Science Technology Company
Company Background :
Science Technology Company was a leading manufacturer of computer-controlled automated test equipment (ATE) that was used to monitor and manage quality over the life cycle of electronic products. With 31% market share, the company was the dominant firm in the design and manufacture of testers and test software for printed circuit boards. Its second business was its semiconductor test operation, which manufactured complex systems that cost in excess of $1 million and were used to test state-of-the-art very large scale integrated (VLSI) circuits. Other Products included a system to test electronic products in the field; systems used to test a products mechanical and structural integrity under stress and computer aided engineering software used to test and verify designs before they were physically built, by creating electronic models and simulating their performance in the software version.
Company Objectives and Strategy
STC’s primary objective was to be the recognized international leader in providing integrated quality management systems to manufacturers of electronic devices and equipment. This objective required maintaining its leadership in creating new test technologies and new products for all segments of the design and test markets. This commitment to maintain fundamental superiority in test expertise required very heavy spending on research and development.
Case Analysis
Early in march 1985, Bill Watson, president of STC was reviewing a 5 year financing plan prepared for the company by Harry Finson, Chief financial officer. After some study, Mr. Watson identified several questions for further consideration and resolution:
1. In view of the uneven growth in sales, inventories and receivables and earnings in the past were Mr. Finson’s 5 year forecast useful?
Mr. Finson’s 5 year forecast is somewhat useful because the increase of 30% annual growth rate in projected sales is achievable knowing that the market for
Science Technology Company was a leading manufacturer of computer-controlled automated test equipment (ATE) that was used to monitor and manage quality over the life cycle of electronic products. With 31% market share, the company was the dominant firm in the design and manufacture of testers and test software for printed circuit boards. Its second business was its semiconductor test operation, which manufactured complex systems that cost in excess of $1 million and were used to test state-of-the-art very large scale integrated (VLSI) circuits. Other Products included a system to test electronic products in the field; systems used to test a products mechanical and structural integrity under stress and computer aided engineering software used to test and verify designs before they were physically built, by creating electronic models and simulating their performance in the software version.
Company Objectives and Strategy
STC’s primary objective was to be the recognized international leader in providing integrated quality management systems to manufacturers of electronic devices and equipment. This objective required maintaining its leadership in creating new test technologies and new products for all segments of the design and test markets. This commitment to maintain fundamental superiority in test expertise required very heavy spending on research and development.
Case Analysis
Early in march 1985, Bill Watson, president of STC was reviewing a 5 year financing plan prepared for the company by Harry Finson, Chief financial officer. After some study, Mr. Watson identified several questions for further consideration and resolution:
1. In view of the uneven growth in sales, inventories and receivables and earnings in the past were Mr. Finson’s 5 year forecast useful?
Mr. Finson’s 5 year forecast is somewhat useful because the increase of 30% annual growth rate in projected sales is achievable knowing that the market for