The longevity of Anthony's Orchard in the sector is a testament of the quality of their strategic entry and successful integration into the agricultural sector. The CEO indicated that throughout their history, "the company has experienced periods of tremendous growth" and some difficult years. As a consequence, their financial health portrays this reality. Holding all things constant, their account reflects a positive balance, and with the successful expansion into new product lines, the company's financial health is projected to improve.
The material and labor costs
The competitive nature of the global economy demands that companies cut cost in favor of more efficient production. Anthony's Orchard spends a considerable portion of their budget on material and labor costs. In fact, the human capital expenditure in production, direct and indirect, is a major contributor to their overhead cost. But at this point in their development, Anthony's Orchard must consider the burden of labor cost and technological investments, and make a logical takeoff. In economics, Sloman (2006) indicated that the opportunity cost of greater capital investments demands reduced spending in another area, usually labor as the two are juxtaposed.
Budget Income statement and Cash Flow
Budget planning at Anthonys Orchard begins in August and is usually finalized in October at the beginning of the fiscal year of the company. The director of each of the organizations department is must provide a labor and material forecast to the senior vice president of operation who compiles the estimates to arrive at the total cost estimates. After estimation of the fruit yield from the operations divisions, the senior vice president of finance then generates the final annual budget consisting of provide income statement and cash flow statements for the upcoming fiscal year. The annual budgeting is then presented to the Board of Directors and Executive Committee awaiting approval. Employment of First in First out (FIFO) accounting method helps the organization minimize crop waste. The budget is also made in a flexible manner to ensure that it responds to crop yield and business demands. The number of direct labor hours in the areas of operation such as retail store, processing and harvesting ultimately affect the variable overhead. Below is an analysis of the budgeting of the company including the income statement and cash flow.Income statement
Business units in Anthony's Orchard
Effective integration is critical to business success. According to Jiang (2009), the main functional units do not work in isolation but function together to strengthen the whole organization. The integration of marketing, finance, production, Human resources is vital in moving the company's mission from theory to practice, not merely in the daily operations but in the long-term financial performance. Furthermore, Jiang (2009) noted that these units "are all integrated and are responsible for working together so as to realize the overall objectives of the organization." The rich legacy of Anthony's Orchard as demonstrated in their treasured corporate culture is a testament of their internal integration that is expressed in the external business environment.
CPV analysis of the current years financials
Cost-volume-profit analysis is essential to establish the effects of varying cost and volume on Anthony's Orchard operating and net income. This analysis entails the following: transfer pricing, direct material costs, income statement, cash flow, sales and the cost of goods sold (COGS) for the current fiscal year of the company.
Direct material cost
Cost of goods sold (COGS)
What if analysis
CEO Frost confessed that as a part of their strategic management they must "continually monitor conditions and consider them when developing and executing strategic plans." This sort of strategic assessment is the nurse of effective management. It is also an indication that the management of Anthony's Orchard is proactive and therefore, in a good position to predict and respond appropriately to any fallout.
The potential fallout of such a major client will affect the company's bottom line but their prudent fiscal management will help them to bounce back within reasonable time. However, in safeguarding the future of their company, the expansion into new product lines is a wise move but also the management must consider global sourcing and outsourcing of production with the aim of reducing cost.
Jiang, X., 2009. Strategic management for main functional areas in an organization.
International Journal of Business and Management, 4(2), pp. 153- 157
Sloman, J., 2006. Economics, 6th edn. Essex: Pearson Education Limited.
Spilsbury, R. 2012. Global economy. Chicago, Ill, Heinemann Library.
Pacek, N. 2012. Global economy. Singapore, Marshall Cavendish Editions. http://www.books24x7.com/marc.asp?bookid=49108.
Classroom Video (Firm). 2003. The global economy. Coquitlam, B.C., Classroom Video.
Organisation for Economic Co-Operation and Development. (2012). Strategic environmental
assessment in development practice a review of recent experience. Paris, OECD. [Online] Available at: <http://public.eblib.com/choice/publicfullrecord.aspx?p=882140> Accessed [31 March. 2016].
Welsch, G. A., Hilton, R. W., & Gordon, P. N. (2010). Budgeting: profit planning and control.
Thailand, Pearson education Indochina.
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