Case study report

Case study report

1.Question : How much money does Steve receive when he takes the order? Answer: He receives ＄1000 when he takes the order.

Question: How much does the system cost to build and install?

Answer: It costs ＄6920 to build and install.

Question: When does he receive final payment?

Answer: He receives final payment on day 65.

2.Table TIME

DAY1 DAY7 DAY14 DAY28 DAY35 DAY65 TRANSACTION

1000 3920 1200 1500 300 9000 BALANCE

1000 2920 4120 5620 5920 4080 Bar chart

-8000-6000

-4000

-2000

2000

4000

6000

8000

10000

DAY1DAY7DAY14DAY28DAY35DASY65transaction balance

3 It is obvious that the company has been lack of money since day 7. Then the cash flow gap doesn ’t stop widening until the customer pays the final money.

In this case, the owners Steve and Sue have to loan money from their families, friends or even banks. Or they won ’t take advantage of early settlement discount and people will not work or them because of a shortage of wages. So anyhow they need to have a try. And if they are lucky enough to enjoy a good reputation and possess valuable property for guarantee, maybe they can get a loan from the bank to reduce the gap. And of course on account of money is scarce capital, it has to be respected, so the owners have to pay interest on it.

But why are they short of money? Well, in my opinion,this problem can be explained from two espects--one is fewer sources, the other is higher cost. On the one hand, as we all know, the company is owned by only two people, so it ’s similar to

family-run workshop. So it’s normal that they don’t have enough money to run the company. On the other hand, the company is too small to form a scale economy. So workers can do nearly all things,. As Adam Smith said in the wealth of nations “division of labor is a source of national wealth increase”,so the company is failed to raise efficiency. In other words, it has to produce same products with high labor costs. Therefor it can only end up in failing.

And yes, the company in this artical is a representative of many small companies. As far as I’m concerned, its failing is not a coincidence. Yes I mean most small companies will finally be weeded out. But why?

Here I want to compare the small companies with big companies (Maybe the modern corporation is more suitable for them). First, in my view, the modern corporations usually adopt a form called Corporation Limited or Co,Ltd and they often own the abundant capital. So they can raise money either by issuing shares or by loaning from banks. But it’s difficult for the small companies .

Second, just like I have said before, the small companies are the same as family--run workshop, on the contrary, the morden corporations use production line. And the workers themselves need only one skilled action. We can image how efficient it is and how low the labour costs are. Even the corporations can control the raw materials and decide the price of them. So if the corporations compete with the small companies, they can hold down prices,. Of course, they don’t care about the temporary loss, but the small companies would fail because of this.

Third, the corporations often have the r&d team. That mesns they can update their products with creation and new technology. And it can not only do good to costs but also be necessary to diversity of products. However it’s a challenge and a tough task for the small companies.

Finally the small companies are weak in brand effect.

All in all, I think these espects lead to failing of the small companies.