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The Nature of Operations

(d) Evaluate concerns that the factory manager might have about the joint venture between TT and the supermarket group. [11]

TT will produce more crisps for the supermarket to sell. This may mean that TT has to open the factory for six days a week instead of five. This will increase TT’s costs. With a lower profit margin, TT may make a loss from this joint venture.

It may also mean that TT does not concentrate as much on it’s branded crisps because they are making ones for joint venture. This may mean that TT cannot produce the new variety. This might lead to less sales in the future, which may damage TT’s profit.

The biggest concern is likely to be about having to open an extra day each week which will mean more strain on the machinery. However, in the long term a reduction in profit could be more of a concern, especially if it leads to the business shutting down.