The general manager of JJ Production, a leading stage production house, was approached by one of his most important sources of clients, Hong Kong Convention and Exhibition Center, to invest in a seat-riser for one of the halls in the center. The center had decided to market the hall as a concert venue during the off-peak season. The general manager was asked to consider a deal in which JJ Production would be required to invest in building the seat-riser, installing and removing it when required, and warehousing and maintaining it. The company would be compensated per day for the period that the center had events booked in the hall. Accepting the deal would expose JJ Production to considerable financial risks, but rejecting it could offend an important customer and would risk the established business relationship. The general manager must analyze the financial statements on a project basis while at the same time taking into consideration the long term relationship.
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