Areas to be covered with principles, concepts and practical
application:
Accounting 🙁 Minimum of 2 pages) Economics: (Minimum of 2
pages) Finance: (Minimum of 2 pages)
Marketing: (Minimum
of 2 pages) Management: (Minimum of 2
pages)
All together: Text 10
plus Full text pages from top to bottom margin with an overall Executive
summary and conclusion
No copying from Internet or rewording from this synopsis. Original work only.
INSTRUCTIONS:
Comprehensive Paper- July 25, 2014
You have just been hired by the Board
of Directors as President of one of the most highly regarded microelectronics
and telecommunications company in the world.
You are the first President to have been hired by this group who would
be referred to as an outsider (did not come up through the ranks of the
company). Actually, your previous
association had been with an organization with extensive background in the
computer related field.
The
opportunity with this prestigious company comes from their critical situation
that the company “has hit the wall.” Bits
and pieces of the below information has been made public by articles and
quarterly analyst calls but as yet no one has summarize the influences or
causes as presented below. This
circumstance has been growing for quite some time but has come to this point
due to three major influences and circumstances:
·
Per
the Executive V. P. of Marketing “The dogs are no longer eating the dog
food.” Interpretation: The company has “loaded” up the RBOCs
(research the term) with second level generation of telecommunication
gear. Third year generation has been
developed and introduced into the European market and is rapidly being accepted
and implemented into the telecommunications infrastructure with high consumer
acceptance. The RBOCs are behind in
their introduction within the U.S. due to the large capital expense that comes
with deployment. These RBOCs are deeply in debt with extensive
liabilities to the manufacturers of the second tier generation of
telecommunicates gear. The company
decides to “play the strategy” of delaying the introduction of Third Tier
generation in the U.S. because the RBOCs have been their bread and butter for
the last 20 years.
·
A
major joint venture has been under both development of product and services and
is within the early stages of deployment.
This product and services are satellite cellular and the associated
satellite network. This complex
infrastructure and network would allow people to call literally anywhere on the
planet by tapping into a complex celestial network of satellites. The venture team has done extensive research
to access the market and supposedly it is there. Also, the venture team has had
access to world-class expertise and overcome seemingly insurmountable hurdles
including the launching of 163 satellites into space to provide the satellite
network. But, there were some
fundamental flaws in the strategy. This
$6 billion in investment (included the company for 19%) and other large
investors including some Middle East, Asia and Orient governments as well as
firms and “high” investor individuals.
But the financial model has some issues that “dove tail” into both the
Business Plan and the Marketing Plan. One of these was the consumer was not
comfortable carrying a handset in a briefcase (this element had been easily
overcome in the late 80s when cell phones were first introduced with a
dedicated and aggressive engineering plan to continually reduce the size of the
hand set down to the point that could be carried in pocket or purse) but for
the satellite hand set this engineering design curve was not practical due to
the required size of the battery technology available at this time. For instance, the earlier tower to tower cell
phone (introduced in the late 80’s) commonly referred to as the “brick” was
reduced to 8 ounces and less than 5 inches over a period of two years. Thus,
this engineering design flaw presented a contrast to the Business Plan and
Marketing Plan which had aggressive customer acceptance and related to customer
growth and corresponding revenue growth.
Another issue, as stated above, was the satellite hand set required a
very large battery due to the power need to source a satellite thus adding to
the weight issue. (Therefore, a large variance to the Business Plan due to
Production plan’s assumptions related to product design). Another issue was the individual placing the
call and receiving the call needed to be in rural or remote locations due to
the multiple frequencies “waves” that were present in densely populated
areas. (Again, a variance to the
Business Plan due to Production plan’s assumptions related to product
design). And another issue was the
excessive cost of the hand set, the rate for the subscription to the network
and lastly the huge cost of an individual call restricted the market to those
who could approve such a luxury. These
were in contrast to the pricing model that was within the Marketing plan and
the Financial Plan. The pricing model
was built on the traditional cost curve as well as pricing would begin reducing
as volume and economies of scale were realized.
And last but not least and the largest issue that finally forced the
venture into bankruptcy was the company (with only 19% ownership) but due to
over confidence in the success of the project which included executive risk
taking decisions as well as the company being “cash rich” at the time Guaranteed the Bonds for the
venture when the second round of funding ran into resistance from both current
investors and prospective future investors during the second round of funding
for the venture. This was huge variance
to the Business Plan, Financial Plan and model which included different and
less dependent economic and finance assumptions on the part of the 19%
owner. For instance, bonds were never in
the original Business Plan, Financial Plan or Financial model and the
guarantying of the bonds were never presented in any Plan or Model even the
adjusted and/or amended Plans. When the
third round of investing arrived all investors balked and “headed for the
hills” with the resulting venture being forced into bankruptcy.
·
The
semiconductor sector of the company had never been a major contributor of introductory
new products into the market place and had always been viewed as a “me too” as
having products which were introduced into the market place after a leading
edge competitor had already introduced the products. Thus, the Research and Development function
was not noted for its creativity and innovativeness. As a result, the company’s competitive
advantage in this array of products and services were historically classified
and ranked as number six or less in the industry. However, this sector had been the company
most economical and profitable and positive in cash flow for the company
through the late 50s, 60s, 70s and early 80s until the introduction of the
cellular products. At this junction the
semiconductor sector was having trouble being profitable and had begun a
retention strategy including a draft white paper proposal of a “spin off.” Their product innovation is considered so
limited that the cellular product line does not use their product. Instead they use a competitor.
Other
factors needed for the case include the demographics of the company.
·
$30
billion in revenue.
·
Very
profitable
·
Very
positive cash flow
·
Stock
has undergone a stock split last year and a 3 for 1 split two years ago and
well as the first 2 for 1 split three years ago. Currently one of the “darling” stocks on the
NYSE.
·
Worldwide
presence with 23 factories; 5 of which are off shore including India, China,
England, Singapore and Taiwan. Total
worldwide employees of 147,000 people.
·
Recent
major liabilities added to the balance sheet due to the bond guarantee. However, exposure on the investment, other
than the bond guarantee situation, is the 19% investment. Prior to the bond guarantee action the
balance sheet was one of very good status and had been attested to as such by
an independent CPA audit firm.
·
Company
has other business units in sectors which included computers, automobile
electronics and as a government contractor.
·
Almost
all of the executives are insiders who have come up from within the ranks.
Prepare your
“White Paper” proposal within each of the below 5 functional areas of
accounting, finance, economics, marketing and management utilizing the basic
principles, practices and concepts of these five below functional areas. This minimum of two pages each for each one of
the five functional areas will become your immediate and working guidelines how
to achieve the following three priorities that have been given to you by the
Board of Directors:
1)
Immediately prepare an action plan
with immediate implementation dates to quickly address the crisis that the
company is facing which is a total disaster and threatens the continuance of
the company as “an ongoing concern.” Prepare
an operational plan which the company will immediately begin implementing next
week after the Board reviews and/or approves your action plan.
2)
Both action plan and operational plan
must ensure that the selling price of the stock quickly stops its “free fall”
and stockholders again have confidence in the investment in the company’s
stock.
Areas to be
covered with principles, concepts and practical application:
Accounting
🙁 Minimum of 2 pages)
Economics:
(Minimum of 2 pages)
Finance: (Minimum of 2 pages)
Marketing: (Minimum of 2 pages)
Management: (Minimum of 2 pages)
All
together: Text 10 plus Full text pages
from top to bottom margin with an overall Executive summary and conclusion
Extensive
literature review with multiple types of sources; demonstrating a superior
variety of media formats were used/cited.
Minimum of 8
independent references.
Appendix
–Graphical model and matrix of your action plan.
In addition
to meeting the requirements of Satisfactory, present a matrix (this is
sometimes refer to as a”Model” to support and supplement the criterion of the
assignment. This would be your first slide
that you would present to the Board of Directors.
Please refer to the Rubric
Comprehension Exam to obtain an understanding of the specific requirements and
expectations for the Comprehensive Exam.
Do not repeat phrases or sentences
stated in the case or points will be deducted and that will cause your Turnitin percentage to increase.
Now, the burden of the survival of a
company and 147,000 individual’s livelihood has been placed on your
shoulders. You do not have the time to
organize a “team of consultants” or cabinet to assist in the development of
your “white paper.” It is time to enter
the dark room, have snacks, sodas and coffee and demonstrate your leadership
skills!! Also, you may now have an
appreciation for the phrase “it is lonely at the top.”
