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Since her breakeven point is almost at 100% of her full capacity of production, this risk is HIGH that anything would negatively affect the profitability. Employee training on new products and employee turnover in general are inevitable and thus would slow production. When that occurs, the margins are too small to breakeven if you don’t hit the 48000 mark of manufacturing.RecommendationsAlthough I feel there are benefits to the purchase, I would negotiate a lower price with Kowalchek to lower the risk and margin. There is a large amount of risk and hazard if many
Tenalpina Tools: Entrepreneurs DilemmaUT EMBA 2018 Prof. RobinsonBy: Jared Greenpieces of the company are not successful. I have several business recommendations assuming the purchase of the forge.Take a no interest loan from family/father who previously offered and set a payment plan to start a 4 year amortization no interest loan AFTER the first year of operation. In addition, sign a note and record it with the terms and state that in the father’s estate the loan will be deducted from the balance owed in case anything happened to the father. This way Giulia’s father can help her out but still get paid back and protect the legacy to other children and family members.Must market to more clients and have multiple channels for marketing: retail, online, direct at trade shows.Giulia should focus on her skill in design concept and add more product lines to an existing successful selling piton. Use the same quality and innovation for more products to be used in conjunction with the piton.Look further into other revenue streams and add manufacturing for other products in your new state of the art forge plant. Is there a need for other small inventors or companies that need a part manufactured?Increase the retail price of the piton by searching out other customers who can offer a higher retail price; increasing the already slim margin of 1% of safety.