I. Basic Problem
The basic problem for the TOMRA GROUP is determining the difficult decision of whether or not to continue conducting business with their current supplier relations or to move towards manufacturing of their basic mechanical parts (white nylon cylinders, tiny steel cylinders, steel plates, and nylon bumpers) needed for their production.

II. Support for Basic Problem
TOMRA GROUP has an inefficient business strategy and slow development. They minimized the capital investments and entirely depended on its suppliers, which cause some challenges on developing their business and even would have risks to lose their market because they could not control their production quality of reverse vending machines. Even though they are confident about their relationship with suppliers, building and maintaining communication and trust costs so much and draw down their profits.
Exhibit 7 shows the trend of Return on Equity before taxes and after taxes. The ratios are both decreasing from 2007 to 2010. Even though ROE before taxes are higher than 20% and ROE after taxes are higher than 10%, which are generally considered good, the decreasing tendency indicates that Tomra Group is making less and less profit based on their equity.
Exhibit 8 shows the Debt to Equity Ratio during six years. D/E ratio was also decreasing from 2007 to 2010, and in 2010 ratio was only 0.02 which is much less than the general effective number 0.5. Those low debt-to-equity ratios may also indicate that a company is not taking advantage of the increased profits that financial leverage may bring and narrow down their potential future development.

III. Alternate Recommendations 1. As an alternative recommendation, we suggest that TOMRA GROUP evaluate and select its suppliers using the current Vendor Evaluation Form (Exhibit 6 in course pack) to rate each