Introduction
Star River Electronics is a joint venture between Starlight Electronics Ltd., United Kingdom and an Asian venture-capital firm, New Era Partners. Star River Electronics is based in Singapore. It manufactures and supplies CD-ROM’s to major software companies. Due to its production of high-quality discs, Star River gained fame in the industry. Even though the volume of sales is increasing, there is a fall in the unit prices due to price competition and the growing popularity of substitute storage devices, mainly DVDs. With newly installed capacity, the company hoped to increase the proportion of revenue from DVDs.
On 5th of July 2001, Koh was appointed as the new CEO of Star River Electronics and on her first day itself she had to make several financial decisions or with outcomes that will have major financial implications for the firm. The following analysis will state the problems in Star River, analyze the situation, explain the major strategic alternatives, list the criteria for decision making, analyze the strategic alternatives and recommend a list of actions for Koh to deal with the current situation at Star River.
Problem Statement
New Era looked at Star River as one of its promising venture-capital investments. But this optimism cannot be warranted until they get a solid understanding of the firm’s past and future performance and find out the significant positive and negative insights. Also, Koh is not sure, whether they can repay the bank loan within the reasonable period. To avoid over borrowing from bank, Star River has to request its parent companies, the New Era Partners and the Star River Electronics United Kingdom for an injection of equity. For this, the company has to offer an attractive return on...
... middle of paper ...
...raw material costs, labors costs and other costs and utilizing the labor and raw materials more effectively.
• To generate more sales, the utilization of assets has to be done more effectively. Avoiding an unnecessary purchase of a fixed asset will result in less capital expenditure and less depreciation expense.
• To increase the return on assets and the return on equity, the company can aim at a higher turnover rate. Also, they can widen the profit margin by cutting down the costs. These will increase the profits and in turn increase the return on assets and the equity.
Conclusion
The current and the forecast financial statements of Star River Electronics show that the company is not financially healthy. I believe, by following the above recommendations and by efficiently managing the company, Star River will become healthy within the next four to five years.
Price increases in the raw material mean that prices needed to be increased, but customers were still willing to pay for a quality product.
Looking at the individual ratios seen in exhibit 1 and comparing it to the industry average shown in exhibit 2 gives a sense of where this company stands. Current ratio and quick ratio are really low and have been decreasing. For 1995, the current ratio is 1.15:1, which is less than the industry average of 1.60:1, however to give a better sense of where this stands in the industry, as seen in exhibit 3, it is actually less than the average of the bottom 25% of the industry. The quick ratio is 0.61 is less than the industry is 0.90. Both these ratios serve to point out the lack of cash in this company. The cash flow has been decreasing because, it takes longer to get the money from customers, but the company still needs to pay for its purchases. Also, the company couldn’t go over the $400,000 loan limit, so they were forced to stretch their cash.
U.S Bank, Maximize your return on assets: six steps to getting more profits from your property, plant, and equipment assets. Retrieved May 1, 2014.
However, during the 1990s, Philips and Matsushita both faced major challenges to sustain their position in the market. Changing profile of the industry and globalization forces made Philips and Matsushita’s organizational models and competitive advantages obsolete, and brought up the need for drastic actions. At the brink of a new century, the battle of two giants unraveled with CEOs from both sides implementing another round of strategic initiatives and restructurings. The pressure put on new CEOs was enormous – wrong st...
SUN Microsystems Case Analysis Sun Microsystems had an extremely tough decision to make in regards to its procurement strategy. They had to decide if they were going to take on an “E-sourcing” or “dynamic bidding” auction-type strategy with making purchases from their suppliers. Taking on this type of procurement strategy would benefit Sun with cost-savings on procurements, but may jeopardize their supplier relationships and quality of inputs for Sun products. After reviewing the enclosed financial data for Sun from 1996-1999, it is apparent that some trends are consistent. Sun’s cost of goods sold has consistently been around half of their revenue for prior fiscal years, resulting in an approximate gross margin of 50%.
...rs, setting a good trend for the corporation. They also have a very low debt-to-equity ratio, indicating that they have enough equity to easily pay off any funds acquired from creditors. As a creditor I would feel safe in lending them funds for any future projects or endeavors.
The success of circuit city can be attributed to their concept of strong management, customer service focus and a good merchandising formula which capitalized on innovative electronic consumer products. They created world-class competencies in efficient and effective logistics expertise. Their deployment of sophisticated point-of-sale and inventory tracking technology, IT investments which helped them to connect the flow of information among geographically dispersed stores was the best in the industry. These core competencies allowed them to track customer preferences and enabled them to adapt quickly to changing trends. Added to these competencies, their highly trained sales personnel who provided superior service
LVMH founds itself in a stable financial situation. Being positioned as the market leader they have better financial results than the rest of the competitors. Although the sales results for 2004 were under the industry’s average the overall performance over the last 5 years was 3% higher then the industry. It is important to note that the major owner of the company’s capital is present CEO Bernard Arnault with 47.52% of the control of the company with 64% of voting rights. This may have an Important impact in the overall performance and operating decision taken in the company.
Evaluating a company’s financial condition can be done by looking at its profitability or its ability to satisfy long-term commitments. These measures can be viewed through an analysis of a company’s financial statements, including the balance sheet and income statement. This paper will look at the status of Scholastic Company’s (Scholastic) ability to satisfy its long-term commitments and at the profitability of Daktronics, Inc. (Daktronics). This paper will include various financial ratio calculations and an analysis of the notable trends. It will also discuss the profitability and long-term borrowing positions of the firms discussed.
Job costing involves usage of situations where every job is done cost differently, consumers specifications play a bigger picture in this case. Direct and indirect costs are encountered. It is believed that job costing has lots of costs accrued from the production to the consumers (REEVE, J. M., WARREN, C. S., & DUCHAC, J. E. 2012). This involves labor, running of machines, and all the individuals who are involved in the production of a product from raw to the final product, indirect costs are applied in this order. Job costing order is best showcased in a manufacturing company, let’s take coca cola company, company specialized in beverages manufacturing and distribution, usually customers have no say in the final products of this company, but as the trends for consumption of a certain flavor, according to their statistics they will conform with the demands. The special requirements, like name branding on the bottles of the beverages, customization of the containers have had a significant impact in the consumption of coca cola products (Weygandt, J. J., Kieso, D. E., & Kimmel, P. D. 2010).
The second way is to achieve low direct and indirect operating costs is gained by offering high volumes of standard products and offering basic no-frills products. Production costs are kept low by using less parts and using standard components. Limiting the number of models produced to ensure larger producti...
... tax tariff. Based on the assumption that the company is exporting the finished goods to major developed countries such as the U.S. and the E.U. the transportation costs is high.
One of the largest technology company in the world, Lenovo had a humble beginning as a small Chinese firm founded in 1984. The company showed modest growth throughout the rest of the 20th century. It wasn’t until the company’s acquisition of IBM’s personal computer business in 2005 (Martin, 2014) that the company began to gain prominence in the technology industry. Lenovo’s innovation and strategic decision making has allowed the company to evolve on a global platform and enabled it to become one of the leading technology companies in the market today.
Sweet, Bill. "China's Suntech in Bankruptcy Proceedings." - IEEE Spectrum. Energywise, 12 Mar. 2013. Web. 18 Nov. 2013. http://spectrum.ieee.org/energywise/green-tech/solar/chinas-suntech-in-bankruptcy-proceedings
The XYZ Corporation was established in 2004 and their main office is located in Vancouver, BC. The company’s main objective is to create new innovating technology for media devices, computers, and digital music players. They deal with the design, manufacturing and marketing of the products. XYZ Corporation has been providing Canadians with groundbreaking technology throughout the years and continues to create new technology to provide others with top-level technology. Although, recently their success rate has appeared to drop rapidly due to a number of factors that will be explored throughout this case study. Their main objective is to target the problems so that they can work towards having the issues resolved as quickly as possible. If they do not take any course of action, the state of the company may be in extreme danger. This case study is designed to explore the areas of the company and discover the problems blocking the XYZ Corporation from success.