Report to the Directors of USPS diagnosing the state of affairs and Essay - 1

Report to the Directors of USPS diagnosing the state of affairs and offering some prognosis on what might be a more sustainable business model - Essay Example However, reduction of certain required expenses will lead to a decline in the company’s service quality. For example, the Post Office decides to cut the services of the one of the mail sorting employees. The cut is based on the company’s decision to reduce its huge employee salary payments. The employee reduction will trigger a slow customer mail services. The current business model includes a ballooning debt figure. The debt included an unpaid $5.5 billion amount on its defaulted loan schedule. In fact, the current business model is characterized as not a profitable self-maintaining business entity. Likewise, the current business model is described as needing to sacrifice its services in order to reduce its operating expenses. For example, the lone postman is hired as a part time employee to deliver mails on a Wednesday and Friday. Consequently, mails that arrive on a Monday will be delivered two days later, Wednesday. Similarly, mails that arrive on a Thursday will be delivered on a Friday (Ross, 2012). The same article described the current business model is grounded on low stamp and parcel rates. The current rates of mailing the correspondences were not high enough to surpass the breakeven point. Consequently, an increase in the stamp and other post office rates will lead to the increase in the company’s overall revenue (Ross, 2012). The current business model fails to generate enough revenues needed to pay for the maturing debts (Epstein, 2011). A business is normally set up in order to generate revenues. This is the first step. The USPS accomplished this first business task. Next, the company must generated net profits. The net profit amounts are arrived at by subtracting operating expenses from the gross profit amount. Based on the company financial report, Table 1, the company failed to generate enough revenues needed to arrive at the bottom line. The bottom line is the passing grade of any company. The bottom line equates to a net