Electro-Tech was formed in 2008 by combining the technical divisions of Mobilec and Novo-Tech. Electro-Tech is one of the world’s leading suppliers of telecommunications systems. A multinational company, Electro-Tech employs 21,000 people across 80 countries. In 2015, it sales exceeded £5 billion. Electro-Tech’s mission is to place world-wide telecommunications at the heart of every business. It uses the latest technology to develop products and services that help its customers improve their telecommunications functions.
To develop new products and services that can compete in the global telecommunications sector requires intensive research and development. To protect its investment, Electro-Tech obtains patents for its new products.
In 2015, Electro-Tech was faced with a major investment decision. As its TeleTech range moved through its product lifecycle, the company was getting nearer to the maximum capacity for production. Electro-Tech could not produce more of the TeleTech range without investing in its production facilities. A proposal was put forward to expand production through a £150 million investment at the Atlantic site in Cornwall. The company had to decide whether increasing production would be financially viable and a worthwhile investment.
The table below shows estimated cash flow for the Atlantic expansion project.
Cash flows (million)
Year
0
Year
1
Year
2
Year
3
Year
4
Year
5
Year
6
Year
7
Year
8
Year
9
Cash Inflow
Sales
200
400
400
400
400
400
400
400
400
Total Inflow
200
400
400
400
400
400
400
400
400
Cash Outflow
Investment
150
Manufacturing
Costs
80
160
160
160
160
160
160
160
160
Sales and
Marketing
15
30
30
30
30
30
30
30
30
Other Costs
25
25
Total Outflow
150
120
215
190
190
190
190
190
190
190
Net cash flow
-150
80
185
210
210
210
210
210
210
210
Task 1
For your interview, you will need to show that you have a proper understanding of strategy and global finance.
a) Explain how the concept of globalization is linked to investment approaches, using examples from Electro-Tech and other global companies
b) Evaluate approaches to investment that two global businesses have adopted.
Task 2
a) Review two contrasting global business environment factors
b) Evaluate the impact of each factor on Electro-Tech’s operations
Task 3
a) Explain the potential investment decisions and strategies available to Electro-Tech’s proposed Atlantic expansion project
b) Select and critically evaluate the optimum strategy.
Task 4
For your interview, you need to reach a strategic decision about whether or not the Atlantic expansion project should go ahead.
a) Explain the potential impact of your strategic decision on Electro-Tech’s operations
b) Evaluate the potential financial consequences that’s your strategic decision may have on the organisation
Task 5
a) Explain TWO global risks that Electro-Tech might be exposed to if they were to implement the Atlantic expansion project
b) Evaluates TWO risk mitigation techniques that can be applied to the Atlantic expansion project
c) Evaluate the suitability of the two risk mitigation techniques you have selected for managing the global risks to Electro-Tech’s Atlantic expansion project
