Since the 1940’s TMS has been providing small loans to consumers.
During that time TMS augmented its business to include the servicing of business loans, business acquisition financing, and commercial real estate loans. In 1946 TMS decided to finance forestry and construction equipment. The decision proved to be very profitable and resulted in TMS’s establishment of Future Growth Inc. (FGI).
Consequently FGI also experienced an immense demand for equipment allowing FGI the capability to purchase its own equipment manufacturing company.This allowed FGI to sell, build, and finance its own equipment. For 67 years FGI’s business venture went well (UOP, 2010). Currently FGI is faced with making various decisions due to the failing economy and several natural disasters that have occurred in various states. The sale of homes has also decreased. Much of the equipment is being repossessed by FGI, in turn FGI has decided to bundle it together and selling it at a discounted price.The purpose of this proposal is to provide business recommendations to Thomas Money Service Inc (TMS). In light of everything that is occurring in the economy TMS has requested recommendations addressing how TMS can increase revenue, its ideal production levels, maximizing profit through fixed and variable costs in addition to reducing costs.
Recommendations Increasing Revenue Increasing revenue is the goal and continuous effort of any organization regardless of how the economy is doing but it is most important in a declining economy.Thinking and planning strategically will assist any business in increasing revenue. Due to all of the natural disasters that have occurred, it will be most beneficial if TMS places their focus mainly on the construction of new buildings. There is a need for hospital and nursing homes, with all the construction equipment FGI has it can contract its equipment to an organization who does construction.
Another important aspect to keep in mind if this is the route FGI takes is to increase its marketing budget.Increasing the budget for advertisement more than just to the super bowl commercials will keep FGI in the minds of businesses. Placing ads in builder’s magazines and in the newspaper for example will broaden the types of business that will know about FGI and TMS therefore, creating a wider customer base. Ideal Production Levels With the economies decline ideal production levels would be to maintain the current price level of the equipment bundled at the price of $1634.
30 (See Appendix A).If FGI decides to contract its equipment to companies who perform work in the construction industry it will be able to maintain its production levels. The demand for the building of hospitals and nursing homes is in high demand. Because the demand is high for the construction of these buildings, FGI can take advantage of contracting out its equipment. Maximizing Profit Reducing Costs Organizations Values Until the economy took a down turn, TMS had never issues bonds or lain any of its employees off.TMS took pride in knowing that it was doing well and this benefited the company as well as its employees. Until recently TMS had to let one-third of its employees go.
Striving to maintain that “family” atmosphere at work is important to TMS and FGI. As it works through the economies decline the company is working towards keeping and exceeding its current profits. Many options exist that the company can take to increase their profit. With these options, they must also look at the values of the company.
ConclusionEvery organization wants to ensure that when the economy is taking a turn for the worse that their company is able to withstand the decline. TMS has been fortunate enough to have had very many profitable years because of the business decisions it has made. At the moment TMS and FGI are faced with making several business decisions that can change the company. Various recommendations on ways to reduce costs, maximizing profit, ideal production levels, and ways to increase revenue were provided so that the company can maintain its profitable state.
ReferencesUniversity of Phoenix. (2010). Thomas Money Service Inc. Retrieved on July 26, 2010 from http://classroom.phoenix.edu/afm215/secure/view-thread.jspa?threadID=22338389