Step 4. Prepare a report on the case. Use the instructions in Unit 1

Step 3

As of December 2000

Sales of the Microcomtec 100

Step 2. Consider exhibits

Step 1. Clarify the Issue

Analyse the case step by step.

Discussion questions:

1. What does Microcomtec Corporation do?

a) What is its major product?

b) For what market does it manufacture?

c) What are Stanley’s major recommendations?

2. In the background a number of problems with Microcomtec are mentioned, either directly or indirectly by way of proposed changes.

a) Make a list of these problems.

b) Then write a one-sentence statement describing each problem.

Exhibit 1

Third and Fourth Quarter, 2000 (in US$)

	July	August	September	October	November	December	Total
Domestic	38,900	48,600	61,642	54,282	42,623	43,624	289,671
International	31,090	21,438	37,583	21,438	21,438	-	132,987
							422,658

Exhibit 2

Microcomtec’s Balance Sheet

(Actual US$)

ASSETS
Cash	44,190
Accounts receivable:
Trade	209,540
Other	41,800
Inventories:
raw materials packaging work in progress finished goods	98,070 24,504 3,230 107,440
Prepaid expenses	10,756
TOTAL CURRENT ASSETS	539,530
Fixed assets less depreciation	12,462 (4,790)
Net fixed assets	7,672
Other noncurrent	190
TOTAL ASSETS	547,392
LIABILITIES
Notes payable	54,182
Accounts payable: trade current intercompany accrued expenses accrued taxes TOTAL CURRENT LIABILITIES	269,904 82,591 23,693 97,330 527,700
Reserves	1,561
Share capital (privately held)	18,131
TOTAL LIABILITIES	547,392

Discussion questions:

1. Exhibits 1 and 2 show Microcomtec’s financial situation. Judging from these figures, is Corporation in serious trouble? Support your answer with specific references to the exhibits.

2. Does exhibit 2 suggest that Stanley’s recommendations will be adopted by Dixon? Why or why not?

3. Create a graph using Exhibit 1, expressing the domestic and international sales trends for the third and fourth quarters of 2000.

4. Write a brief summary of the balance sheet using Exhibit 2. Your analyses should include a comparison between assets and liabilities. Note that while the total assets and total liabilities are exactly the same (and must be if a balance sheet is to “balance”), there are a number of points to compare: total current assets versus total current liabilities, accounts receivable versus accounts payable, cash versus notes payable, etc. From your comparison, how would you rate the financial position in the company?

a) Consider the memo from H. Dixon to D. Robinson:

Interoffice Memorandum

To: D. Robinson

Fm: H. Dixon

Re: Direct Mail

Date: Jan. 22, 2001

With underwritten be advised that I contacted the people at Industrial Collaborative today in an effort to purchase direct mail lists. They claim to have very vertical lists of primary purchases both in the U.S. and abroad for materials-testing automation. They are going to sell one list for $1,200 or two for $2,100 (over 1,000 names in each). Names and titles are included into the lists. I strongly suggest that we should obtain the lists, as it was recommended by Ms. Stanley. We should also create a direct mail piece to accompany existing product leaflets. Harvey, from International Communications Department, promises he can have design and copy in a matter of some days for a three-page brochure describing our automation packages. Harvey will phone back later to confirm. Let’s discuss the matter this afternoon.

b) Create a dialogue between Robinson and Dixon regarding the above Memo:

R. Henry, it seems as if you’re missing the basic points of Ms. Stanley’s recommendations.

D. _____________________________________________________

R. I say that because her report explicitly states that we should abandon these markets and change our direction.

D. _____________________________________________________

R. I know you believe we should give it more time. But, evidently, we don’t have more time.

D. _____________________________________________________

R. Well, maybe I am making a mistake. But we have to try to get a product that actually sells.

D. _____________________________________________________

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