Estrada’s Issue and Recommendation

Declining sales

Implications• Revenue decrease thus profitability of the company is

put into questions. • It may incur loss and disrupt company’s growth and

development. Recommendation• Invest in marketing department. • This is done to promote company’s product. This is done

through extensive advertising, promotion and advertising strategy. (For example: use of 4P’s strategy)

Increase in operating costs

Implications• lead to loss and reduce profitability, (may lead to

other problems such as decrease in credit rating, cash flow problem, retrenching of staff and etc)Recommendations

• Implement a new cost efficiency strategy, (For example, , invest in strongest brands while divesting underperforming businesses.). (Koltrowitz, 2013)

Poor Debt ControlImplications

• Increase in bad debts or unrecovered debts.Recommendations

• Implement a stricter credit policy. Eg : Before giving credit sales, we must consider- The level of profitability in each company (debtor@customer). - Decide on general payment terms. - Follow up with customer’s invoices and make a reminder before the due date of the payment at the invoices to inform the clients.

Negative cash flow in 2008 and the preceeding years

Implications• Company will have problems in meeting its cash demand

in its operation (disrupt the operation, problems in paying salary and wages of workers and paying back debts).Recommendations

• Increase selling ; increase sales to existing customer on cash basis

• Use discount in selling of products in bulk amounts.• Collect receivables as soon as possible• Securing loan from the banks

(source: http://www.inc.com/encyclopedia/cashflow.html/1)