The current financial report indicates that the Clayton facility faces losses; however, according to the market analysis and current contract activities, the issue is temporary. From the company’s standpoint, the Clayton facility should continue to operate, as it is the only division in the area, which can conduct financial operations. Moreover, the new fiscal year will only begin so that Clayton has chances to acquire new contracts and increase sales reports. As a result, the company can handle and overcome the current financial flux and rely on Clayton.
Another aspect of why Clayton disposal is a disadvantageous decision is that the company will be left without a beneficial market share. The shutdown of the facility supports competitor’s interests, as it will have Clayton without any rivalry or signs for it. Further, talent management may suffer from Clayton’s shut down, as employees may enter the competitor’s workplace, leaving the company with intellectual and labor advantage. From this perspective, the decision to shut down the facility in Clayton is non-feasible and has no evidence to support such a decision. The long-run impacts forecast only further losses and issues related to market competition.
The self-interest, in this case, definitely indicates that Romero is trying to fix the financial problem through short-term decisions, which are based on her personal desire to have perfect numbers. Her point is that all facilities should be profitable, as Romero’s reputation and position depend on the financial reports. In this case, it can be admitted that shareholders may be interested only in the raw econometrics; however, all bank stakeholders will express concerns if Romero will close the facility and lay down loyal and productive employees. Such question will also question the ethics and feasibility of the new vice president’s actions.
From this perspective, Harley Romero does not act ethically. Nonetheless, she works resourcefully from a financial standpoint. In this instance, the vice president’s behavior cannot be marked as ethical from the employees’ perspective. Moreover, her actions are based on the limited information about all aspects of Clayton’s facility operations. As Littlebear suggested, Clayton’s expenses are not as high as indicated in the financial report so that Romero should conduct an internal audit to ensure that her decisions are accurate, precise, and ethical.
The Clayton’s facility depreciation has a bilateral effect on the company’s financial performance. The financial report indicates that the depreciation significantly affected the revenue statement in the last year, as the company has no sales to mitigate or reduce the contract loss financial devastations. On the contrary, Littlebear states that Clayton is a lucrative location, as there are no other solid competitors. In this case, the facility charges a premium price for its services, making a substantial contribution to sales margins. Moreover, the presence of a new entrant was not expected by the company. However, Clayton can compete and offer more flexible and affordable services to attract clients and keep sales on the appropriate level.
From this perspective, the depreciation affects revenue margins and increases maintenance costs. Nonetheless, the location of the facility, its premium charges, and the low level of rivalry supports sales growth. Such a strategic and financial balance supports Clayton’s status as a profitable facility. This analysis should be considered in any decision made for the ongoing fiscal year, as well as further actions toward the facility shut down.