Reasons for falling profits

Prices
Production
Demand
Staff morale

The future

Valentino’s owners have set aside €1,5 million to invest in their company so that it continues to expand and becomes an international business. Here is an excerpt from a company profile that a business journal did recently: Valentino can continue to grow ,but only if it develops new products and finds new markets.

So, the problem is: how should Valentino invest the €1,5 million? The following chart (Investment Options) lists the ways in which it could do that.

Investment Options

Option	Cost	Benefit
1. Buy new machinery	€ 200,000	End the delays caused by the old machines breaking down
2. Invest in more research and development	€ 200,00	Develop new products such as a low-fat chocolate drink, new biscuits/cakes
3.Buy out a local competitor	€ 1,5 million	Reduce local competition
4. Set up a factory in the US	€ 1,3 million	Manufacture chocolates in a major new market
5. Finance a market survey and research trips to the US	€ 100,000	Assess the market potential for valentine products. Contact agents
6. Invest in an existing group of cafes	€ 500,000	Become a partner in cafes which sell and promote Valentino chocolates.
7. Set up online sales	€ 150, 000	Increase sales and profits
8. Buy a new fleet of cars	€ 500, 000	Increase motivation of the sales staff.

Task 2.

Imagine that you are directors of Valentino. Meet to discuss your investment plan:

1. Work in pairs. Decide how to spend the 1, 5 million. Prepare a presentation of your investment plan with reasons for your choices.

2. Meet as one group and present your ideas.

3. As one group, agree on a final investment plan.

Unit 17 Planning

Exercise 1.

Discuss the following statements.

1. Making lists of things to do is a waste of time.

2. You should plan your retirement from an early age.

3. If you make a plan you should stick to it.

Exercise 2.

(CD) A Managing Director talks about the planning of a new sales office in the United states. Listen and complete the extract:

Recently we decided to open a new sales office in New York. First I arranged a (1) …with the finance department to discuss the project. We prepared a (2) … with details of the various costs involved. Then we collected (3) ….about possible locations for the new office. We considered two (4) ... - one in Greenwich village and the other near central park. After doing some more (5) … I wrote a (6) … for the board of directors.

Unfortunately, we made a mistake when we estimated the (7) … as the exchange rate changed, and so we didn’t keep within our (8)… We overspent by almost 20 per cent. We had to rearrange the (9) … for moving into the building because the office was not redecorated in time. The board of directors was unhappy because new didn’t meet the (10) … for opening the office by 15 December. It finally opened in January. However, we forecast (11) … of at least $ 500,000 in the first year.

Listening

(CD) Task 1.

Teresa Graham OBE is an advised to many businesses and also to the UK government’s Better Regulation Commission. In the first part of the interview, she talks about what is important when planning in business. Listen and complete these notes using up to three words in each time.

Keys to a good planning:

1. It’s important to have a clear idea about …

2. …for your business very carefully, and don’t reinvent the wheel.

3. This structure will then lead you logically through …that you need to do.

4. Tip: desktop market research is very valuable, but research carried out …clients who really want to buy your service or your product breathes life into any plan.

5. So use your clients to market test your ideas and help you to …

(CD)Task 2.