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Finance & Accounting
Pages 8 (2008 words)
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.
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. ...
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