cash flow

Aggro Stores is a 30 year old cooperative (not for profit) business based in a remote island community of less than 10,000 residents. The original purpose of the business was  to  supply  agricultural  products  such  as  animal  feed  and  farm  equipment  to  the mainly  rural  population  of  the  island,  which  collectively  set  the  business  up  for  that purpose.  The  business  is  run  by  a  general  manager  who  has  a  small  staff  of  five people to support the operations; mainly by taking calls, maintaining and organising stocks,  serving  the  customers  and  keeping  the  accounts.  Recently  a  new  manager has been appointed after the dismissal of the old manager for undisclosed reasons. The manager reports to the board of the cooperative, but has reasonable autonomy in the way that he wishes to run the business. On taking up the appointment the new manager is dismayed to find that the business is  not,  as  he  had  been  told,  stable  and  profitable,  but  is  in  fact  in  a  poor  state  after years of underinvestment and neglect. Within a few weeks he has identified that the store carries a very limited range of stock and that stock levels of those lines that are carried  are  low.  In  addition,  some  lines  of  stock  are  aging  and  close  to  obsolete. Customer footfall is also low as there is not much to buy in the store apart from the agricultural supplies. There  is  significant  competition  on  the  island  from  a  road  haulage  contractor  who brings in supplies of animal feed on the trucks that would otherwise be empty when they return to the island after shipping out the crops and animals that are the island’s main  outputs.  Further  competition  comes  from  a  larger  haulage  company  on  a neighbouring island, which is also bringing animal feed back in its empty trucks. The  animals  (mainly  sheep)  that  leave  the  island  are  intended  for  meat  markets  on the  mainland.  Most  of  the  farmers  on  the  island  are  part  of  a  quality  assured  meat scheme  that  increases  the  value  of  their  animals.  As  part  of  the  scheme  they  are required  to  buy  their  animal  feed  from  a  supplier  that  is  also  part  of  the  quality assurance scheme, to ensure that the feed is being of a good standard and is being kept  in  a  safe  manner.  The  facilities  to  keep  the  feed  in  this  manner  are  costly  and lead to the feed being more expensive than that supplied by the haulage contractors. The  manager  is  aware  that  many  of  the  farmers  are  buying  their  feed  from  the haulage  contractors,  despite  that  being  in  breach  of  the  terms  of  the  quality assurance scheme. The  store  buildings  are  large,  but  underutilised  and  in  poor  repair.  Purpose  built when  the  store  opened  30  years  ago,  they  are  suffering  from  rot  in  the  roof,  the drainage is no longer up to standard and the car park is full of holes and is constantly full  of  mud  from  the  high  rainfall  in  the  region.  The  manager  has  identified  that  the roof  is  unsafe  in  places  and  that  the  drainage  is  on  breach  of  local  environmental regulations.  In  addition,  the  interior  decoration  of  the  store  is  very  poor  and  it  is  an unpleasant place both to work in and to visit.