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Extra info for ACCA P3 Business Analysis: Practice and Revision Kit
Much of the machinery used by ML's customers is quite old so components are no longer available from the original manufacturers, most of which are large multinational companies. tud The business model is very traditional. The sales manager receives orders by telephone or fax and if the required component has been supplied before, the sales manager checks the price list and informs the customer. ML holds very low levels of finished goods inventory of only of the most popular components. cc as If the component has not been made before, an ML engineer obtains the original component drawings (from ML archives or the original manufacturer, produces detailed engineering drawings, a list of materials required, and an estimate of the labour hours needed.
Most customers pay within 30 days, by cash or cheque. ML does not have a problem with bad debts. An increasing proportion of ML's business is now transacted in US dollars, as Arcadian currencies tend to be unstable. fre ML prides itself on customer service and receives lots of repeat business. ML grew significantly for a number of years as a result of 'word of mouth' recommendations but has not experienced growth for the last two years, although turnover and profit have remained stable. ML uses only very basic Information Systems (IS), and reports its performance using a simple comparison between budget and actual, which is produced using a spreadsheet package.
Co m Although he has never been in the navy, Ron is obsessed by ships, sailing and naval history. He is known to everyone as 'The Commander' and this is how he expects his employees to address him. He increasingly spends time on his own boat, an expensive motor cruiser, which is moored in the local harbour twenty minutes drive away. 30 pm to ensure that they do not leave early. However, he spends large parts of the working day on his boat, although he can be contacted by mobile telephone. Employees who arrive late for work have to immediately explain the circumstances to Ron.