Country : Canada
Assignment Task

    

THE COMPANY 
Magic Timber and Steel (Magic) was formed in 1999 in Caloundra on the Queensland Sunshine Coast, Australia.' Located about 100 kilometres (60 miles) north of the state capital of Brisbane, the coast was known for its clean, protected beaches and safe waters. The business peaked in terms of sales revenue in about 2011, and went on to experience a steady decrease in turnover that was attributed to a number of reasons, including infrastructure issues on the coast and a slowing in the tourism market. To reinvigorate the business, in early 2015, Magic's owner, John Davidson, believed his company required an investment in fixed assets, specifically, a large finisher that would increase capacity and reduce maintenance. Since the new machine required a large financial investment, Davidson used the net present value method to determine whether the purchase would add value to the firm. In addition, he needed to consider some important qualitative factors before a decision could be made. 
MAGIC TIMBER AND STEEL PTY. LTD. 
Magic's original owners, John Davidson and Kelly Peters, leased the company's first premises on the site of a disused service station, and specialized in packs of "seconds" timber that was sold to the retail market at discounted prices. The business was successful and eventually outgrew the small premises. In July 2002, Magic purchased an industrial block of land that was approximately 10 times the size of the leased premises and on which was built a large, secure shed. The owners decided to move on from the timber packs and instead set up the new location as a timber yard. As the business continued to grow, Davidson and Peters began stocking hardware supplies and purchased a large Scania truck that could be used for picking up products and providing delivery service. Magic also invested in a range of machinery. While the owners were happy to pay out a large sum of money for a new Scania, they decided to purchase only secondhand machinery. As the business grew, they preferred to limit the staff to themselves, one other permanent employee, and two casual employees who would work on an on-call basis, as demand required. For Magic, the timing of its growth was fortuitous because the Sunshine Coast was undergoing a rapid residential building expansion in response to a 10 per cent per annum population growth in 2002, 2003, and 2004? During this growth phase for the company.

Magic earned a reputation for being a supplier of discount products, and soon, the company had acquired a substantial core of builders as its customers. The smaller retail market continued to grow, but proportionally became a lower contributor to Magic's sales activity. In 2005, Davidson bought Peters' share of the company and became the sole shareholder. As part of the agreement, Peters kept the Scania truck, along with the debt associated with it. Around 2011, Magic's business peaked in terms of sales revenue and then experienced a steady decrease in tumover (see Exhibit I)? This decline was attributed to a number of reasons, including infrastructure issues on the coast, a slowdown in the tourism industry, and a decrease in population growth (le. than 4 per cent in 2011); however, the Sunshine Coast still remained one of Australia's fastest-growing regions. Asa result of the declining economic environment, a number of builders who held accounts with Magic went into liquidation, leaving the company with bad debts that had to be written off or placed on payment plans, a situation that had a significant impact on Magic's own financial situation. Around the same time, a large Australian publicly listed retailer, Wesfarmers Limited, opened one of its large Runnings Warehouse Stores (Runnings) within two kilometres of Magic's premises. Bunnings was similar to North America's Home Depot, and was a direct competitor to Magic. During 2013 and 2014, in an effort to reinvigorate Magic, Davidson undertook an increased marketing campaign that included print and radio. He also added steel to Magic's product line, which necessitated the purchase of a large laser cutting machine that required a significant capital outlay of $300,000.4 Davidson continued to promote his business as distinguishing itself from the larger competitors by providing personal service, and he strived to give an impression of a successful, professional business. 
    

 

This Management Assignment has been solved by our Management Experts at UniLearnO. Our Assignment Writing Experts are efficient to provide a fresh solution to this question. We are serving more than 10000+Students in Australia, UK & US by helping them to score HD in their academics. Our Experts are well trained to follow all marking rubrics & referencing style.
    

Be it a used or new solution, the quality of the work submitted by our assignment Experts remains unhampered. You may continue to expect the same or even better quality with the used and new assignment solution files respectively. There’s one thing to be noticed that you could choose one between the two and acquire an HD either way. You could choose new assignment solution file to get yourself an exclusive, plagiarism (with free Turnitin file), expert quality assignment or order an old solution file that was considered worthy of the highest distinction.

  • Uploaded By : Roman
  • Posted on : March 05th, 2020
  • Downloads : 430

Whatsapp Tap to ChatGet instant assistance