Letter of Transmittal – Report on feasibility of the company expansion
International Business Corporation
Defence Society. Karachi.
2nd May 20___
Mrs. Salim Ahmed
Climax services limited
Hasrat Mohani Road,
Dear Mr. Salim
As you requested, here are my findings about the expansion project the company wants to start.
The evaluation of the project from the managerial, marketing, financial, location, labor, technical, technological and environmental view points exhibits that it is workable as well as profitable. The project is challenging and will bring a new era of prosperity. The company has great potentials in widening its scope and operations.
I am certain that the report will serve you as a guide and base for formulating your future policies. If there is any question please send for me.
Research General Analyst
INTRODUCTION OF TYPICAL FORMAL REPORTS
Climax Services Limited was established fifty years back. Since then it has been marketing its wide range of goods and services successfully to both national and international customers and clients. Now the company wants to expand its operations to go deep down into its acrescent market to snatch a lion’s share which is sure-fire, as the company management optimistically opines. Before allocating the physical and human resources in the project the company first wants to find the pros and cons of the project.
FACTORS FAVORING THE PROJECT
After conducting, a detailed research and study the following factors have been determined to be tremendously bearing on the project favorably.
Availability of Suitable Site
Suitable location calls for heat, light, power, water, transportation, nearness to the market, space for expansion, affordable cost of land, and parking lot. Fortunately, location with these characteristics is available. The company, I will suggest, should start negotiation with the estate brokers or vendors.
Availability of Capital
The funds are available from the reserves. The capital is needed for the purchase of land, furniture and fixture, delivery and office equipments, and other necessary, assets. It has been worked out that the total requirement of the fired is three to five million rupees which is available from the reserves.
Availability of Labor Force
The proposed project is of the nature that calls for all the three kinds of labor, namely, the skilled, semi skilled, and unskilled. In the city all these three classes are easily available at suitable remunerations.
Encouraging Government Policies
The business and industry policy of the Government of Pakistan provides many incentives for the proposed business. Some of them include rebate; exemption from income tax, duty-free import of necessary materials, and one window sanction of the project.
Existing Company Facilities
The existing company facilities of various types of fixed and current assets may be beneficially utilized without adversely affecting or hitting the present business operations. Rather, the project will facilitate the present business operations.
FACTORS NOT FAVORING THE PROJECT
There is nothing in the world which is all good and free from defects or disadvantages. So is the case with the proposed project of the company. In the following Ii/les the abuses and weaknesses of the project have been discussed enabling the reader to make a sound decision.
Competition in the market is very tough – for two reasons:
a. Due to government’s liberal incentives for the industry, there is a great number of companies in the market causing unbeatable and extreme competition.
b. Smuggling of the goods has spoiled the market. Scranny profits are the result of smuggling.
Non availability of Experienced Staff
Although all the three classes of labor are abundantly available, the experienced managerial staff fit to the peculiar requirements and job descriptions of the company is scarce and not easily available.
Low Profits at Initial Stage
The profit, as stated above, is getting scranny due to smuggling and competition. But the thing does not end up here. The company will have to face the profits at still lower level in its initial stages. But the author opines that it is not a serious problem since most of the projects do not generate lucrative profits at the initial stages.
OVERALL SOUNDNESS OR FEASIBILITY OF THE PROJECT
It will be observed from the above facts that the factors favoring the project are greater and more important than the factors not favoring the project. If the disfavoring factors are averted the proposed project will become very much promising and favorable.
The most disfavoring factor, severe competition, can be neutralized by creating a unique, unexcelled, and uncommon quality and characteristic in the goods and services. Aggressive advertising can also be used to popularize the product.
Non availability of experienced staff can be neutralized by hiring the managers from within the company by promotion, which in turn will boost up the morale oF the employees of the company.
THE FINAL WORD
On the basis of analytical study of the project it may be deduced that the project is encouraging Feasible, and promising. I am strongly convinced that the company should immediately start making the blue prints of the project and put it into operation within this financial year because this period is very expedient for the project. The delay will make the project costlier. Moreover, the existing products will be instrumental in the promotion of the new product.