Analytical Reports 22 unread replies.22 replies. Organizing Reports: Structuring

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Analytical Reports

22 unread replies.22 replies.

Organizing Reports: Structuring Analytical Reports

Three years ago, your company (a carpet manufacturer) modernized its Georgia plant in anticipation of increasing demand for carpets. Because of the depressed housing market, the increase in demand for new carpets has been slow to materialize. As a result, the company has excess capacity at its Georgia and California plants. On the basis of your research, you have recommended that the company close the California plant. The company president, J. P. Lawrence, has asked you to prepare a justification report to support your recommendation. Here are the facts you gathered by interviewing the respective plant managers:

Operational Statistics
• Georgia plant: This plant has newer equipment, productivity is higher, it employs 100 nonunion production workers, and it ships $12 million in carpets a year. The hourly base wage is $16.
• California plant: California plant employs 80 union production workers and ships $8 million in carpets a year. The hourly base wage is $20.

Financial Implications
• Savings by closing California plant: (1) Increase productivity by 17%; (2) reduce labor costs by 20% (total labor savings would be $1 million per year; see assumptions); (3) annual local tax savings of $120,000 (Georgia has a more favorable tax climate).
• Sale of Pomona, California, land: Purchased in 1952 for $200,000. Current market value $2.5 million. Net profit (after capital gains tax) over $1 million.
• Sale of plant and equipment: Fully depreciated. Any proceeds a windfall.
• Costs of closing California plant: One-time deductible charge of $250,000 (relocation costs of $100,000 and severance payments totaling $150,000).

Assumptions
• Transfer 5 workers from California to Georgia. • Hire 45 new workers in Georgia. • Lay off 75 workers in California. • Georgia plant would require a total of 150 workers to
produce the combined volume of both plants.

QUESTIONS TO PONDER
a. Which approach (focus on conclusions, recommendations, or logical arguments) will you use to structure your report to the president? Why?
b. Suppose this report were to be circulated to plant managers and supervisors instead. What changes, if any, might you make in your approach?
c. List some conclusions that you might draw from the above information to use in your report.
d. Using the structure you selected for your report to the president, draft a final report outline with first- and second-level informative headings.

Explanation / Answer

a. I would use the 'focus on logical arguments' to structure my report to the president. The reason is that the President has asked me to make a justification report as to why the California plant has to be closed. My report will use this approach to logically build my earlier recommendation of closing the California plant. The report will provide the rational for my decision. I will use the '2+2 = 4 approach' and show the President the main reasons behind my recommendation. The main reasons are the cost savings through reduced labor costs, increase in productivity and tax savings.

b. If the report was meant for plant managers and supervisors, then 'focus on conclusions' approach can be used. This approach is used as the plant managers and supervisors are likely to be receptive and will most likely agree with the conclusions presented by me. I will present my conclusion and support it with evidence in the form of benefits that will accrue after closing the California plant.

c. The conclusions that i might draw are: (i) Operating California plant is unviable in the current demand situation and will be a drag on company's financials. (ii) Closing down the plant will result in considerable cost savings for the organization

d.

Introduction (first level informative headings) - This part will discuss the current situation at hand in terms of excess capacity, slowdown in demand and the result of my investigations and research.

Conclusion/recommendations (second level informative headings) - This part will discuss recommendations on the basis of my analysis. Details will be provided on hoe closing down the California plant will result in cost savings, increased productivity and tax savings.

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