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1.Local Market Data:

Discuss the current state of the surrounding housing market (which is the area of the properties.)

For example, what is the direct distance to shops, to transport, to schools, to the centre of the city and to other significant local land-marks?  

What are other aspects about the local area which may affect values?

In this section of your report (Task 1) include a map of the area with key local features pinned. Be sure to note elements of the local market/area that would be particularly appealing to short-term-stay guests.

2.Identify 2 residential properties: one house (free-standing) and also one unit/apartment:

Discuss the process you took in locating and inspecting each property.

Describe each property including the land and also the building. (See your tutor for a tip on the land.)

Briefly state why the unit could successfully be used for short-stays. Eg: it has secure parking, is close to a train station, has separate access from the street, is close to a popular beach or city-center, etc.

* Include photos (max of 4 photos) of each property; including front view, street view and a key feature,

* include a locational map, including key local amenities and your 2 residential properties also.

If appropriate, you may use the map from Task 1, now with your properties added.

3.Financial information:

What is the current (estimated) sale price of each property?         

What is the annual rental amount? What is the (annual) yield/return/ROI?

Compare the unit’s potential annual income both as a long-term (permanent) and short-stay rental.

How did you find the sale price and rental information for the properties?

What method did you use to determine the yield? (Show your calculations.)

This section should be brief and simple; as detailed financial info will be done in Assignment 2.

  • Inadequate or improper inspection or not conducted.
  • Information somewhat relevant to inspection task.
  • Some information irrelevant.
  • Minimal description on physical and legal characteristics of the market.
  • Inadequate range & depth of information.
  • Inspection conducted poorly but some attempt made to identify main characteristics of the market.
  • A reasonable range and detail of information.
  • Information generally relevant to the task.
  • Adequate range & depth of information but still relevant information missing.
  • Inspection generally well performed but cursory.
  • Not all relevant information sourced.
  • A good range of relevant credible sources of information selected.

Local Market Data

The first step of seeking an effective solution to a problem is the proper identification of the problem to be resolved itself

While making the review of the past years orders by the Rattunde & Co.GmbH, it was discovered that most of their clients with the profitable projects were representing the metal tube processing industry, hence one of its partners naming Rattunde suggested that that as the level of competition in the industry manufacturing the machine used for cutting tubes would be much profitable with them as no major innovations were made in this area for last ten years, hence the he planned to manufacture such types of machine that can not only be used in cutting of tubes, but also for brushing ,washing ,drying and stacking them too as a measure of innovation.

In addition to the manufacture, he planned to introduce an effective after sales service of these machines for which it is proposed that a modem shall be inbuilt into the new machine so that using this modem he engineers of the Rattunde  & Co.GmbH can directly access the machines of clients to provide it’s after sales service. In this case the Rattunde & Co.GmbH shall manufacture only this type of machine. But this option has the limitation that the client may not permit the outside engineers granting them full access in their internal network concerning the security issues. Again the development of this new machine shall take the further period of the six months thereby resulting into the low income generation during this period because of the significant costs to be incurred in the design, assembly and testing of this new machine.

While the another partner naming Prokschs suggested that as the group still receives the order for the manufacture of the other types of machines such as numerically controlled workstations are still being received by the company, hence it should continue the manufacture of these types of machines too. But it would turn down the plan of the Rattunde. Hence the problem in this case is whether to adopt the product development plan proposed by Rattunde or by Prokschs.

The major criteria to make our decision would be as follows

  1. The cost structure of the new machine

The cost structure of the new machine involves the cost of designing, testing and assembling the new product which has been considered similar that of the existing one.

  1. The impact of the manufacture of the new machine on the revenue of the Rattunde & Co. Gmbh.

As in the give case it has been told that the new product shall take the period of at least six months for its development, hence during such development phase it shall become difficult for the company to generate higher level of income because of the huge cost of development of this product.

  1. Marketing efforts and associated costs of marketing required for the new product

In the given case for the tube industry there is only biannual trade fair that was not proved beneficial in the past for the company. Moreover the amount of the advertising expenditure is also going to be a major factor to decide amongst the alternative.

  1. The prospective demand of the new product

As it is being told that in future the Rattunde & Co. Gmbh.can sell at least three machines per year which may be increased by one in every year.

  1. The level of competition

Identify 2 residential properties

As it is quite difficult to enter a market of stiff competition, but if the number of competitors get reduced then it becomes easier to enter.

The process of the alternative development suggests the numerous ways of solving the problem for which this model is being used

Under the given case there are following alternatives available with the Rattunde & Co.GmbH.

  1. Follow the advice of Rattunde by focusing on only the manufacture of the new product that is the machine that cut tubes so that the company can focus only one product.
  2. The second option may be to fully drop the idea of the manufacture of the new machine along with the additional features to be added for the future growth.
  3. The third alternative should be the selection of the appropriate product mix so that to increase the overall contribution of the Rattunde & Co. GmbH.

While performing the analysis it is to be kept in mind that analysis shall involve both the subjective and the objective one. It is said to be subjective when analysis is done on the basis of the qualitative data, whereas the same becomes the objective one when it is done with the help of the quantitative data.

As now from the above there are three alternatives opted for, hence each of these alternatives shall be evaluated on the basis of the criteria selected above to reach to make our decision.

Considering the first alternative of manufacturing the only one machine use to cut tubes, the costs of which are much similar to the cost structure presently found in the Rattunde &co. Gmbh. Hence it is being expected that in the long run this cost structure won’t bring any instability in the Rattunde &co. GmbH.

In this case it seems that the only sell of this new product shall not be able to raise the overall revenue level.

Being the new product hence an effective marketing strategy along with the consideration in terms of advertising expenditure is also required to be given the due consideration. As one of the promotion strategy for this kind of product though a trade fair conducted annually could not provide the satisfactory result and additionally demanding the advertising expenditure for amounting to 100000 euro, that are creating hurdle for it.

In terms of prospective market development as it could be seen that due to the additional feature added with a view to providing better after sales service, but it can cause resistance in the minds of the tentative clients who found it as an interference with their personal liberty that is creating limitation to raise its demand.

In terms of level of competition as there are very few competitors which are only three in number, hence it has a positive impact on the future prospect of the product.

The second option of dropping the whole idea of the new product can cause the contribution loss proposed to come from the new product.

The third option seems to be much better as it suggests that there should be the appropriate product mix of the new machine along with the old ones as the demand for the old machines are still present and the Rattunde & Co. GmbH enjoys a good reputation of its existing products too.

From the above analysis it is being recommended that neither it is beneficial to adopt the policy of manufacturing the only machine to be used for cutting the tubes nor to fully drop the idea of such manufacture, but the Rattunde & Co. GmbH should find a way in between by selecting the appropriate product mix in terms of Machine used to cut the tubes, Workstations and other one.

Once the decision is taken then there is the need of the development of the action which is generally developed by the managers. While in the process of such development it provides the basic ideas of the issues that act as hurdles to implement the decision taken.

In order to implement the decision already taken the following action plan is recommended:

  1. Calculate the total amount of available resources
  2. Estimate the demand of each of the Rattunde & Co. GmbH’s product demand in the market.
  3. Calculate the desired level of the resources to be utilized in the manufacture of this products
  4. Determine the key factor of the production.
  5. Calculate the Contribution per unit of each and every product proposed to be manufactured
  6. Calculate the contribution per unit of the key factor.
  7. Rank the products as per the contribution per unit of key factor basis
  8. Calculate the quantity to be manufactured based on the above rankings or in order of preference.
  9. Start the production as per the above calculation.

Income Statement (Figures in euro 000)

Particulars

1999

Net sales

1262

COGS

566.65

Gross Profit

695.35

Salary with social security

340

Depreciation

93.3

Other Expenses

357

EBDIT

-94.95

Interest Expenses

5

Extraordinary Expenses

0

Taxes

0

Dividends

0

Net Profit/Loss

-99.95

Balance sheet( Figures in Euro 000)

Particulars

1999

Assets

Cash

Nil

Work in progress

Nil

Goods for sale

Nil

A/R

200

Other Current Assets

9

Fixed Assets

311

Total Assets

520

Liabilities

A/P

83

Provisions

24

Prepayments from Clients

182

Other Short term liabilities

128.30

Bank Loan

0

Bank O/D

1.65

Liabilities to shareholders

185

Total Liabilities

Owner’s Equity

Shareholder’s Equity

28

Retained earnings

-12

Reserves

-99.95

Total Owner’s equity

-83.95

Total Liabilities and owner’s equity

520

Particulars

Amount

A. Cash Flow from operating activities

Net Profit as per P/L

-99.95

Add : Depreciation

     93.3

           Interest Expenses

       5

Add : Decrease in current assets &increase in current liabilities

Less: Increase in current assets & Decrease in current liabilities

Cash flow from operating activities

-1.65

Note : it has been assumed that all sales were made in cash and no credit sales of the new machines as well as the existing machine

Conclusion

Based on the above discussion it is quite evident that it is the external environmental component of the business like the technology, economy, socio-cultural consideration that brought significant changes in the decision making process of the organization. This is clearly evident from the study of historical data of the Rattunde & co. GmbH since 1991 to 1999 due to which the unstructured problem of new product development took birth. But for its analysis nothing much was known. Hence the six steps of problem solving provided a logical or reasonable basis for the solution of this problem. One of the major feature of the unstructured problem is that the prospect of the quantification is very less and if it is quantified then it results in to the oversimplification too and at the same time demands some sort of speculative assumptions too.

References

Alexander, F.K. 2016. "The Changing Face of Accountability." The Journal of Higher Education 71 (4): 411-431.

Belton, P. 2017. Competitive Strategy: Creating and Sustaining Superior Performance. Vol. 2. London: Macat International ltd.

Choy, Y. K. 2018. "Cost-benefit Analysis, Values, Wellbeing and Ethics: An Indigenous Worldview Analysis." Ecological Economics 145. https://doi.org/10.1016/j.ecolecon.2017.08.005.

Fay, R, and E.M Negangard. 2017. "Manual journal entry testing : Data analytics and the risk of fraud." Journal of Accounting Education 38: 37-49.

Goldmann, K. 2016. "Financial Liquidity and Profitability Management in Practice of Polish Business." Financial Environment and Business Development 4 (3): 103-112.

Heminway, J.M. 2017. "Shareholder Wealth Maximization as a Function of Statutes, Decisional Law, and Organic Documents." SSRN 1-35.

Jefferson, M. 2017. "Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland ." Technological Forecasting and Social Change 353-354.

Linden, B, and R.E Freeman. 2017. "Profit and Other Values: Thick Evaluation in Decision Making." Business Ethics Quarterly 27 (3): 353-379. https://doi.org/10.1017/beq.2017.1.

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