Description
first one
Polymold Division Strategy PaperPolymold Division is one of the largest manufacturers of precision injection molds and they are experiencing a rapid decline in their business. They are trying to decide whether investing in a CAD/CAM equipment will prove beneficial in the long run.Mr. Martin, the manager of Polymold Division, is worried that sales would continue to steadily decline without the acquisition of the CAD/CAM equipment. Since there are many competitors, their market share will continue shrink with their current products. The CAD/CAM acquisition will help reduce costs and the development of new products, but only after all necessary expenses to get the process up and running.As stated in the case, we can assume that market share will drop from 5.1% in 1983 to 4.2% in 1988 without the acquisition of CAD/CAM. There will be a 4% point increase in cost of goods sold. With the acquisition of CAD/CAM, market share will increase from 5.1% in 1983 to 7.3% in 1988. However, there is a probability that market share could be as little as 6.3% or as high as 7.7%. We will also be using a 50% tax rate as stated in the case.In order to solve this case, we must forecast future financial statements with and without the acquisition of CAD/CAM. The financial statements will be heavily influenced by sales and growth. We can create forecasted income statements for each yearto analyze Polymolds budget. We would calculate pretax earnings by taking forecasted earnings and subtracting cost of goods sold and various expenses (administrative expenses, depreciation, etc.). We would then subtract the 50% tax rate given in the case tocalculate our net income. This same procedure would be used for both scenarios of with or without the purchase of CAD/CAM. However, with the purchase of CAD/CAM, we
Second one
Polymold Division Strategy PaperPolymold Division is one of the largest manufacturers of precision injection molds and they are experiencing a rapid decline in their business. They are trying to decide whether investing in a CAD/CAM equipment will prove beneficial in the long run.Mr. Martin, the manager of Polymold Division, is worried that sales would continue to steadily decline without the acquisition of the CAD/CAM equipment. Since there are many competitors, their market share will continue shrink with their current products. The CAD/CAM acquisition will help reduce costs and the development of new products, but only after all necessary expenses to get the process up and running.As stated in the case, we can assume that market share will drop from 5.1% in 1983 to 4.2% in 1988 without the acquisition of CAD/CAM. There will be a 4% point increase in cost of goods sold. With the acquisition of CAD/CAM, market share will increase from 5.1% in 1983 to 7.3% in 1988. However, there is a probability that market share could be as little as 6.3% or as high as 7.7%. We will also be using a 50% tax rate as stated in the case.In order to solve this case, we must forecast future financial statements with and without the acquisition of CAD/CAM. The financial statements will be heavily influenced by sales and growth. We can create forecasted income statements for each yearto analyze Polymolds budget. We would calculate pretax earnings by taking forecasted earnings and subtracting cost of goods sold and various expenses (administrative expenses, depreciation, etc.). We would then subtract the 50% tax rate given in the case tocalculate our net income. This same procedure would be used for both scenarios of with or without the purchase of CAD/CAM. However, with the purchase of CAD/CAM, we
