Ath Micro Technologies Case Study Solution Of Robin

Unformatted text preview: ATH CASE ANALYSIS 1 Name: Dipinka Shrestha Student ID: 21485687 1. Does the earn-­‐out structure focus on the right performance goals? Scepter had acquired ATH to increase its presence in the market. So, we can infer that it wanted to increase its market share through new product development. However, from the earn-­‐out structure it looks like sales and earning goals are independent. It may be right to have no connection between sales and earning goals, if sales are sustainable. However, if these two goals are independent, it can be inferred that profit is not a major concern as there is no control in expenditure. So, the current earn-­‐out structure is not aligned with ATH strategy selling low cost and high quality product. Moreover, in the earn-­‐out structure the bonus is mentioned, but the bonus does not link to the market share growth. So, I think that the earn-­‐out structure is not focussed on the right performance goals. (a.) Should Scepter Pharmaceutical put additional controls on this entrepreneurial firm? From the case above, we can see Scepter had put only diagnostic control on ATH. The case does not suggest operating synergy between ATH and Scepter. From the case, it seems that ATH is operating autonomously or the managers from the ATH has the autonomy to take the decisions. So, the potential for control failure is high and there is a need to add the three other essential levers of control on ATH. Being in a crucial domain such as medical, it is important for Scepter Pharmaceutical to put additional controls on ATH such as belief system, boundary system and interactive control system. Lack of Process controls is very risky in the pharmaceutical sector. Though Diagnostic control such as the earn-­‐out structure will help keep critical performance variables within preset limits and help track profitability and goals. However, diagnostic control system alone can lead to control failures and crisis. 2. If you were president of ATH Micro Technologies, how would you communicate and motivate employees to achieve profit and performance goals? From the case, earn out structure is in place. However, the organization does not seem to have a belief system. In order to communicate and motivate employees, first of all, I would create a belief system such that it communicates mission and core values, for example -­‐customer satisfaction and quality, and inspire all participants to commit to the organization's purpose. I would design an incentive program that aligns to the core values and mission of the company. For example, certain percentage of bonus would be related to quality control, certain percentage of bonus for profit and customer satisfaction. Likewise, it is also important to establish an Interactive control system to track strategic uncertainties. In order to do this, it is important to open organizational dialogue to encourage learning. Since ATH is operating in a medical technology industry that is constantly changing, it is critical for the managers in this industry to have an insight into the changing industry conditions and identify specific vulnerabilities, opportunities and the source of any problems that require proactive responses. So, the compensation of the manager should be linked to these measures in order to motivate them. (a) What are the appropriate performance goals for employees to focus on? The appropriate performance goals for employees to focus on would be a combination of qualitative and quantitative measure together. Since ATH is a product-­‐based company, employees should focus on qualitative measures such as product quality, customer satisfaction and product innovation but at the same time, employees should also focus if the sales goals are being met and if the cost to produce the product is under control in order to attain profitability. So, it is important to tie the qualitative and quantitative measures together and employees should focus on both of these goals together rather than solely on one. (b) How would you communicate and control events and employee actions that could put business objectives at risk? I would communicate and control events and employee actions that could put business objectives at risk through the boundary system. I would identify actions and pitfalls that employees must avoid and establish them as a boundary system. I would make the ATH CASE ANALYSIS 3 employees aware about the various regulations that need to be followed in the industry such as adherence to FDA regulations through this system. 3. What are the best financial measures to assess ATH MicroTechnologies’ performance? Why? The best financial measures to assess ATH MicroTechnologies’ performance are Profit and Return on Investment (ROI). Profit is the difference between Sales and Cost. Considering ATH’s strategy of selling low cost and high quality product, it is essential for ATH to measure both Sales and Cost. The current earn-­‐out structure does not consider profit so the earn-­‐out structure is not aligned with ATH strategy. Considering profit as a financial measure aligns with ATH Strategy. Likewise, Scepter had acquired and invested on ATH for market penetration. So, it is important for Scepter to measure the Return on Investment (ROI) in order to assess ATH MicroTechnologies’ performance. ...
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- Он должен там. Ищите. Джабба окончательно убедился: директор рискнул и проиграл.

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