A MEMO

It is suggested that the company expand to Europe with Ontario investors (AO) as a partner and hire additional brand ambassadors, marketing employees, and full-time sales staff to extend its market base and earn more profits.

BACKGROUND

TraiX requires efficiency in its human resources staff as well as a strong financial position to secure the essential cash flow for executing its expansion strategy.The AO has also been bringing ground experience that would be relevant in the European market hence they continued to work with TrailX is necessary. The annual increase in revenue of 11% is an indication of the company’s growth in its products consumption and appealing to customers. Hence, such growth may also be expected in Europe. The repeat bookings may be considered a vital asset, and may, therefore, be replicated in Europe after expansion. Given that TrailX is operating as a virtual company, it may efficiently work in Europe without losing its customers while also maintaining its current employees especially those in Canada.

ANALYSIS/OPTIONS

Expansion to Europe with Attractions Ontario investors is the most viable option to take. If AO pulls out, then the payment of $620K would cause poor liquidity to TrailX thereby hampering most of the operations. Besides, they have to be maintained because they are essential for any successful expansion to be realized. If AO vacates their position, TrailX would be required to seek external funds, and the most probable option will be debt, which is more expensive compared to annual payments being given to AO. The AO will also continue offering mapping services through Esri.

HUMAN RESOURCES IMPLICATIONS

The brand ambassador and necessary because they would ensure the publicity of the company while the employment of marketing staff and full-time sales team leads to lower cost of operation with a potential increase in revenues due to the increased number of customers.

FINANCIAL IMPLICATIONS

A table showing expense probabilities, chances of expansion into the European markets, risk and growth potentials.

Employees Category/Division Average salary (a) Chance of AO staying (b) Chance of Expansion to Europe if AO stays (c) Chance of staying and expansion (b*c) Possible salary increase(a*b*c) Risk status Growth potential Brand ambassador $42k 50% 75% 37.5% 15.8 Medium High Marketing staff $82k 50% 75% 37.5% 30.8 Medium High Full-time sales staff

$47k 50% 75% 37.5% 17.6 Medium High Table 1

Based on the data, the expansion will lead to a minimal increase in salaries and wages. However, the over 500,000 brand ambassador followers will be able to continue supporting the company even if Europe’s expansion is adopted. Many customers in the European market will lead to higher revenues for TrailX. The possible cost areas for the company during expansion would involve increased salaries and wages, further social media mapping, European market entry cost, branding, and marketing. The $11 million experimental software that was abandoned will be used in the European market, thus reducing the cost of equipment. The total cost of embracing the expansion will, therefore, be between $500K to $610K for the company while the revenues will exceed $700 due to broad market comprising of Cana, U.S., Europe and other parts of the world.

Respectfully Submitted

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