Merill Electronics Essay Example

to internal and market changes. Failure to do so may render any alternative strategy ineffective. Operating efficiency, profitability, and turnovers will be assessed through financial ratios, which guide the company in evaluating its current and projected condition. Strategies will be tailored based on the current state of Merrill's books. When implementing suggested actions, the cost of change and time requirements should also be taken into consideration.The main strategy to consider will be the most cost-effective in terms of monetary and opportunity costs. There are alternative courses of action and evaluation which include staying with the current strategy implemented by Brown or altering it and implementing complementary actions, registering the company and making stocks publicly traded, or selling out the company to reduce losses if strategies fail. A general overview of the financial ratios shows that the current and quick ratios are below average due to a bloated debt ratio, while asset turnover is also below par, possibly caused by operating inefficiency. However, ROE and gross margin are above industry means, indicating short-term effectiveness. Alternative 1 is to stay with the current business strategy, which has proven useful for high-volume business despite ballooning expenses and suffering inventory management.

The accumulation of excess inventory and obsolescence of previous stock is expected to cause losses. The sustainability of the current plan is uncertain because banks have refused to increase the company's credit lines. If the company fails to meet the requirements set by its banks for additional funding, the plan may be derailed prematurely. Implementation costs for recent changes have been internalized, but financing costs may be required to maintain the current business configuration. Additionally, opportunity costs

may accumulate due to funds diverted to increase inventory levels, and missed opportunities for fruitful investments may occur if the current system is not streamlined further.

Alternative 2 proposes altering Brown's strategy and implementing complementary actions to address issues such as increasing bad debts, volatility in receivables and inventory, and growing funding needs. To control for excess inventory, some products may need to be slashed from the company's current offerings. Close monitoring of the Vortex division will be necessary to determine whether it can remain profitable in the future.The Small-Appliance Division is a potential divestiture candidate due to quality problems and significant carrying costs. To continue with the current strategy, a more efficient receivables management system must be implemented, and additional funding must be sourced from a suitable provider to make the strategy sustainable. Improving customer and supplier relationships can ensure high product quality and efficient cash inflow from receivables. If the complementary actions to remedy the strategy's flaws are implemented, this would be an effective choice in the highly competitive business environment. While there is no guarantee of long-term sustainability, implementing changes promptly can increase the strategy's success. The main challenge would be securing financing from alternative sources if Merrill's credit lines are not extended. However, implementing these changes comes at a high cost due to uncertainty of funding sources.Implementing Patricia Merrill's strategy carries significant risks, as time and opportunity constraints may lead to either substantial gains or losses that will impact the company's future. An alternative solution is to register the company and make stocks publicly-traded, which is suitable for short-term issues. The resulting influx of cash can help with inventory

and receivables costs, credit lines, streamlining operations, and improving supplier relations and inventory turnover. However, this solution is not a complete resolution to the company's problems as further improvements are still necessary for sustainable operations. Implementation of this alternative solution requires meeting certain requirements such as a good financial history and resources (i.e., advertisements and meetings), which may exacerbate the already strained credit lines.In conclusion, the company must use its funds wisely to avoid wasting time when trading publicly. Alternative 4 suggests selling the company to reduce losses in case current strategies fail. This option could potentially solve the company's problems by providing access to the buying company's resources, streamlining operations and addressing debts. It could also result in increased effectiveness due to good synergy and leadership. However, declining market share, competition and faulty leadership from the buying company could lead to worse difficulties than the current situation. Nevertheless, selling the company would relieve Merrill's family of any burden related to the business. Sustainability, however, depends on the buying company's plan, whether they choose to sell it piece by piece, assimilate it into their ranks or run it as an autonomous business. Ultimately, how the company adapts to changes and solves its problems will vary based on a case-by-case basis.The sustainability of Patricia Merrill's father's company depends on who she decides to sell it to. To implement a strategy for selling the company, advertising and meetings are necessary expenses. The company should choose the buying offer that best suits both the company and shareholders in order to minimize costs. A combination of the second and third alternatives from the cost-benefit analysis is recommended for Merrill,

which entails capitalizing on advertising and improving their top three division earners - PC, Records, and Hi-Fi and Electronics. Quality must be ensured in these divisions to reduce warranty and replacement costs and improve customer relations and market penetration. Divesting unprofitable divisions, such as Small-Appliance and Vortex, should also be considered.Merrill ought to place these product lines on a trial period and discontinue them if they don't improve in the future. To keep existing and acquire new customers, the company should enhance its relationships with stakeholders and increase delivery speed. Additionally, Merrill should hasten its collection of debts as late accounts evidently rose from May to June. The rise in inventory levels is due to the introduction of new product lines; however, Merrill could apply Just-In-Time inventory management to reduce losses from obsolescence and overstocking. Lastly, Merrill should regulate excessive operating expenses for sustainability. If these recommendations are carried out proficiently, the company's short- and long-term issues will be resolved.