Bergerac case report
FINANCIAL AND ADVANCED CAPITAL INVESTMENT ANALYSIS – IEM 5503
BERGARAC SYSTEMS CASE REPORT
Prepared By
DHINESH SELVARAJ
11508062
Executive Summary
This report is a result of an analysis of the case which has been analyzed and reported by Mr. Bob McCarthy, Director of planning who has collected some serious information about the firm Genie Tech. Genie Tech is one of the current suppliers who supply plastic molded parts to Bergerac Systems. Off late the supply of these plastic parts is being a real problem for Bergerac Systems. The reason for the shortages in supply by both Genie Tech and Ellsinore are mentioned as the financial crisis of 2008, both the suppliers are also facing a very competitive and fragmented market with very low margins. As these reasons are putting them in a very difficult situation in supplying the parts, Bergerac faces big trouble in manufacturing the cartridges since the established base has grown big, Bergerac is not able to meet the supply.
Hence Mr. Ian McCarthy has to decide to either build the capacity of manufacturing the plastic parts in house or to buy Genie tech who are ready to sell their firm to Bergerac. The capacity of the current machines present in genie tech and the expenses are tabulated, similarly the expenses and capital costs of building capacity in house are also given.
Mr. McCarthy has used the data collected to calculate a projection to the year 2010 by backward integration options he finds out the payback period of both the options and finds concludes that building the capacity inside the firm is more economical than buying Genie tech, where in the analysis is short term. This report is based on the analysis which is made for a long term study period of 5 years and the Net income of each year is calculated which includes the capital investments and the annual savings made by each model in each year considering the Net present worth of these two options (Buy and Build) a stronger and a reasonable
BERGARAC SYSTEMS CASE REPORT
Prepared By
DHINESH SELVARAJ
11508062
Executive Summary
This report is a result of an analysis of the case which has been analyzed and reported by Mr. Bob McCarthy, Director of planning who has collected some serious information about the firm Genie Tech. Genie Tech is one of the current suppliers who supply plastic molded parts to Bergerac Systems. Off late the supply of these plastic parts is being a real problem for Bergerac Systems. The reason for the shortages in supply by both Genie Tech and Ellsinore are mentioned as the financial crisis of 2008, both the suppliers are also facing a very competitive and fragmented market with very low margins. As these reasons are putting them in a very difficult situation in supplying the parts, Bergerac faces big trouble in manufacturing the cartridges since the established base has grown big, Bergerac is not able to meet the supply.
Hence Mr. Ian McCarthy has to decide to either build the capacity of manufacturing the plastic parts in house or to buy Genie tech who are ready to sell their firm to Bergerac. The capacity of the current machines present in genie tech and the expenses are tabulated, similarly the expenses and capital costs of building capacity in house are also given.
Mr. McCarthy has used the data collected to calculate a projection to the year 2010 by backward integration options he finds out the payback period of both the options and finds concludes that building the capacity inside the firm is more economical than buying Genie tech, where in the analysis is short term. This report is based on the analysis which is made for a long term study period of 5 years and the Net income of each year is calculated which includes the capital investments and the annual savings made by each model in each year considering the Net present worth of these two options (Buy and Build) a stronger and a reasonable