Tenalpina Tools Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Tenalpina Tools Case Study Solution

Introduction

The company is an existing enterprise which has been purchased by a fledgling entrepreneur Giulia Ferrato, a recent graduate, provided with an opportunity of controlling the enterprise. The funding is also small time while the existing workers of the company are expected to bring in their expertise and continue on the initial employment contract.

The company provides pitons for rock climbers and household effects and is contemplating expansion into production of hammers to increase the compatibility and ease of the customers using the products. The company has been assured of continuity in the business but under the new leadership plans on expansion leading to initial uncertainties associated with those initial steps including gaining more capital and more costs.

The investment of the company is in form of self-financing of the owner and with growth in production the company will have to seek new forms of funding. However, before funding and making plans for expansion, the owner needs to ascertain whether there is sufficient demand for the product.

Problem Statement

Deviating the existing production process and expand to production of other goods is costly for any company as the expansion requires more funding and incurs more costs. Furthermore, the generation of profits is still uncertain as there are external forces that may impact the company adversely. There are financial uncertainties, which have risen due to the decision to expand. The other problem faced by the company is that the demand is uncertain leading to uncertainties regarding funding the new venture and expansion into producing hammers with competitors already existing in the hammer producing market.

Financial Analysis

The cost of the company is fairly low. Even after introducing new machinery the annual cost and annual production are quite mismatched. The depreciation is the highest part of the cost. For the purpose of gross profit’s computation all the cost have been accumulated in the cost of sales. This is because limited information regarding cost have been provided. The cost has been distributed between production of piston and hammers. The ratio of expected sales is 4200 pistons to 350 hammers at the ratio of 12:1. The cost has been allocated between hammer and piston including the adjustment for the additional cost incurred for producing hammers. The additional cost has only been adjusted in the hammer’s production only.

Tenalpina Tools Harvard Case Solution & Analysis

Break Even Analysis

Annual production of the company is specified to the extent to which the owner has entered into contract with customers who have pre-determined the number of products they want to purchase over the specified period of time. In case of multiple products the Cost, Volume and Profit (CVP) analysis are used in the ratio of ratio of expected sales is 4200 pistons to 350 hammers at the ratio of 12:1...................

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