Aurora Textile Company: Buying a New Machine was Viable to the Company (Essay Sample)

Name:
Instructor:
Course:
Date:
Aurora Textile Company
Aurora Textile Company was formed in the 1900s. It catered for both local and overseas textile market. The company rendered its services in four sections namely; hosiery, woven, industrial products, and knitted outerwear. Since the year 1999 to 2002, the company had been recorded losses continuously. The losses were as a result of, stiff competition from cheap textile products from Asia, and strengthening of U.S. dollar which saw an influx of textile clothes from overseas to The United States.
Pecuniary analysis showed that Aurora would make more profits for ten years to come if it had embraced the usage of Zinser 351. However, some underlying factors would determine whether the machine could replace the older one. Firstly, the future of the textile industry in the U.S. The textile industry in the U.S. was facing a myriad of challenges globally. For instance, the immerging cheap textile apparel in China forced textile companies in the U.S to shut down due to the high cost of production at that time. Secondly, the strengthening of U.S. dollar attracted textile manufacturers from overseas to export their products to the United States. Thirdly, when World Trade Organization (WTO) lifted a ban on quotas in January of 2005. The ban was a huge blow to the textile industry in the U.S. WTO decision meant that U.S. textile companies were not immune to any possible competition threats from overseas. Another factor that would determine the purchase of Zinser 351 was, shareholders’ interests. Since 1999 to 2002, the company recorded losses which later translated to a reduction in company’s share capital. Therefore, it would...