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Report: Mayday Printers.

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Introduction

REPORT: MAYDAY PRINTERS The firm, Mayday Printers, from my analysis is operating in a niche market (a small segment of a larger market). This means they are aiming at a relatively small target market and have a specialised service designed to meet the specific needs of the niche. The specialised service Mayday Printers offer is a twenty-four hour turnaround so they guarantee they can finish printing anything you want and it will be ready for you in a day to collect. They also can then charge a premium price for this specialised service because they must make their profits from a small sales volume as they are in a niche market. The problems faced by Mayday Printers are that overheads can not be spread over a high output level. So fixed costs per unit are high therefore prices must be high but the service must be highly valued by the niche aimed at, like the service Mayday Printers provide which is differentiated from other services because they have such a quick turnaround from receiving the order and processing it therefore they can charge a premium price for it. If we now look at what factors can allow Mayday Printers to achieve such an efficient service we shall see the importance of the machinery and what effect a new printer will have. A flexible and reliable workforce is needed because if there is an order made for example at night the workforce must be expected to work through the night to process it ...read more.

Middle

The advantage of taking out a bank loan is that after the 10 year period when the entire loan has been paid off the printer will be Mayday Printer's property. If they lease the printer it would not be their property at any point. Leasing over a long period of time is more expensive than the outright purchase of the printer. The loan is cheaper in the loan term as Mayday printer would pay �934 per month compared to the �1,500 per month for leasing, over 10 years the loan is cheaper and the printer becomes their property. Loans cannot be secured on assets which are leased, so when the loan is repaid and the printer is their asset they can secure a loan on it but if they leased a printer they cannot secure a loan on it as it is not their property. A loan also allows you to preserve your cash and working capital. Business and bank know precisely what the repayments of the loan will be and how much interest is payable and when. This makes cash flow planning more predictable you can organize your loan schedule to match your payments with the projected cash flows from the proceeds of the funds this will help you minimise the drain on your working capital. The loan is committed; the business does not have to worry about the loan being withdrawn whilst it complies with he terms of the loan. ...read more.

Conclusion

These may be provided by Mayday Printers and could affect their credit rating.The end user bears all the risk of equipment devaluation because of new technology as at the end of the loan the property is yours and by that time new printers may have come out, with a lease you can easily upgrade to a new printer. Overall after analysis of both options I feel the bank loan financially is more appealing as it works out at �934 per month which is less expensive than leasing the printer for �1,500. However if the printer breaks down under the lese the leasing company will fix it. Also the leases is a fixed rate but can be called in whenever the leasing company desires. I feel the loan will be the best option as at the end of the repayment period the printer will be Mayday Printer's property and after that it will be a great asset as then the revenue received will be profit. During the repayment period it will pay for itself as the company will have expanded and increased capacity and will be able to take more orders, with a lease more orders a month will be needed before they make profit as they have to pay a higher amount per month. With a lease it will never be their property and so if they lease it for ten years it is better to outright buy it. The loan is financially more profitable and manageable for Mayday Printers. It will in the long term benefit the business more and help them expand and grow. ...read more.

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