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torical car work had to be declined recently. The major bottleneck is the spray booth where cars have to remain for a minimum drying period. The company has two spray booths but one can only be used for parts not full bodies. The company also had a problem with the parking of vehicles during the day and could only use the spare ground for parking during dry weather. In wet weather shuffling cars was not only frustrating but an inefficient use of staff time.
Some months ago Juan had asked Roberto and John to investigate the feasibility of expanding the business and John has just completed an overseas trip (a combination of work and holiday with his wife and family) during which he completed some research into the latest techniques used in the smash repair business in Europe. He had also studied the latest spray booth technology and had been very impressed by a new German spray booth. The trip had been very expensive and it had cost $37,500 for airfares, accommodation and meals. As most of the trip was business the company has paid for this expense. On returning from the trip John met with Juan, Roberto and Maria to outline an idea that he had been considering for some time.
John stated at the meeting that he believed that if the company added a new spray booth and workshop at the back of the vacant block he would be able to significantly increase business particularly in the restoration of vintage and historical cars. Car clubs were growing and keeping the cars in pristine condition was important to the enthusiasts in these clubs. FBSR had built up a solid reputation for high quality work in this area and this work provided far bigger margins than insurance work. He firmly believed that FBSR would also be able to take on more insurance work with the increased spraying capacity. John tabled a projected revenue forecast for both the historical car business and increased insurance work. The forecast revenue is detailed in Appendix 1. He also outlined some preliminary estimates on the costs involved. The building to house the spray booth and workshop would cost about $250,000 to erect. The building would be constructed on the back half of the block and the front half of the block would be converted to an all weather car park for cars awaiting repair and customer and staff parking which would improve efficiency. The costs of the car park construction are estimated to be $75,000. The biggest cost would be the spray booth and the associated equipment. He had a firm quote from the German company and the total cost including all shipping, installation and testing would be $350,000.
Juan was very excited and said this was just what he had anticipated and would like to see the company at least double its size before he finally stood down as Chairman of the company.https://www.51lunwen.org/daixieassignment/ Both Maria and Robert were less enthusiastic. Maria argued that the company was profitable and provided a good return to the family particularly those that work in the company. A larger company would only bring more problems and John had not considered the extra staff that would be needed to work in the new premises. The land was very valuable and a local company had recently offered $235,000 for the block. Maria firmly believed that the company should take the money and carry on the business at current levels of activity. At this Juan got angry and stated that the land had only cost the equivalent of $5,000 which is next to nothing and was bought for the