Cafes Monte Case Essay

The lodge regain in Milan, Italy.It was found by Mario Salvetti as a manufacturer and distributor of grant finest coffees. The company faces a hard decision that may affect their future. The company wants to know whether or not they should keep on the job(p) in the same investing. An important meeting was in that location among the top management teams members to cover the future of the company. The companys performance was just in 2000. Profit was shown at the financial statement. Giacomo Salvetti the chief executive officer of the company needs to decide which to choose as the business strategy for the company 1) Keep operative in the premium coffee food securities industry.2) Transfer to the toffee-nosed brands market.The current subject matter of the coffee production in 2000 was 350,000 K/M , with added additional capacity of 150,000K/M. The apostrophize of the additional units was 6 billion liras. More facts close the profitability and the liquidity were required beside the cash lean and the profit plan to quantify strategic alternatives and to aid in making this decision. The idea of changing was not easy to the CEO to accept without a top out image of the financial consequences. The report was provided by the selling manager showed that the premium market is very volatile.On the other hand, the confidential brands market is more stable. (Full capacity at the price of 8,800 liras). Price is lower in the hugger-mugger market than the premium. The volume is depending of the number of retailers. ( every additional retailer need at to the lowest degree 500,000 K/Y). The report was provided by the manufacturing director showed that be are different in each marrow of the volume and quality of beans. These bells include the cost of beans, labor and fixed cost. The company is able to excuse 65% of selling costs, 75% of R&D costs and 50% of administrative costs, if they choose the nonpublic brands market.(Director of strategic planning) . Private brands retailers will buckle under slowly- 90 days instead of 30 days. (Financial officer).I took the gross revenue price as the current price 8,800 liras. just about of the expenses are decline compare to what they were in 2000 beside to a fault the profit. Marketing expenses were no longer there because the selling percentage became 0% in this volume of the private market. The reason of having this decline is the gross margin of the private market comparing to the margin of the premium market. gross sales price and cost in private market are less than what they are in the premium market. Cash flows are not stable during the year. It looks pull up stakes from quarter to another. In the cash flows, the retailers will pay in 90days (3months) period of time as what it is in the private market. The cash opining was 50% in the setoff month and 25% in next 2 months. The other expenses were divided by the 12 months equally. inconstant and selling costs are showing in page( 5).I dont recommend the salutary 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 immix the premium and the private markets together, because of the profitability there.