Intel vs Arm Case
MEMO
To: Warren East, Chief Executive Officer – ARM Holdings
From: Team 8 Consultants
Date: April 3, 2012
Subject: XXXXXXXXXXXXXXXX
DECISION SUMMARY
Should JBT buy Key Technologies’ sorter division for $50 Million? To answer this question, our team conducted an examination of the value the division will provide to both your company and your customers, and the effects the purchase will have on your company’s financials and yearly marketing goals. After analyzing these factors, we recommend that JBT should move forward with this purchase.
DISCUSSION
Value Added to Customers. The proposed acquisition of the sorting division provides JBT customers with an enhanced portfolio of products they can purchase and have serviced from a single source. Also, food processors with employee wage rates greater than $4,081 per annum benefit from purchasing a sorter by the efficiencies gained in reducing manpower on the sorting line. Looking at the largest market - the United States - a food-processing firm will save $338K per year when it shifts its sorting line from manual to automated. This means that the labor savings can offset the cost of the machine in less than two years.
Value Added to Company. The proposed acquisition will provide JBT with a solution for its declining operating profits (from 10.7% to 7.8% YOY). A main cause for this was an unfavorable mix of aftermarket products sold compared to the prior year. By introducing a high-quality, high-margin product (50%) to their product mix; JBT should see increases in their operating profits, which will positively impact their bottom line. In addition, profits from servicing the equipment will provide an additional consistent and profitable revenue stream over the life of the product.
Acquiring Key’s Sorter Division will also provide the JBT sales force with an exciting new exclusive product. The optical sorter has a concrete business case behind it as it
To: Warren East, Chief Executive Officer – ARM Holdings
From: Team 8 Consultants
Date: April 3, 2012
Subject: XXXXXXXXXXXXXXXX
DECISION SUMMARY
Should JBT buy Key Technologies’ sorter division for $50 Million? To answer this question, our team conducted an examination of the value the division will provide to both your company and your customers, and the effects the purchase will have on your company’s financials and yearly marketing goals. After analyzing these factors, we recommend that JBT should move forward with this purchase.
DISCUSSION
Value Added to Customers. The proposed acquisition of the sorting division provides JBT customers with an enhanced portfolio of products they can purchase and have serviced from a single source. Also, food processors with employee wage rates greater than $4,081 per annum benefit from purchasing a sorter by the efficiencies gained in reducing manpower on the sorting line. Looking at the largest market - the United States - a food-processing firm will save $338K per year when it shifts its sorting line from manual to automated. This means that the labor savings can offset the cost of the machine in less than two years.
Value Added to Company. The proposed acquisition will provide JBT with a solution for its declining operating profits (from 10.7% to 7.8% YOY). A main cause for this was an unfavorable mix of aftermarket products sold compared to the prior year. By introducing a high-quality, high-margin product (50%) to their product mix; JBT should see increases in their operating profits, which will positively impact their bottom line. In addition, profits from servicing the equipment will provide an additional consistent and profitable revenue stream over the life of the product.
Acquiring Key’s Sorter Division will also provide the JBT sales force with an exciting new exclusive product. The optical sorter has a concrete business case behind it as it