Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm's output is $32. The cost of other variable inputs is $2,000 per day. It also tells us that the firm's fixed cost is “high enough” so that the firm's total costs exceed its total revenue. The marginal cost of the last unit is $30.
This assignment allows you to determine the specific details about this fictitious company in order to conduct an …show more content…
Changes in any of these factors can affect the success of the business. For businesses that depend on natural resources such as oil, minerals, wood, water, or land access, trends in the management of these assets by governments or other custodians can have a major effect on strategic options.
3. Evaluate the financial performance of the company using the information provided in the scenario. Consider all the drivers of performance, such as company profit or loss for both the short term and long term. Be sure to show the calculations that helped you reach your conclusions.
Management has decided to hire Managing Consultant Clint Jones to help and give advice on whether the company needs to shut down operations or keep the open. In doing this, Clint looked at several key drivers of performance such as:
• “The demand for the company’s product and service which lead to greater productivity
• Investments, profit and loss statements
• Debt-to-asset ratio and a few sore financial analyses” (Anthony, J., 2011).