Moving to China

"APPENDIX A"



1.80%of all employees are in the union membership,the problem is that the a majority of the labour may ask high wages if necessary, it can directly impact the fixed costs and push up the total costs which might bring the negative effects to the company profits and liquidity,also high costs may lead to cash-flow,shortage of demand for example.Problems which can be a dangerous situation for company in a long-term run.



2.Compared to the annual pay of factory between CELLTON FACTORY and IN CHINA,salary paid to the labour in CELLTON FACTORY is 9-fold to in China,which is a good news for shareholders and investors who want to relocate the factory in China in order to gain a high level of profits.For shareholders,they may get more dividend with high level of growth in profit return,their shares can be more valuable and they can sell shares at a high price.And both of shareholders and investors are motivated when they receive the profit return



"APPENDIX B"

3.Net present value shows the positive figure at 5.7m,and this is a quite big value for the company(Net present value is the value which the company may gain in the future transfer into the current situation),+5.7 represents the meaningful situation of the economy for the company and it will encourage not only labours but stakeholders to achieve the objectives.Labours may be motivated as a result increasing the productivity and reducing the unit cost and the company will become more efficient and competitive.



"APPENDIX C"

4.Even though both sales revenue and net profit indicate the increasing trade 15% and 5% respectively.However it is evident the increasing of the net profit is one-third of the sales revenue,it may tell us the cost is increasing at the same time.The net profits may increase at a increasing costs,and increasing in costs may higher than net profits,which can be a problem to company



5. Capital employed(measured of the value of the resources used by a business) is 500m.It shows a large amount of money spent on resources,the resources are valuable and it indicates the price of the products are likely t be high,because of the resources/materials(variable costs) is high.High price may affect the demand for the products.

"APPENDIX E"
6.Compared the two line graph,it is clear that factory in China(450) gets the break even earlier than in CELLTON FACTORY(600).It will reduce the risks for the company and make the company safe(marginal safety).Capacity in China is greater than CELLTON FACTORY with 1000 and 800,the benefit for this is the company may get more profits because they have the ability to produce more,and can solve the emergency situations like if there is a high demand in a short period of time,the company with high level of capacity may overcome the problem quickly and flexibly.
Also,we can see that the variable costs in China is 18.5,which is lower than in CELLTON FACTORY with 25per unit,it means the variable costs of every product produced in China saves 6.5,if the company produce same quantity of products in both factory,the costs of the products produced in China will lower,therefore the company in China,can have such pricing strategy such as loss leader(which set a considerably low price in to the market in order to break the order of the market)and keep the price to gain more profits .They sell the same price to retailers which means that the company may gain more profits in China because of the low variable costs and fixed costs in China...

tired........