Evaluate Peter’s suggestion to compliment wages with fringe benefits (lines 55-59).

According to the case study, Peter pays 10% higher than that available to semi skilled staff in order to attract staff with the necessary abilities required to work at APSL. In addition, he believes that he should also complement wages with fringe benefits for example a subsidised canteen, yet they have been successful. It becomes clear that the employees would much rather have maximum possible pay instead.

What are fringe benefits?

  • Subsidised canteen: mentioned by APSL
  • Company car
  • Vouchers
  • Medical checks
  • Discount on APSL products
  • Pension plans

There could be a number of reasons as to why Peter would like to compliment wages with fringe benefits on top of his competitive rate of 10% above most other semi skilled staff wages. However, it is important that APSL evaluate this suggestion in line with their key objective of improving solvency ratios to ensure that they do not conflict.

One advantage of complimenting wages with fringe benefits is that it could offer a cheaper alternative compared with paying 10% higher. For example, by having a subsidised canteen, it means that staff will still have to pay a proportion to contribute towards their meals, however APSL will be providing some money towards it. If it turns out that having competitive fringe benefits such as this is cheaper than paying employees additional monetary wages, it is something for APSL to suggest. The business places an importance on having employees that are well trained and understand the business’ keen objective of maintaining high quality, and therefore if APSL do not provide incentives on top of their competitive rates, it may limit the level of skills that APSL have the capacity of employing. Inevitably, less benefits will attract less staff and therefore Peter’s suggestion of a subsidised canteen helps to contribute to better working conditions for staff to stay with APSL, which as a result, will improve quality rates due to long term, skilled staff, rather than short term, less experienced staff if APSL experience high staff turnover.

However, it is clear that staff are reluctant to accept fringe benefits, and would much rather be offered “maximum possible” pay, and then “make their own individual choices about, what, if any additional perks they buy.” Therefore, if Peter was to introduce fringe benefits such as vouchers and health/fitness club memberships, it is likely to conflict with the business’ key objective of improving solvency ratios. Certainly, investing in fringe benefits for the entire production will be a costly expense and therefore APSL must carefully evaluate whether this is a beneficial one that allows them to meet their objective. For one, having committed and happy staff that are regularly complimented with fringe benefits is likely to reduce staff turnover and as a result improve the motivation and quality offered at APSL, and in conclusion result in better profit margins. However, it is also fair to argue that buy offering such lavish benefits can be costly and therefore APSL may face jeopardising meeting their key objectives. Paying for staff to have health/fitness membership can be approximately up to £50 per month and therefore, this will have an eventual impact on the profit margins at APSL. Whilst it could be argued that having fringe benefits is essential for APSL to “select” rather than “accept”, it must be made sure that they do not hinder the company’s ability to meet objectives.

Further to this, APSL could consider having fringe benefits to specific staff members. By doing this, APSL does not waste excessive money in spending on benefits for all staff, but rather the ones who deserve it. For example, if a production member shows particular interest and has high output in a particular month, APSL could reward that employee with a company car/medical check ups. These are often one off payments that will not require a continuous investment from APSL and therefore fringe benefits can be given out when they can be afforded. This is likely to have a number of benefits. For one, by offering fringe benefits to specific employees it will not only reduce expenses and as a result improve solvency as opposed to offering it to all staff, but also means that employees are motivated to reap benefits in the future, as well as feel as though they are valued and being recognised in the business, which in hand will improve job satisfaction and incentives to do well at APSL.

By contrast, it is also reasonable to argue that Peter should not compliment wages with fringe benefits. Not only is this a frivolous extra expense that the business will occur, accompanied by the scheme to pay 10% higher, but also it is clear that employees are interested. It may be said that if employees do not wish to have fringe benefits, Peter will just be unsuccessfully investing in schemes such as a subsidised canteen, where it will not improve employee turnover, absenteeism or output. Whilst employees may feel recognised, it is unlikely that this will encourage the level of skilled workers that are interested in working at APSL and therefore Peter may have to re-evaluate this suggestion. One idea for APSL to consider is instead of fringe benefits, APSL may offer piece rate. By offering piece rate wages, employees of the business will directly benefit from working hard and achieving high output, where other employees that do not produce as much do not get the same level of pay. This is advantageous as it means there is a direct correlation between work ethic and reward, however, employees have to remember that a main focus at APSL is high quality and thus a high volume production with low quality output will not be rewarded.

Peter should not compliment wages with fringe benefits when it will not be valued by employees. The current scheme of 10% on top of regular employees is already a large proportion of expenses that APSl will have to undergo and therefore the business will need to make cutbacks, and hold back on investing in fringe benefits to reward employees when there are other, more vital issues to consider such as improving solvency.

 

 

 

 

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Addressing some key issues in the APSL case study.

There are some obvious hints at some of the possible questions for this F297 exam. Whilst nothing should be put passed OCR, it could be useful to plan some possible answers for possible questions.

Should APSL leave its focus on the UK caravan market behind to focus on its other objectives?

Important factors to consider:

  1. According to the case study “APSL have set a 2018 objective of exports rising to 15%
  2. APSL sales to the UK caravan industry almost always tend to be sold to UK based caravan enthusiasts
  3. the majority of [luxury UK based motor car manufacturer] cars are destined for the export market

From this, we can take a few things. If APSL continue to aim their focus at UK caravan companies, they are hindering their ability to reach their 2018 objective of exports rising. Additionally, perhaps selling to a car companies is more beneficial as these tend to be exported outside the UK.

Should APSL then direct their focus towards the export market only?

  • As stated in the case study: “APSL’s exposure to the UK business cycle will be reduced”
  • the caravan company is a “long established customer” and therefore APSL may not want to have bad relationships>bad word of mouth> loss of profit
  • Focusing on cars is likely to have more revenue, yet, APSL should consider exchange rates and how this may impact APSL’s exposure to the export markets outside of the pound currency.

Should APSL invest in the new energy saving device?

Additionally, another issue that arises in the case study is the debate of using a heat press. The business has seen expenditure on energy steadily rise, and especially in the August of 2013 did they experience sizeable increases. Investing in a new heat device, costing £250,000 means that APSL could yield a saving of 4% per annum.

Important points to consider:

  • There are conflicting views with the owners: Kate is keen to go ahead, Peter thinks that the financial return would offer APSL too low and John is less sure the decision should be based solely on quantitive factors.

Therefore it may make sense for a question to debate by siding with a owner. Should APSL jump in like many other projects they are pursuing currently? Should APSL focus on saving money for future investments? or should APSL consider a little more than money and profit and perhaps think about other social factors.

When siding with John, then, what other factors (qualitive) should be considered when taking on the energy saving device?

  • CSR: investing in an energy saving device will help APSL improve their ethical brand of the company as well as improving their corporate social responsibility. By showing that they are working towards saving energy and the environment through renewable energy, APSL can brand themselves as an “environmentally friendly” business.
  • In addition, APSL places a strong emphasis on environmental issues. Seen through their environmental policy and strict employee , this can help APSL comply with number 3 of their environmental policy: “we are committed to the most efficient use of resources” and a commitment to recycling and therefore the energy saving device will be the most strategic method of APSL adhering this policy.
  • Finally, APSL are experiencing complaints from Mr Gilman: through the dumping of APSL’s waste, it could be a point that investing in this energy saving machine could be a method of APSL giving back and compensating for the other unethical issues that it is dealing with. Perhaps it can be their way of ‘making up’ after the several incidents of dumping industrial waste.

Should APSL handle the environmental issues itself?

(Perhaps it’s worth mentioning- I like Peter a lot!)

Whilst these points will inevitably be similar to the previous question, they will not be synonymous.

Important points to consider:

  1. parts produced by APSL cannot be reworked if they are non compliant with the customer’s specification
  2. non compliant parts are shredded In a granulating machine and then sold back to the raw material supplier
  3. parts which cannot be recycled are taken away by a disposal contractor: Waste Away
  4. Peter has argued that this disposal is something which APSL should do for itself
  5. Kate and John feel that doing so would be incompatible with APSL’s strategic advantage
  6. APSL received a complaint letter from Mr Gilman: “if you should not stop I will have no option than to put the matter in the hands of my solicitors”

Should APSL take this matter into their own hands?

  • APSL are paying Waste-away Ltd to simply dump industrial waste on to a road. Perhaps they should handle this problem themselves as it means their reputation is not in danger and that they can save money
  • APSL has a clear focus on its many objectives and therefore if they were to handle waste disposal too, it can be too many things for the owners to focus on
  • APSL could find another disposal company that is reputable for reliable service
  • If they handle the issue themselves, it is likely to improve their reputation as well as corporate social responsibility (if they volunteer/donate) to funds that surround themselves with being sustainable environmentally..

How should APSL respond to Mr.Gilman?

  • Firstly, APSL should explain that they are not wholly responsible for this dumping: they have ensured that a company takes the waste and believed they would deal with it responsibly rather than fly tipping. This is likely to achieve some understanding between Mr.Gilman and the owners
  • Next, APSL should focus on how to approach the actual problem. Perhaps they could explain that they are sorting out the problem by finding a more reliable business or even handling the problem themselves.
  • APSL should offer a form of compensation to Mr Gilman for having to clear the dumped waste by himself
  • APSL should consider other ways they could make up for this dump of  non compliant parts: donate, invest in energy saving device, invest in Flaxiboard

As requested, the next analysis will be on fringe benefits and taxation.

How can APSL improve its solvency ratios?

Firstly, what is a solvency ratio and what is its significance for a business?
Solvency ratios measure the ability of a company to pay its long term debt and the interest on that debt. Solvency ratios, as a part of financial ratio analysis, help the business owner determine the chances of the firm’s long-term survival.

Sidenote: many textbooks lump solvency and liquidity together. They are NOT the same: liquidity usually refers to the short term debt of a business, whereas solvency is usually ALL debt, particularly long term 🙂

APSL currently have a ten year strategic objective to improve their solvency ratios. Here are just a few ways they can do this:

1.)Sweep accounts: Use sweep accounts through your financial institution. This will allow you to earn interest on any excess cash balances by “sweeping” or transferring the funds into an interest-bearing account when the funds aren’t needed and sweeping them back to your operating account when you do need them.

If APSL save some retained profit in a separate account until they plan on investing it, they will be able to earn a little extra cash through sweeping accounts.

2.)Overhead: Assess your overhead costs and see if there are opportunities to decrease them. Lowering overhead has a direct impact on profitability. Overhead expenses, including rent, advertising, indirect labor and professional fees, are indirect expenses that you incur to operate the business outside of direct material and direct labor.
Perhaps APSL could see if they need to change to a location that will help them reduce overheads? this way they can increase their profit margins and make it easier to pay back their debts.

Unproductive assets: If you have unproductive assets that the business is just storing, then it’s time to get rid of them. The only reason you should spend money on assets such as buildings, equipment and vehicles is to generate revenue.
APSL are shown to keep a lot of stock to ensure repeat custom. However storing old moulds for a number of years can be highly expensive considering their current property is running out of capacity.

Accounts receivable: Monitor accounts receivables effectively to ensure that you’re billing your clients properly and that you’re receiving prompt payments.
one way APSL could do this is by carrying out a debtor days ratio and find out how long they wait before they get paid by clients. They could speed this up to improve cash flow.

Accounts payable: Negotiate longer payment terms with your vendors whenever possible to keep your money longer.

Apsl case study ocr f297 10) discuss the need for, and the significance of, a constant review of market and environmental circumstances to help make decisions over the strategic direction of APSL.

10) Discuss the need for, and the significance of, a constant review of market and environmental circumstances to help make decisions over the strategic direction of APSL.

APSL currently operate in a highly sensitive market. Upon coming out of the recent recession and the possibility of new competitors entering the market, APSL will need to ensure that they constantly carry out both internal and external audits to review and amend their ability to successfully meet their objectives. In this case, APSL hope to expand to EU markets as well as improve their solvency ratios in their 10 year strategic objectives and therefore Kate, John and Peter will need to make sure that they are taking the relevant steps required in order to meet their target.

Firstly,it is important that APSL constantly review the market so that their products are able to appeal to the current needs of customers. For example, if APSL spot a trend of customers and businesses wanting to appear more ethical and environmentally friendly, it provides an opportunity for APSL to cater to those clients and as a result provide a direction into reaching their objective of improving solvency. This is seen through APSL’s current relationship with clients Albion Aerospace: who are interested in the new product of Flaxiboard. Through APSL’s review of environmental issues such as recycling and the need for renewable materials, they were able to discover Flaxiboard, and as a result were able to potentially secure a deal of 60 doors by Albion. Briefly, this shows an example of how reviewing the current market and trends can be useful in maximising profits. If APSL continue to do this, it is likely that they will discover other products, customers and environmental trends that they are able to make a profit out of. Ultimately, an exploration of the current market will allow APSL to develop unique selling points.

Indeed, it is incredibly essential for APSL to conduct frequent external audits to evaluate and review the current market. One reason for this is it could suggest areas which APSL may need to amend such as pricing issues. If APSL find that a new competitor selling similar thermoformed and polyurethane components, it is important they are able to stay on top of competition and maintain repeat custom. For example, if a new competitor is offering similar products and cheaper prices, it could risk the current customer base returning to APSL and therefore APSL will need to implement an appropriate pricing strategy that ensures that they do not lose out on profit margins. APSL may decide to introduce competitive pricing strategies to ensure any competitors do not have a detrimental impact on APSL’s margins. Therefore, a constant review of the market is ensuring that APSL are able to ‘bounce back’ from competition.

Furthermore, another significance of a constant review of the market is that APSL are able to adopt a pricing strategy accordingly. For example, by carrying out an external market audit, APSL can see how their current customers react to changes in price. If APSL review the market through using price elasticity of demand and therefore find customers are elastic towards price, John, Kate and Peter will know that they have little scope to increase prices to increase their profit margins. This tool for reviewing the market can be particularly useful when APSL focus on meeting another important objective of increasing their distribution of products outside the European Union as it can help the business choose an appropriate price strategy that customers outisde Europe will be willing to pay, as well as APSL ensuring that their prices are in line with the competition.

Another reason that APSL should frequently review their status in the market by carrying out an internal market audit is that they are able to predict changes in their cash flow forecast. If the economy is looking increasingly worse than predicted, APSL will be able to amend their current forecast by expecting lower revenue in a particular month etc. Therefore, by reviewing their place in the market, APSL will be less impacted by fluctuations in the economy. Additionally, an advanced review of the market will help APSL make adequate changes: for example, APSL could carry out a debtor/creditor days calculation and work out if they need to speed up payments from its debtors in order to cover their costs that particular month for example their fixed costs.

It is vital that APSL review the current market in order to quickly bounce back from economic recessions and fluctuations within the market. If APSL continually carry out market audits, they are able to make sufficient decisions in advance and foresee future changes in their cash flow forecast. This will inevitably be a useful tool for APSL in the future as it means that they are more versatile as a business and are able to spot opportunities that will help them meet their overall objective of improving their solvency ratios.

Apsl case study f297 business ocr revision strategic management- flaxiboard

Hi everyone. I’m on study leave now, so hopefully I’ll be posting more. I don’t know if you’ve noticed through different writing styles but most of the essays I’ve posted recently have been given to me by friends and classmates to post on here. Just for any questions that I haven’t covered. Nonetheless, I’m going back to writing them.

 

 

 

The question I will be addressing MYSELF today is:

Should APSL accept the order for 60 doors made from Flaxiboard from Albion Aerospace?

APSL currently use plastic to form their products for customers. Whilst plastic remains both the easier and cheaper option for APSL to utilise, the apparent benefits of using Flaxiboard seem both appealing and beneficial. In contrast to plastic, Flaxiboard is a reneweable source which means that when the supply of plastic eventually runs out, APSL will have another source to carry on operating the business in the existing market. However, with all business opportunities come disadvantages. It appears that Flaxiboard is slightly more expensive, as well as taking a total of 1 minute longer to press in contrast to the current material of plastic that APSL use. Thus, Kate, Peter and John will need to extensively evaluate the decision to use the Dutch supplied ‘Flaxiboard’ to produve 60 doors for the company Albion Aerospace.

It becomes clear that Albion Aerospace is a “prestigious customer” for APSL and therefore is likely to have a high interest in the business. Being a valuable customer, APSL is unlikely to want to disappoint Albion Aerospace by rejecting their order and therefore John may well have to go through with it otherwise his decision could result in bad word of mouth and ultimately have an impact on the company’s ability to meet their 10 year strategic objective of improving solvency ratio’s. Additionally, APSL will need to carefully consider the cost factors involved. The difference between the cost of plastic and Flaxiboard is £1.20 and therefore a total of £72 will be added to the cost of purchasing 60 flaxiboard doors from APSL. Therefore, APSL may have to add an extra cost on to the usual selling price of the doors in order to cater for Albion Aerospace’s order as well as covering their own cost of utilising a more expensive flaxiboard. However, this may also impact the demand for APSL’s product. If APSL find that they will need to add extra on to the original price per door when using Flaxiboard, it may hinder the desire for purchasing the product on Albion’s behalf. Thus, APSL will need to consider the elasticity of the product: if by conducting a supply and demand graph, APSL find that the door is elastic and this may impact the demand required, it may not be a good idea to go with the Flaxiboard as it means APSL will ultimately lose a large order. However, if Kate, John and Peter find that APSL’s products are inelastic, they have the ability to raise prices slightly higher in order to cover the cost of purchasing flaxiboard and therefore raising prices will be less risky for the business.

On the other hand, despite having additional costs attached to using Flaxiboard, APSL must not ignore the obvious advantages that this opportunity could cause. In hindsight, APSL will only producing 60 doors for one customer and therefore this order may be perceived as a ‘trial.’ It Is important that APSL consider the advantages of risk taking and forsee that this may benefit APSL’s ability to reach their long term objectives. In other words, if APSL truly wish to improve their solvency and maintain profit within the business, they must be willing to explore other products and the benefits they may have, despite costing more. Ultimately then, having a trial run of Flaxiboard is likely to give Kate, John and Peter a good idea of what the material will be like to use. If the owners of APSL find that staff are having difficulty using the new material, as well as if the machinery find the material made from sugar beet waste being too complex to mould, APSL will be able to learn from this large scale trial that they should not purchase more of it and make it a permanent component of APSL’s raw supplies. Whilst this is a risk worth taking, it could be argued however that using Flaxiboard to conduct a project of 60 doors for the customer Albion Aerospace will be too costly of a project. Despite revenue rising by 23.6%, APSL still have falling margins which could be argued is caused by the extra cost in supplies and materials. Therefore, it is irrational for APSL to use an even more expensive material causing their margins to fall even further which will result in APSL gaining an even smaller profit that last year. Thus, if APSL are serious about reaching their strategic objective of improving solvency ratio’s, they must take appropriate cutbacks, and perhaps avoiding Flaxiboard is a good way to manage profit margins and meet targets.

APSL should consider their corporate social responsibility when making this decision. Using Flaxiboard has it’s environmental benefits such as being both “renewable and biodegradable.” In short, APSL will have a good public reputation by producing this for Albion Aerospace as it will lead to good word of mouth and therefore more customers can find out that they can have their products produced without the stress of harming the environment. It is reasonable to argue that if APSL show that they are conscious about the environment and are trying to ‘give back’ it is likely that they will be able to compensate for issues addressed in Mr.Gilman’s letter such as dumping of non compliant products through helping and investing in resources that will help/not harm the environment. Ultimately, if APSL find that using Flaxiboard helps to improve their image as a environmentally friendly business, then it is a risk worth taking as it may help to increase further orders from other businesses that are interested in improving their corporate social responsibility.

Finally, APSL should take the risk and supply 60 doors to Albion Aerospace due to the definite advantages. Whilst APSL could be impacted by cost, reputation and the jeopardising of future objectives: it is certainly a risk worth taking as Flaxiboard could help APSL achieve their ultimate goal of improving solvency by offering the business an opportunity to maximise their profits.

Strategic management Apsl case study f297 ocr revision

37) Should APSL accept the order for 60 doors made from Flaxiboard from Albion Aerospace?

Flaxiboard is a new material which John has been investigation for a while, to see it if would be a useful material for APSL to start using. In a conversation with Albion Aerospace many months ago it was briefly mentioned and since Albion Aerospace has approached John and asked for 60 doors to be made from this new material. This would be a great way to test out Flaxiboard, however it would include many new costs, such as training, which APSL may be unwilling to pay.

There are a number of benefits of Flaxiboard against ordinary plastic which APSL was using before. It is much lighter and stronger, as opposed to plastic, as well as giving on non-toxic fumes when burnt, and then being both biodegradable and renewable, which plastic is not. Being lighter is a key characteristic for Albion Aerospace, as they are always trying new ways to make airplanes as light as possible. This is to do with the decrease in fuel needed, and therefore it saves costs, as well as being more environmentally friendly. Similarly it is useful that Flaxiboard does not give off the toxic fumes plastic does when burnt, as safety is always a major factor for airlines. Flaxiboard also fits in well with the business environmental aims, as it is both renewable and biodegradable.

APSL could also consider doing a trail run of Flaxiboard, using the order placed by Albion Aerospace. They could see exactly how the material works, and test of the practicalities of it, such as the longer time needed to be pressed. They could then use this information to see if Flaxiboard would be a good material for certain markets, such as Aeroplanes, and if it would be a good future investment for the business.

However there are also many drawbacks of Flaxiboard, including that its 80% more expensive, takes an extra minute per item to be pressed, and is much more difficult to work into the complex shapes needed, resulting in double the time needed to finish them, and 10% lower compliance rate. As APSL also has problems at the moment with non-compliant products, this means they have a lot of waste, some of which has been illegally dumped. Using Flaxiboard instead would increase their costs here, as more would be non-compliant and have to be disposed of.

Depending on APSL’s Price Elasticity of Demand, the cost of the new materials could be a huge problem in getting people to buy Flaxiboard products compared with others that may be much cheaper. Therefore demand would go down, along with sales, and therefore profits. This would make it hard for APSL to achieve its Key Objectives, of a higher solvency ratio, and thereby higher shareholder dividends. However some markets, such as Albion Aerospace, might feel like the added points, are worth the overall increased costs, and therefore should be used instead.

If APSL were to accept this order, it would mean they would have to get the space and resources needed to make these doors. Employees would need to be pulled from their current roles, to be trained especially for this order. This would mean decreased productivity, as well as the high cost of training. As the business is also close to capacity, it may mean there is little room for them to both store the materials, and train staff. They would have to store all the materials, as the JIT system they have in operation would need include Flaxiboard, due to the different companies they would be from.

Overall APSL should consider doing this first order, as a trail to see exactly how the material would work, and be successful. It would have high costs to set up at first, however the profit from the order may cover parts of this, and if APSL were serious about this material, it would need to be done anyway. It would open up several new markets for the business to expand into, as well as giving it another strategic advantage, as few other companies are currently using it.

Strategic management Apsl case study f297 ocr revision

35) Discuss the extent to which the location of APSL is important to its success?

APSL currently supplies its products to company’s all of England, and even to some other areas of the world. One of their key targets to achieve by 2018 is to increase all exports to 15% of the business, in order to decrease the reliance to the UK business cycle. The business is also currently trying to decide whether or not to relocate their business from Gainsbury to Hull, some 40 miles away, in order to increase capacity. As APSL are considering this decision, based on whether it would be the most beneficial way to improve their business, in terms of capacity, this suggests that location is not something that matters highly to them, compared with all the other factors.

Instead the business is more likely to be effected by the other issues of different locations, such as the lease of any factories. Operating in a cheaper area, such as Gainsbury, means the business is able achieve higher profit margins, as well as having more competitive pricing strategies, compared with a business operating in central London, where overheads will always be much higher. This would help the business to achieve its other key objectives of increasing solvency and shareholder ratios. Operating in cheaper areas would also mean that the business would be able to have a much bigger factory than they would have in an expensive area, for the same sort of price, as Kate believes they are operating far too close to capacity at the moment this would be a necessity for the business. However if APSL was to be located nearer to busier cities, this would help them to reduce delivery costs and times, due to the higher number of motorways and other methods of transportation. This would please the customers of the business as they would get a much greater service from the company.

Another issue which will change depending on the different area the business is operating in, is the cost of labour. As APSL aims to pay all employees’ 10% higher than they would get paid at another local workplace, this means that difference in wages, while being small originally, would become much larger with the 10% increase. If APSL were to move to a higher paying area, then they may struggle to pay the full 10% extra which they currently do. This would remove their ability to choose the best employee’s rather than simply accepting them, something which Peter is very keen on. However a different location would also have a different percentage of unemployed and overall population. Therefore the business may end up with more people applying for a job with APSL than at current, so even without the extra 10% APSL might still be able to choose its employee’s out of the larger range.

However aside from the issues of APSL finances, the location would not matter a lot, as long as they were able to fully operate, and be close enough to major transport links that they were able to deliverer all of their products to the intended company, both instead and outside of the UK. However the finances, due to APSL’s bad cash flow, would potentially cause a problem, and as they would be unable to pay the rent on the lease if it was far too high, and also the cost of any employee’s that are hired. Therefore this would prevent APSL from locating in many top locations in major cities. Essentially, any location that is affordable with good transport links would be fine for APSL to operate in, and it would make little difference to APSL’s daily running.