Airplane: The Business Purchase

On Possible Buying of Piper Chieftain

A personal assessment of the situation of the possible purchase of Piper Chieftain by Keith Russell tells me he should not buy this airplane. The reason is many uncertainties and fluctuations associated with the numerous associated costs, benefits, and the future macro-economic climate of Australia. Realistic expectations of negative character prevail with the Piper Chieftain’s 800 hours per year of potential active use as the main reason to avoid buying, at least for the time being. Gaining competitive advantage through technology acquisition and service expansion is a tried and true tactic, but flawed evaluation can turn trade-offs into losses.

On Risks and Uncertainties of Buying Expensive and Complex Material Assets

Many uncertainties and risks to profitability surround the business purchase of an airplane and any other similar complex equipment. One should consider its realistic active future exploitation, shelf life, and the cost of related consumables such as fuel, spare parts, and ancillary equipment for communication and customer services. Price changes in these can turn such a significant new acquisition into either a financial burden or a source of enrichment for the organization and its owner. For small firms, these monetary factors carry the same weight as the purchase price of the primary item in a buying decision.

On Production Alternatives for Wellyntoy

I think the second alternative suggested by the production manager is the best one for Wellyntoy. It is the safest production solution; it also goes along with Gassmann’s demand estimations. However, it would also generate comparatively less profit than the other two. The suggestion of field sales representatives looks the most financially promising, but low actual demand and sales of Dynatrons would lead to critical monetary losses for the commercial entity. Gassmann’s favorite third alternative would give Wellyntoy a substantial market advantage, but the success would depend heavily on sales of standard Dynatron variants.

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