Keane’s Acquisition Of Metro Information Services Harvard Case Solution & Analysis

Keane's Acquisition Of Metro Information Services Case Solution

The Information Technology Industry is moving towards the art of living with the innovation. The IT industry comprises of different software companies competing in their own innovative IT platform. There is no fixed key success factor for this industry. The reasons of success for any company are different from one another.

The key success factors include; the enterprise size and vision, operations of the company run smoothly, assets of the company or financial resources, Cost effectiveness, Customer relations, Cash flows and Security. The company’s size and its vision are very essential in the IT industry. In this era of innovations, it is very important for a company to have a strategic focus.

The company without a vision of growth, sustainability and main objective is useless. The vision of the company differs with the size of the company. Some companies are there to survive, while some are here to grow and some are to rule the industry. The smooth operations are essential for any company to be successful. Assets or physical resources of the company show the financial strength of the company.

Cost effectiveness is shown through CAPEX. The cost effectiveness of the company will gain the advantages of the increase in return on investments. Customer relation is also the critical key factor for the success in the IT industry. All the profits and revenues are generated through customers, so it is important for the company to provide maximum services to the customers.

Cash flows are considered as the main source of the operations as businesses are never operated without the cash. The Cash flows are very essential for the long run of the company. The huge free cash flows would be further utilized in expansions and growth of the company. Failure in the management of the cash flows is the basic reason for any business to fail.

The key success factor of this acquisition in terms of assets is the Goodwill and other intangibles of the both companies are huge. Metro Information Services has 65% of Goodwill and other intangibles in their total assets, while Keane Inc. has a 22% of portion of goodwill and other intangibles in their total assets. Goodwill is considered as the key success factor in the IT industry as it reflects the company’s reliance on its image of service providing that strengths their Goodwill value.

The metro has about 91% of the accounts receivable in its total current assets, while the accounts receivable of Keane reflects approximately 42% of their current assets. The operating cash of the company also assumed to be well from this observation. The total equity of the Keane is 78% in the total capital, while the metro information services have approximately 49% of equity in their total capital.

The operating incomes of both the companies are at a declining phase, which show the costs and expenses are increasing with the time that doesn’t reflect same increase in the revenue. This shows the cost effectiveness of the company is very weak. The companies should review their basic budgeting structure to control the costs.

All these factors have great influence on the company’s returns to investors, as both the companies show a huge decline of 70% to 90% in their net income per share. This also reflects the return on the investment will also be at declining phase..................

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