Telford Engineering

Strategic Options Presentation

Slide 1

 MEXIT has affected every type of industry which means that Telford have clearly
found problems in a post-MEXIT world.

 Demand for Telford’s services, as a result of MEXIT, has therefore been felt both on
a national and international level.

 Telford need to be proactive in their approach to handling MEXIT, as they need to

ensure their business is still viable for their customers.

 Telford need to consider reducing their headcount. This is because the impact of
MEXIT is meaning demand for Telford’s services have fallen and the costs of imports
have risen. This means, to stay competitive Telford must decrease their operating
costs.

 As a result of lowering Telford’s headcount, they are able to overcome the long-term
effects of MEXIT as they can now refocus their business strategy and be able to
compete.

 If Telford do not imply this change, then they will not see a fall in operating costs.
This means they could struggle to compete in a much more competitive market.

 However, this strategy may not be the best option. If the effects of MEXIT are not as
long term as first expected, then this could see a rise again to pre-MEXIT demand
levels. This would therefore mean that Telford could struggle to recruit a high level of
staff again due to the fact that the majority of the previous foreign staff have returned
to their home countries.
Slide 2

 It is very likely that the effects of MEXIT will be felt long term. This is because the
number of exports has fallen which has clearly affected the Company’s sales.

 Telford must evaluate how they are going to be able to cope with this decreased
demand in the long term.

 To be able to cope with this shortfall in cash, Telford clearly need a cash
injection. This can either come from debt finance or from equity finance.

 Using equity finance to inject cash into Telford would mean that the ownership for
investors is diluted and it can be a very expensive way to raise capital. However,
using equity finance will not have an adverse effect on the levels of gearing.

 Using debt finance is a much cheaper way to inject cash into Telford. This will
also not dilute any ownership from existing investors. However, this will have an
adverse effect on the levels of gearing and may make the investment too risky for
investors.

 These aforementioned factors need to be considered when deciding how to

handle the shortfall that Telford will feel from the impact of MEXIT.