MONMOUTH, INC Harvard Case Solution & Analysis

If you were Mr. Vincent, executive vice president of Monmouth, Inc., would you try to gain control of Robertson Tool in May 2003? Why, or why not?

monmouth inc case solution

monmouth inc case solution

Answer:

Being an executive president of Monmouth Inc, I would try to gain Robertson Tool under control. There may be several reasons behind that, firstly it can be seen that Monmouth Inc was involved in the production of engines and massive compressors. Apart from that, it was also involved in many successful acquisitions in the past. As a result based on its past performance, it can be seen that it has performed as a major market leader.

In addition, as a market leader it is decided that it is better to enter into the hand tools to make the strategic and financial position in the market. Despite this, it is also worth mentioning that it has mainly made acquisitions of the companies that are operating in the same industry. Furthermore, by looking from the perspective of an executive vice president of Monmouth Inc, Robertson Toll Co. had a troubled past in which there were several impacts on its sales growth that almost fell by 2% and it was far below as compared to the level of industry, respectively. The industry’s growth rate was almost 6% therefore; Robertson was not performing well in this aspect.

Despite this, due to bad performance of Robertson in the past the investors were usually lacking interest in terms making further investments. It followed creative accounting and had poor profits in the recent years.  Hence, apart from all of these hurdles, Robertson already had competitive strengths, which made it quite attractive. It was also the market leader in the manufacturing of cutting and edging tools. It had a dominant position in the market segments by relying on its two types of products.

Moreover, the most vital factor that makes Robertson attractive to Monmouth’s executive president is its great distribution system. It has a high number of sales people and the engineers are mostly in Canada and the United States. Its products were being sold in almost 137 countries. However, by looking at its strengths, it is able to bring growth in its sales per annum by almost 6 to 7%. Nonetheless, it was able to maintain a 50% market share; as a result, it was able to make its strong brand image and good reputation in the market.

By taking into account these factors, it can be recommended that as an executive president of Monmouth Inc, a thought should be given to this takeover in order to make the future prospects of Robertson better by better utilizing the resources. Although there are many other competitors in the market who are trying to make a proposal for Robertson, therefore, Mr. Vincent should make a decision as soon as possible in order to not to miss the opportunity.

Hence, by looking at the performance of Monmouth, it can be seen that it is able to manage the Robertson’s quite effectively. Also, it may be combined with other companies in order to bring reductions in the distribution costs particularly. By adding Robertson with Monmouth, it will also prove beneficial in increasing the stock value. Hence, Robertson will be able to bring further improvement in the value of the business and performance of Monmouth.

As a result of the combination between these two companies, there will be increased chances of making the operations more efficient and decreasing the line of production. This step will prove helpful in keeping focus on a specific market segment and to increase market growth in the future.

In the deal, what is the impact of the expected operating improvements on the value of Robertson Tool and on the bid?

Answer:

Monmouth is not the only company that was interested in making a merger with Robertson. There were several other proposals that were made for Robertson Tool Co. By taking into account, the operating improvements can be brought in the Robertson Toll company in this deal, it can be mentioned that Robertson’s value is going to increase and the price that will have to be paid for it in the future will also increase. It is because Monmouth was able to acquire three of the leaders in the market that resulted in further improvements in its overall performance.

Hence, Robertson’s family was not really prepared for such a quick action to be acquired by anyone. If a merger takes place between Robertson and Monmouth, then it may prevent other smaller companies to make bid for Robertson. Hence, the rivals will have to make a huge payment in order to win the proposed bid. Therefore as a market leader, Monmouth Inc can increase the performance of Robertson’s by making a use of strategies that it had used in the past, respectively.....................

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