Making a Boardroom Decision

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  • Topic: M4 motorway, Motorway, Costs
  • Pages : 2 (757 words )
  • Download(s) : 44
  • Published : December 20, 2012
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Making a Boardroom Decision
The Board of Spartex Ltd is considering relocation due to rising costs and worsening traffic. The business has built up a good local reputation and a loyal, skilled workforce over its thirty years in London. Now it is considering a Greenfield site in South Wales- near to the M4 motorway. The move will have a net cost of £250,000. The decision will be that of the board which consists of: * The Chair, who runs the meeting, can influence the decision, but needs to establish a consensus * The Managing Director, who must do what is best for the overall future of the business There are many reasons that would suggest both for and against the move being a good decision for Spartex. Firstly, a reason that would suggest Spartex is correct to push for the move 200 miles west to a Greenfield site in South Wales is that the Monthly total costs will be £39,300 as opposed to £42,000 in its current location, largely down to a large decrease in its Overheads. In turn this will lead to the business requiring less sales to breakeven with a new value of only 5000 required as opposed to 6000 in its existing location. Furthermore, the reduced total costs will generate the business a larger monthly profit that is £2700 more than it generates in its existing location with a new figure of £8700 per month. In addition, another reason that suggests they should move is that their market share dropped in 2008 from 6.6 in 2007 down to 6.4. This suggests that the business is struggling to keep up with the rest of the market and thus a change could be the added boost needed in order for them to get back on track. In addition, a new target market will also be achieved from the relocation meaning new interest will be generated upon arrival in the new location whereas interest in its current location may have fizzled out and became old in a way. Also, the relocation will be near the m4 motorway, meaning any transports both internal and external to the business...