Societa per Azioni- Decision Making

Summary

Fonderia di Torino was founded in 1912 by Benito Cerini. The company was created to produce castings for the armaments industry. In the 1920's and 1930's the company expanded into the automotive industry. Benito Cerini foresaw the future demand for precision metal casting and revamped the company to meet the demand. The company grew slowly but steadily. Fonderia Di Cerini has several unknown variables that should be considered when making the decision of whether the new machine should be purchased. One of the factors is that there are twenty-two machine operators and three maintenance workers that may not be allowed to be laid off due to union agreements. If Francesca Cerini could negotiate with the union and hire workers that are not needed for the Vulcan Mold-Maker (25 workers at €4.13/hour) as janitors, then the company would never achieve payback and would have a negative NPV of €455,093. If Cerini had to hire the unused workers at their current rate of pay (€7.33/hour for machine workers and €7.85/hour for the maintenance workers), then new project would actually cost more to operate than current machines. If the machine were purchased the company would have to be able to agree with the labour union on the reduction of twenty-five employees without financially stressing the company. The company could negotiate a buyout of the employees. The buyout could not exceed €144,000 or €5,760 per employee because the NPV would be negative at that point. If company feels a buyout is possible at this price they could go forward with the project. The Adoption of this machine will give contentious competitiveness through efficiency and low costs. Firms need to be able to swiftly adopt new technology and, because of its high costs, maximize its usage. High level of repeat customers: Having a loyal customer base where customers become repeat purchasers of goods and services is an important key success factor. It provides a higher degree of revenue stability. Low defect rate in production and effective quality control: The associated labour and machine time spent on a product that is defective equates to a loss. It is important to minimize these errors as they reduce the firm's productive output. Access to multi skilled and flexible workforce: The increasing sophistication of the technology requires an increasingly skilled workforce. Their skills and knowledge tailor and configure processes to suit customer requirements. The new Vulcan Mold-Maker Machine analysis clearly indicates that company should replace old machine.

Fonderia Di Torino S.P.A- Decision Making

Introduction

The joint-stock company (SpA) is a corporation, in which the investments of members are in action, with legal personality and with perfect segregated liability. This means that the share capital is divided into a number of titles, each of which incorporates a certain amount of participation and social rights related to the share itself. In order to advice senior manager of Fonderia di Torino S.p.A. to purchase a new machine; we will analyze the main feature on which the decision making is ...