The company however can deal with the risks by ensuring that the money they borrow will be paid within a certain period and still leave them profits. The board of directors has selected a committee that will establish the feasible project so as to expand it. The committee which consists of employees gives them an opportunity to choose what they feel they are capable of achieving and therefore doing away with the risk of losing employees due to pressure. The firm should do enough research to know what their new customers expect. This way they will have new customers and also be ahead of their competitors. Analyze the cash flow presentation. Identify any potential problems with the identification of the cash inflows and outflows The company has come up with a cash flow that shows how money will move in and out enabling them to know the rate of return of the project. The cash flow shows movement of cash operations that is the sales; there are also the cash flows from financing. The difference between the cash inflows and outflows gives the net cash flow. The Tyneside firm may have potential problems in identification of cash inflows and cash outflows. This problem arises when purchasing items with cash which is an inflow unlike when purchasing i ...Show more

Summary

Tyneside Gravel Name: Institution: Professor: Course: Date: Background The family firm, Tyneside Gravel Company, was established in the year 1912. It is run by John Hepple as the chairman and managing director. He is assisted by his two sons. The market for their products has increased due to the fact that in the Tyne area, projects concerning building and civil engineering have increased…
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