Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

1. This is based on another real situation. A company was looking at developing a high throughput urinalysis device for central laboratory hospital settings. The company had only a minor presence in such markets so this was a major strategic initiative. The system would consist of a large analyzer with reagents. Marketing initially hoped that they could sell 5000 units. Engineering then developed a preliminary cost estimate of $50K for the machine. Marketing argued that with the standard gross margin requirements, the cost to the end user would be so high that they could sell only 2500 units. The engineers replied that at that volume some of the automated steps and specialized molds and jigs used to assemble this machine would not be cost effective. Without them, the cost for this lower volume would rise to $62K. Marketing's response was that at that volume, they could only sell 1200. This death spiral continued until the proposed project was abandoned.

With this project abandoned the company was left without any access to the strategically important area it was trying to enter. With the abandonment of the project, the strategy was in fact also abandoned.
(a) How could management intervene in this situation to make tradeoffs that would enable them to fulfill the strategic aim?
(b) What assumptions are being made?
(c) Can the validity of these assumptions be tested early in the project?

2. When evaluating the strengths and weaknesses of a company the two most critical elements are availability of funding and the available human resources. All too often when people look at human resources in a company they focus on the top management. The skills and experiences of top management are critical. However I believe that the real strength or weakness of a company lies lower in the organization. In a military analogy, not only do the generals of an army have to know what they are doing, the sergeants have to know too and without the later the former will fail. Why? Because the sergeants get things done and solve problems that constantly arise. In a company these people have varied titles such as manager, director, senior scientist, specialist, etc. Not everyone with these titles is strength to the company. The thing that characterizes them is usually experience (not education necessarily) and sound judgment about their work responsibilities. A personal ex: a company I worked for was developing a new glucose test strip. This was a critical strategic project for the company and was being pushed hard by management. The project was not considered to be too challenging technically since somewhat similar products had been developed and sold by the company for years. After initial rapid success the project hit a major snag. The lot to lot variability was terrible. The manager of the group (the only PhD scientist on the project) asked for more resources. He wanted more technicians since his approach to the problem was to vary the amounts of different components in the formulation until he found the one that gave the best reproducibility. So they made a very large number of experimental manufacturing runs at great cost in money and manufacturing capacity and the lab techs did the testing on them. Enormous amounts of time and money was spent with this approach with no success. Finally the lab director overseeing this and other projects, took several scientists off whatever they were working on. They had not been previously involved with the glucose project at all. He assigned us to review this glucose project and see if we could see something that was being done incorrectly or to find alternate approaches to the problem. After an all day meeting, this group focused on one major issue. The chemistry of the test was a series of coupled enzymatic reaction. Blood plasma was the test medium. It seemed to the scientists that there was inadequate buffer in the test to have the reactions run at optimum pH for the enzymes. Direct measurements proved that the pH of the many different lots that had been made ran at significantly different pH values when different plasma sample were applied. Greatly increasing the concentration of buffer in the formulation solved the problem within two weeks.

If someone had assessed this company in a SWOT analysis everything would look good. The company did have the resources needed to complete this vital project promptly. In assessing the project itself, it would have a giant NPV, and the commercial and technical risks would have been assessed as very low. Initially the development costs needed to complete the project would have been considered modest with respect to the NPV; before the difficulties surfaced of course. All of the financial tools we used for measuring projects would have indicated it was a winner. Yet it suffered very long delays and huge unanticipated costs and would have been discontinued if it wasn't so important strategically.What are the lessons here? The wrong person was running a critical project with the wrong resources. Solving this variability problem was not a task that can be accomplished by throwing random resources at the problem. You had to solve a problem you didn't know how to solve at the time.

(1). While fault can be found with many people in this scenario, where were the major weaknesses in the business that led to this situation?
(2). How easy do you think it could be to identify these weaknesses in an analysis of the strengths and weakness of the company? Why?
(3). Can you suggest ways that a company could structure itself so that previously undetected weaknesses can be corrected as quickly as possible?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M924197

Have any Question? 


Related Questions in Basic Finance

Assignment 1 - mini case amgen corporationthe amgen

Assignment 1 - MINI CASE: AMGEN CORPORATION The Amgen Corporation spent several years working on developing a product that can be used to provide a healthy supplement to a variety of food products.  The benefits of a new ...

For each of the following research goals assume that the

For each of the following research goals, assume that the experimental, correlational, and descriptive strategies are not being used, and identify which nonexperimental or quasi-experimental research design(s) would be m ...

Boeing is using world-class manufacturing facilities in

Boeing is using world-class manufacturing facilities in Japan to supply components for its new Dreamliner. Should Boeing consider building production plants in countries like India and China, where there are many excelle ...

Financial news is everywhere in the popular press and media

Financial news is everywhere in the popular press and media. How do you interpret the following examples of financial news related to the concepts in this chapter? Bernie Madoff 's hedge fund, Ascot Partners, failed in 2 ...

A car travels on a circular road with a radius r and

A car travels on a circular road with a radius R, and banking angle pheta. At what speed (vmax) does the car begin to skid if the static friction coefficient is us? Please show all work.

For the situation described in problem 2 above we expect

For the situation described in problem 2 above we expect elastic interaction loss of 6% and embedment loss of 4%. Compute the revised maximum and minimum preloads ? Sketch the revised, preloaded joint diagram ? Compute t ...

To qualify as a true experiment a research study requires

To qualify as a true experiment, a research study requires the manipulation of at least one variable. The fact that some variables cannot (or should not) be manipulated limits the topics that can be investigated easily w ...

Assignment capital investments in emerging marketsuse the

Assignment: Capital Investments in Emerging Markets Use the Internet and/or Strayer Learning Resource Center to research a global manufacturing company of your choice. Review the current plans that your selected company ...

How much distress or pain may researchers inflict on

How much distress or pain may researchers inflict on participants who freely agree to participate in a study after being fully informed about the pain or distress they will experience?

1 why have railroad miles declined during a period of

1. Why have railroad miles declined during a period of national growth? 2. Railroads have the largest percentage of intercity freight ton-miles, but motor carriers have the largest revenue. How do you explain this relati ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro