Should you buy it?

Question

Facts: You are a manufacturer, manager of a small Midwest manufacturing job shop, (net sales $7,000,000). You have the opportunity to quote on a job for an old valuable customer, (gross sales to them $137,000). The job would possibly double your revenue from this customer. The problem is that you do not have the right manufacturing equipment for this project. The only such equipment is a used piece in Poland costs, around $150,000. (as is where is) and weigh 18,000 lbs. Should you buy it?

Considerations: The decision is easy – Yes? Or No? Obviously numerous inputs and options must be considered. What are implications of having a competitor make it for you (subcontracting)? What obstacles must be overcome in buying the equipment? What other areas of inquiry must be through out and questioned before such a costly decision is made? You must be thoroughly inquisitional and creative. “Leave no stone unturned.”

Focus on: the machine itself and its importation, your market, your competitors, your financial structure, your employees, your physical plant, your customer, your present marketing position, your product mix.

What is your marketing image? What will it be after your decision? Be very detailed in your questioning. Look at the micro and macro view of your company and the acquisition. Assume any facts that you want but be very explicit about what you have assumed

Answer 1

NO. Have a report drafted for what st.lawrence clients,
can record.

Answer 2

If I could assure the integrity and the sufficiency of the equipment in Poland I would pull the chord on this option quickly due to this:"sales to them $137,000). The job would possibly double your revenue from this customer. "

I would quickly pay back my costs, engender customer loyalty and, possibly future orders from referrals from a happy customer.

The only downside is a small financial risk that I buy the equipment and the customer changes his mind. This problem is too small to conuter the upside. In addition, I could figure out how to use the equipment to the company's profit or, at the vey least, sell the equipment to mitigate the loss. Either way the downside is too miniscule to counter the upside.

That's the way I see it.

Answer 3

Eventually you going to have to expand, if the demand is there, and it sounds like it is.
If your net sales are 7 mil, though, isn't that enough to continue what you are doing, even if your gross sales to them would double!, that is a small percentage of your yearly
net sales.
If it doubled your 7m, than I would say absolutely go for it.
See what it does for you overall sales, and not just for that one customer!,
If it is cheap enough, and you have a large enough profit by letting competition do the work, and you have the gain anyway, why buy it?. 274000, from one customer, if, his gross sales were doubled, is a small percentage from your total annual sales.
If your total benefits from buying that machine are only those, than I would say don't buy it!.See what it does and how it Affects your over all sales, or yearly net!
One more thing, you are talking about 7mil, net, and asking about 274thou, gross sales, what's the big decision? something is not right though, is it?.
This machine is 150thou, you get your money with one order, from this company!, but it's all bs. Right?.
impress the girls, and anyone that doesn't understand math?//
274Thou, will be the increased gross sales, and 150thou, next to 7 mil NET, is peanuts, or don't you know that?.

Answer 4

heavy industry
any manufacturer who makes big things heavy
sounds serious

Answer 5

yes