Olympus Incentives Ltd

Olympus Incentives Ltd (OIL) is a relatively small company specialising in the manufacture, wholesale and retail of trophies, such as cups, medals and plaques. Clients range from individuals to companies to large athletics, football and cricket clubs. The company has three directors, Olive and Wei WONG (wife and husband) and Thai PHAM, Olive's father.

The company was established four years ago and has built up a good level of business, growing steadily year on year. The directors of the company wish to accelerate the rate of growth but are faced with at least one challenge - the level of business fluctuates greatly through the year. Demand is at its heaviest in December and June with fairly good demand in April and September. The rest of the year is relatively quiet.

Head Office for the business is within 25 kilometres of the centre of London. The geographic spread of customers is however mainly national and to a much lesser extent, international. Almost 20% of OIL's business comes through a well established relationship with a firm of sports management agents in London. A relationship with the English County Cricket Board results in around 10% of the business. Advertising, existing relationships and word of mouth recommendations account for the remainder of the business.

Due to the fluctuating levels of activity at different times of the year, OIL can be working at maximum capacity for seven days a week in the four months of the year when requirements are at their greatest and can be simply ticking over during many of the other months of the year. During the busy periods paperwork other than the ordering system tends to be rather neglected. Consistency is lacking in the quoting, ordering and completion process. Even prices vary according to who takes the order and how much that person calculates they can 'get away with'. Payment is received from each job when the customer chooses to pay. This can vary from 30 days after delivery to six months after delivery.

Wei has been summoned to the bank on several occasions when cheques have had to be refused by the bank because there were not sufficient funds in the account to cover their payment. The bank manager, Mr Scrooge, has repeatedly pointed out to Wei that there is not much point in doing the business if the paperwork is not kept up-to-date. Wei has called Mr Scrooge a petty-minded bureaucrat. This ongoing disagreement has caused deterioration in relations between the bank and the company.

OIL operates from fairly substantial premises in what Wei considers to be an excellent location. The nearby motorway links allow easy access to the U K motorway network and it is also an easy journey from the premises to Heathrow Airport. Due to the fluctuating levels of activity during the year, only around half the unit's space is used by OIL on a daily basis. Thai is of the opinion that OIL should lease a smaller property and significantly reduce the rental commitment. Alternatively, a small expenditure on an internal partition would allow the company to sub-let part of their existing premises.

The manufacturing and packaging machinery, the vans and cars are all owned by the company and were all bought with loans from the bank. Wei is often saying that they should 'sweat the assets' so that the finance cost becomes irrelevant. The interest payments and the repayments/renewals of the loans are a continuing drain on the finances and another source of continuing tension between the directors and the bank manager.

Wei Wong is totally convinced that his marketing and promotion activities are just about perfect. A small amount of general purpose cups, medals and plaques of various sizes are kept in stock but most are produced only to order. During really busy times, OIL hires numbers of U K and foreign casual workers on a daily basis for £40 per day, cash in hand. Tax and National insurance are left to the casual workers