Summ
Summary of the Case study
ABCTech could is considered as a leader in the data security industry because of the solutions they can bring forth when it comes to security systems. Through the security system analysis and development, Thunder Thompson and Chris Christianson have been able to create a security system that allows for a single security update compared to the other security system that calls for many tedious updates. The two, though working on a part-time basis, could generate a net income of $250,000 in the company’s first year after rolling out. If they dedicated their full time to work on the business, it could bring a net income of about $500,000. A software company has offered them $500,000 to buy this business from them. This could also be a good deal considering they will have huge sums at the disposal and that same company will employ them. However, it is a better option for them to put in the effort and oversee the long-term growth of the company. Neither of them is competent enough in the sales department,and they will, therefore, need to outsource. Funds will be required to cover for the expenses of the outsourced staff. They may consequently seek for a loan that will cover these expenses. The business is good,and the best way forward is to go on with the expansion and growth of the company.
Potential resolutions
It is imperative to carry out market research to determine how well a company can perform in a particular industry. Owing to the fact that there is a larger entity that has placed on the table a $500,000 offer, it shows that ABCTech’s security service is of great importance in the industry. Far from that, from the research done, it is clear that the sector will perform better due to the products they offer to them. They are faced with two options, either sell the business or to grow the business. Selling the company means that they will not realize its full potential as projected in the financial statement (Tulung & Ramdani, 2018).
The company should come up with a clear and definite business plan. Then they should set steps for implementation of the business plan to set the firm in motion. This will enable them to establish the direction in which they want to head and the steps that they will take to get there. This business plan will encompass the product they’re offering to the market, their human resource structure, leadership, and management of the company, and the company’s financial management. Having a departmentalized kind of structure will allow each department to focus on their core purpose. For instance, in the sales department, they would focus on marketing and promoting the products of the company. Thunder and Chris incurred a lot of debt to finance this venture. Therefore, by creating a sound structure and boosting sales, they will be able to generate enough money to pay off this debt. Once such a plan is in place, it is necessary to consider the relevant financial ratios. Liquidity ratios such as current ratio and quick ratio are essential because they tell the business’ ability to cover their short term obligations as and at when they fall due such as payment of remunerations to the employees. High liquidity ratios show that the business plan is good and is headed in the right direction because they can offset their financial obligations. Profitability ratios such as return on equity and return on assets should also be computed to analyze the viability of the entity. If the plan highlights good profitability ratios, then they can go on with the project as it will generate profits for them (Greco et al., 2016).
Preferably, instead of selling off the company they could look for investors who are willing to invest in the company. This will have the effect of easing the financial strain on them,and they can focus on running the company. Therefore, they can develop better products for the market. They could also obtain finance by applying for grants from organizations that offer such financing to the industry. There are several grants that tech companies can apply for (Rajala, 2017). Getting grants will, in turn, allow them to focus on business as this grant will cover for the expenses. Because of the kind of solutions the company offers, they will be able to get these grants. They can then channel the finances towards the research and development of their products without having to seek additional loan finance. To get investors, they will have to make a financial analysis of the company’s price to earnings ratio. This ratio allows for the valuation of the company’s stock which will then enhance the making of the financing decision on how much investors will pay and for what percentage of the company. Price to earnings ratio is useful because it goes a step ahead to analyze the price to earnings to growth ratio through which investors can tell the expected growth levels of the company. Investors, therefore invest in anticipation of the growth of the entity. Debt to equity ratio is also is considered by investors since they can assess the financial health of an organization they want to invest in, wheresuch an entity has accumulated little debt in relation to their total net worth, and then investors deem the company to be financially healthy (Greco et al., 2016).
Conclusion
Organizations face challenges in everyday life from conception. How such problems are handled by the company’s top managers determine which directionthe company heads. They should, therefore, seek solutions so that they can grow and learn from past mistakes. Chris and Thunder, therefore, need to pull their resources together and establish themselves as the organization’s leaders and represent its image. This will, in turn, ensure that the company moves forward in the right direction.
References
Greco, S., Figueira, J., &Ehrgott, M. (2016). Multiple criteria decision analysis. New York: Springer.
Rajala, L. (2017). Tech support: NH FIRMS AWARDED MORE THAN $3 MILLION IN RESEARCH AND INNOVATION GRANTS. New Hampshire Business Review, 39(14)
Tulung, J. E., &Ramdani, D. (2018). Independence, Size and Performance of the Board: An Emerging Market Research.
ary of the Case study
ABCTech could is considered as a leader in the data security industry because of the solutions they can bring forth when it comes to security systems. Through the security system analysis and development, Thunder Thompson and Chris Christianson have been able to create a security system that allows for a single security update compared to the other security system that calls for many tedious updates. The two, though working on a part-time basis, could generate a net income of $250,000 in the company’s first year after rolling out. If they dedicated their full time to work on the business, it could bring a net income of about $500,000. A software company has offered them $500,000 to buy this business from them. This could also be a good deal considering they will have huge sums at the disposal and that same company will employ them. However, it is a better option for them to put in the effort and oversee the long-term growth of the company. Neither of them is competent enough in the sales department,and they will, therefore, need to outsource. Funds will be required to cover for the expenses of the outsourced staff. They may consequently seek for a loan that will cover these expenses. The business is good,and the best way forward is to go on with the expansion and growth of the company.
Potential resolutions
It is imperative to carry out market research to determine how well a company can perform in a particular industry. Owing to the fact that there is a larger entity that has placed on the table a $500,000 offer, it shows that ABCTech’s security service is of great importance in the industry. Far from that, from the research done, it is clear that the sector will perform better due to the products they offer to them. They are faced with two options, either sell the business or to grow the business. Selling the company means that they will not realize its full potential as projected in the financial statement (Tulung & Ramdani, 2018).
The company should come up with a clear and definite business plan. Then they should set steps for implementation of the business plan to set the firm in motion. This will enable them to establish the direction in which they want to head and the steps that they will take to get there. This business plan will encompass the product they’re offering to the market, their human resource structure, leadership, and management of the company, and the company’s financial management. Having a departmentalized kind of structure will allow each department to focus on their core purpose. For instance, in the sales department, they would focus on marketing and promoting the products of the company. Thunder and Chris incurred a lot of debt to finance this venture. Therefore, by creating a sound structure and boosting sales, they will be able to generate enough money to pay off this debt. Once such a plan is in place, it is necessary to consider the relevant financial ratios. Liquidity ratios such as current ratio and quick ratio are essential because they tell the business’ ability to cover their short term obligations as and at when they fall due such as payment of remunerations to the employees. High liquidity ratios show that the business plan is good and is headed in the right direction because they can offset their financial obligations. Profitability ratios such as return on equity and return on assets should also be computed to analyze the viability of the entity. If the plan highlights good profitability ratios, then they can go on with the project as it will generate profits for them (Greco et al., 2016).
Preferably, instead of selling off the company they could look for investors who are willing to invest in the company. This will have the effect of easing the financial strain on them,and they can focus on running the company. Therefore, they can develop better products for the market. They could also obtain finance by applying for grants from organizations that offer such financing to the industry. There are several grants that tech companies can apply for (Rajala, 2017). Getting grants will, in turn, allow them to focus on business as this grant will cover for the expenses. Because of the kind of solutions the company offers, they will be able to get these grants. They can then channel the finances towards the research and development of their products without having to seek additional loan finance. To get investors, they will have to make a financial analysis of the company’s price to earnings ratio. This ratio allows for the valuation of the company’s stock which will then enhance the making of the financing decision on how much investors will pay and for what percentage of the company. Price to earnings ratio is useful because it goes a step ahead to analyze the price to earnings to growth ratio through which investors can tell the expected growth levels of the company. Investors, therefore invest in anticipation of the growth of the entity. Debt to equity ratio is also is considered by investors since they can assess the financial health of an organization they want to invest in, wheresuch an entity has accumulated little debt in relation to their total net worth, and then investors deem the company to be financially healthy (Greco et al., 2016).
Conclusion
Organizations face challenges in everyday life from conception. How such problems are handled by the company’s top managers determine which directionthe company heads. They should, therefore, seek solutions so that they can grow and learn from past mistakes. Chris and Thunder, therefore, need to pull their resources together and establish themselves as the organization’s leaders and represent its image. This will, in turn, ensure that the company moves forward in the right direction.
References
Greco, S., Figueira, J., &Ehrgott, M. (2016). Multiple criteria decision analysis. New York: Springer.
Rajala, L. (2017). Tech support: NH FIRMS AWARDED MORE THAN $3 MILLION IN RESEARCH AND INNOVATION GRANTS. New Hampshire Business Review, 39(14)
Tulung, J. E., &Ramdani, D. (2018). Independence, Size and Performance of the Board: An Emerging Market Research.
