The majority of companies become sophisticated when evaluating financial information on investment decision especially those that involve tangible assets. Pogue contends that successful strategic investment decision will impinge heavily on the competitive advantage of a company and will influence what a company does, where it does its activities and how the activities will be done (2010, p. 5). Companies have become less rigorous in evaluating long term investment in marketing as compared to expenditure on other projects. The whole operations of the company should be moved to that particular small rural settlement at once. HYY Consulting will have to identify several factors for financial evaluation hence being able to control the market investment decisions.
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The project HYY Consulting will be involved in investing new products while extending a major product range. HYY Consulting services is a well established and recognized brand making it a major cash generating income for the group even though the market involved is mature. The company should move its operations to Philadelphia, which will create a new market and at the same time retain its previous customers. Miller in his book states that the reversal of markets has become more common in countries and cities that are emerging than in developed economies (1998, p. 7). The relocation into a new market will, however, steal a large proportion of the market share due to the company’s market share from the market that currently exists.
Reasons why HYY Consulting Company should lease its current location in Philadelphia
The company leases additional space in its current location in Philadelphia for the next two years and then moves to a new building because the principles applied in accounting are important in naming the generation of adequate revenues that will be produced in the future accounting, therefore, being able to acquire existing expenses earned by HYY Consulting Company. Such expenses in accounting principles can be expressed in the form of assets on the company’s balance sheet and this will be matched with the corresponding future revenues. The influence of the accounting principles on HYY Consulting Company is strong enough for the company to operate the accounting systems under the same principles to the detriment of investing in the market. According to Baker and Powell, a firm may invest its temporary surplus cash in marketable securities that are short term (2005, p. 171). If the company does not have enough resources to carry out market analysis properly, it will put itself at a disadvantage in terms of competition hence the business prospective acquisition will be sophisticated in terms of its financial evaluation process.
Reasons why HYY Consulting Company should move to a small rural town
The company should move the entire operation to a small rural town immediately. In doing so, HYY Consulting Company needs to differentiate efficiency from effectiveness. Efficiency will be able to measure the unit of input that is required in the company to be able to achieve a specific level of output achieved in relation to resource input for a specific process. Effectiveness will consider the achievement of right outputs to be able to meet the pre-set objectives with no interest on technical efficiency on the relationship between the input and output. It is easy to measure the efficiency of HYY Consulting Company buying operation by having a comparison between the costs per opportunity versus a specific standard. It is impossible to measure this type of performance in financial terms and, therefore, the company will have to include key nonfinancial objectives during the budgeting and planning process. If the objective of HYY Consulting Company investing in a market is not established before the decision to implement the investment is taken, it will be difficult to judge retrospectively whether the decision is effective in terms of achieving its specific aims.
If HYY Consulting Company has a mismatch between its strategic thrust and the structure of the organization, the company will have a problem. It is important to note that the managerial performance of the company is judged based on the performance of their services. HYY Consulting, therefore, should ensure the objective of the marketing managers sustains the life of the company’s products as long as possible, and at the same time brings in an acceptable profit.
HYY Consulting Company needs to ensure the services offered by the company are synonymous with the name of the company. The company should use its name as a substitute of its product description. The company should, therefore, try to find out to what extend it should forego opportunities to maintain and build its market leadership and be able to invest in other areas of opportunities.
For the company to analyze the potential of investing in a market, it should set a pre-agreed corporate objective. HYY Consulting Company should have specific objectives, which it can accommodate within subsidiary objectives. When deciding on whether to relocate, the company should decide on whether the new location can meet essential criteria before authorizing the relocation. Being enlightened with the lifecycle of a company, its product has lots of importance. The company should not justify a long-term expenditure on a product that will essentially be short lived. It is also important to select a technique that will evaluate appropriately and effectively within the specific time scales of the decisions to be made. Once the objectives of marketing are defined, it is important to ensure that the strategies of a company are linked to the proposed financial expenditure.
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Baker K and Powell G. (2005). Understanding Financial Management: A Practical Guide. Miami: Blackwell Publishing.
Miller R. (1998). Selling To Newly Emerging Markets. New York: Greenwood Publishing Group.
Pogue M. (2010). Investment Appraisal. New York: Business Expert Press.