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March 18, 2004 Mr. Mark Agro Agro Storage Toronto, ON M3P 23R Dear Mark, As you requested I’ve prepared the following report to address some concerns about your new warehouse. This report contains a full analysis of the situation, as well as a solid recommendation on how you should proceed. I’ll be in contact with you next week to discuss this report, but should you have any questions for me before that time please feel free to contact me. Sincerely, Sample Student Executive Summary Agro Storage has recently purchased a cold-storage warehouse that stores packages for three customers. Although the warehouse runs at 85% capacity, the previous owner was unsatisfied with profitability. Pressure on prices downward and…show more content…
In this case, reducing the total number of customers served would increase the default risk. I must insure that any alternatives don’t increase the risk of this business operation unwarrantedly. Perceived Image by Customers: Changing existing contracts and relationships with customers can have positive or adverse affects on how Agro Storage is perceived by customers. It is important that any alternative recommended not damage the reputation of Agro Storage. Such damage could impact future profitability through a lack of sales. It is clear that in this situation profitability is the biggest criterion and will bear the most weight in decision making. Risk is not the most important factor here because of the small range numbers that total customers can vary, and perceived image is not the most important factor since price seems to be the overwhelming factors customers base their decision on. It seems like a warehouses reputation would have to be significantly damaged before customers incorporated it in to their decision making. Analysis A review of the information provided to me has allowed me to calculate the profitability of each customer very precisely, and has let me form certain conclusions about the profitability of each of customer. Also, I noticed several cost and constraints for this warehouse: Send/receive goods – a variable cost based on weight. From the information given to me (or lack thereof), this does
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