Kenan Toy Company Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Kenan Toy Company Case Study Analysis

However, while it is ideal to purchase a completely new machine without financial implications; it is unrealistic for most businesses, especially for relatively small or start-up businesses.

Buying new machines is often an expensive job, which can have a significant impact on a company’s cash flow, due to the financial constraints. In some cases, this might require reduced business investment in other areas of the business, which could slow down the growth.

Fortunately, there is a number of financing options available to the companies that invest in new assets, including: bank loans and asset financing. Asset financing allows a business to acquire new assets without them having to pay the full cost of the machine in advance.Instead, the company agrees to pay a monthly fee, which can reduce the financial burden of buying a new machine.

Asset financing offers businesses the flexibility of buying new machines without having to wait for the company’s cash flow to be sufficient to finance the machines at once. In addition, asset financing providers are generally more flexible than other lenders, including banks.

Benefits of Buying a New Machine:

With financial support, buying new machines is a viable option for many businesses,so what are the benefits of buying a new machine?

Improve Capacity:

Because new machines are often first in class in terms of technology and functionality. New machines can have a positive impact on business’s efficiency, enabling the employees to work faster and have an increased productivity. Maintaining the technology leadership can be a strategic way of maintaining a competitive advantage.

Property:

Although leasing is an option to purchase machinery, many companies prefer ownership because of the simplicity of ownership - there wouldn’t be any need of signing agreements, negotiations or contracts. This property would also allow the company to decide if the machine needs to be maintained and the sold later or not.

Improve Security:

Even if the equipment is well maintained; the safety risks posed by newer equipment can generally be avoided. New machinery reduces the risk of injury to workers at work, as safety concerns are the main areas where new machinery needs to be further developed.

Save Time:

The new machine might not need any repair, which can help the business to avoid delays and keep the project up to date. This will have a huge positive impact on the company’s productivity.

Tax Benefits:

In fact, the cost of a new machine might be higher, but there are also options for tax breaks.

Professional Image:

In addition to improving productivity, owning a new machine also shows that your business is proud of its work and you will get the best service if you provide the best service to your customers......................................

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