Cafes Monte Case Essay

The community located in Milan, Italy.It was found by Mario Salvetti as a manufacturer and distributor of indemnity finest javas. The union faces a hard decision that may affect their future. The fraternity wants to know whether or not they should keep working in the same investing. An important meeting was in that respect among the top management teams members to discuss the future of the company. The companys performance was good in 2000. internet was shown at the financial statement. Giacomo Salvetti the CEO of the company needs to decide which to choose as the business strategy for the company 1) pass off working in the insurance premium coffee market.2) Transfer to the hush-hush brands market.The current subject matter of the coffee production in 2000 was 350,000 K/M , with added additional electrical condenser of 150,000K/M. The live of the additional units was 6 billion liras. to a greater extent facts about the net profitability and the liquidity were demand b eside the coin flow and the profit excogitation to quantify strategic alternatives and to help in making this decision. The idea of changing was not easy to the CEO to accept without a clear image of the financial consequences. The cover up was provided by the marketing manager showed that the premium market is very volatile.On the former(a) hand, the toffee-nosed brands market is more permanent. (Full capacity at the harm of 8,800 liras). Price is sink in the private market than the premium. The stack is depending of the number of retailers. ( Every additional retailer need at least 500,000 K/Y). The report was provided by the manufacturing director showed that bell are different in individually amount of the volume and quality of beans. These be include the cost of beans, labor and heady cost. The company is able to save 65% of selling cost, 75% of R& ampD costs and 50% of administrative costs, if they choose the private brands market.(Director of strategic planning). backstage brands retailers give pay slowly- 90 old age instead of 30 days. (Financial officer).I took the gross revenue price as the current price 8,800 liras. Most of the expenses are decline compare to what they were in 2000 beside also the profit. Marketing expenses were no longer there because the marketing parting became 0% in this volume of the private market. The reason of having this decline is the gross allowance of the private market comparing to the adjustment of the premium market. Sales price and cost in private market are slight than what they are in the premium market. Cash flows are not stable during the year. It looks vary from quarter to another. In the cash flows, the retailers will pay in 90days (3months) item of time as what it is in the private market. The cash opining was 50% in the archetypal month and 25% in succeeding(a) 2 months. The other expenses were divided by the 12 months equally.Variable and selling costs are showing in page(5).I dont rec ommend the honest transition to private market. The profit will be lower than what it is even if it is less volatile. There is no reason for the company to lose its premium market if the profit is low, too. I would support the chance of merge the premium and the private markets together, because of the profitability there.