Question number 1:
What are the most significant achievements of the ATH in each of the five phases described in this case?
ath microtechnologies case solution
In each of the phases, ATH has some significant achievement that has made the company to perform in some phases better and good in some of the phases. The details of each phase achievement are given below in detail.
Founding phase:
In its first phase of the foundation of ATH MicroTechnologies, it had decided to go for an innovation because it is the only way to earn profitability in the future years. The innovation was to develop equipment that can be even better than ultrasound an x-ray machine with that Casper has used with different experimental procedures. The innovation was based on sending electronic impulses through electrodes attached to the skin and observing how these impulses change as they went through the body.
Casper demanded that the equipment must be cost effective and beneficial for both the company and the potential patients that required easier and better results with the same or lower cost. The innovative idea has given the company an opportunity to come up with equipment and it successfully introduced the product with three private equity finances and the company was sold to Scepter to raise funds for research, development and marketing of the product. The scepter was a pharmaceutical company that was also willing to acquire ATH with a view to add another innovative product into the list of its products and the company had worth around $10 billion during 2001.
The parent company with a good market reputation and unlimited funds was another significant achievement of ATH to continue its success in the future years.
Growth phase:
The company started its growth phase with the new innovative equipment and after acquisition by Scepter. The first significant improvement was to retain the current directors and the senior management. The senior management and the directors had the idea to develop such innovative equipment.They had developed the equipment, thereforethey had betterknowledge of such equipment and as a result,it was a favorable decision to retain the current directors and senior management.
The second significant achievement was the growth in its revenue.Therevenues had grown from $4.136 million in 2000 to $9.724 million in 2001. The growth was substantial and it represented 135% growth in the one year tenor and it also continued in 2002 and the revenues for 2002 were$17.961 million and it has also shown a growth percentage of 85% that is also high.
The growth is achieved through the retention of the old management that had also known better about the product and the marketing strategies of the product in the target market. The significant achievement is achieved through the help of a significant marketing strategy that had been initiated from the old management that had continued to work for the organization.
The earn-out payment is related to the success of the product and the currentmanagement is trying its best to have profited in the next years to have a $120 million earn-out payment, therefore it can take a reasonable decision that can bring profits for the company and a earn-out payments.
Push to profitability phase:
The first achievement was to come with a comprehensive idea of “Push to Profitability” in which the management needed to be motivated in order to earn profits for the company. The idea was developed by Charles Casper (the founder). The idea came with a view to generate profits for the year 2003 with a view to have some earn-out payments and bonuses that are dependent upon the profitability of the company.ATH Micro Technology Case Solution
The second significant achievement was the growth in the sales as it hadgrown more than the expectation. The sales had grown to $73.716 million in 2003 from $17.961 million in 2002. The sales growth percentage is 310% that is beyond the expectations of the company. The growth is achieved due to incentive offered to the employees that is 20% of their salaries if the company does not face any loss situation in 2003. The breakeven sales were disclosed to the employees and they triedtheir best to cross the breakeven sales point to give profits to the company, therefore the sales increased extensively.
The third achievement of the phase was the solution of the last phase end problem of losses. The company finally earned a profit of $10.625 million in 2003. It had earned profit due to the decision of the founder to offer incentive to its employees to generate profits for the company and they would be compensated for their action to have profitability or even no loss situation for the company.......................
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