Rightnow Technologies Harvard Case Solution & Analysis

ANSWER TO QUESTION # 1

In exhibit 1, the financial statements of Right Now technologies have been made for the year 1999, 2000, 2001, 2002 and the fiscal year 2003. It is calculated in order to analyze the growth of the company throughout the period of 5 years.

The calculation shows that the gross profit rate of the company is highest in 1999 as compared to the gross profit rate in the other years. The gross profit rate of the company is 81% in 1999, whereas, the gross profit rate of 2003 is 75%. This shows that the company is lacking in controlling its direct expenses as efficiently as it was controlling before.

Moreover, the company is enjoying a positive gross margin ratio over the time period but on the other hand the company is suffering from continuous losses over the time period. The company is suffering from losses because the operating expenses of the company are too high that the gross profit of the company is unable to absorb the other expenses of the company completely. Moreover, the major expense in the other operating expenses of the company, as depicted in the Exhibit 1, is advertising and promotion expense.

The advertising and promotion expenses of the company are even higher than the gross revenue of the company from 1999 to 2001. The calculation shows that the percentage of sales and marketing expenses are 149%, 184%,105%, 59%, 58% for the year 1999, 2000, 2001, 2002, and 2003 respectively. This shows that the company has well managed its selling and marketing expenses in 2003 as compared to1999. This shows that the company has adopted new means of advertising and marketing their products which are cost effective.

Moreover the company shows a continuous decrease in research and development costs. The percentage research and development cost to sales for the year 1999, 2000, 2001, 2002, and 2003 are 30%, 32%, 22%, 15%, and 16% respectively. This shows two positive aspects of the company, either the company has reduced the scope of its research and development or the company has made its research and development process cost effective.

If the company has made its research and development processes cost effective thanit is clear that the company has progressed in 2003 as compared to past on the basis of cost controlling because it has reduced the research and development cost of the company to almost half percent.

 If the company has reduced the scope of research and development processes and operations, then the company has taken a decision which could have a negative impact on the profitability of the company. The products and services in which the company is engaged are subject to frequent changes and innovations. The products and services are such that it needs to be changed frequently to cater the differing needs and demands of the customer.

Therefore, if the company has reduced the latitude of the operations of research and development department, then the company will be at high risk of losing its customer or loss of sales at the end of 2003.

The company is suffering from net loss each year since 1999. The net loss percentage to sales for the year 1999, 2000, 2001, 2002 and the year 2003 are 103%, 148%, 62%, 9%, and 8% respectively. This trend shows that the company is progressing in controlling its losses and it also indicates that the company is able to make effective strategies at the right time and is able to implement those strategies successfully, efficiently and effectively.

The calculation also shows the growth ratio of the company for the period. The growth ratios of the company for the year 2000, 2001, 2002 and 2003 are 82%, 46%, 22%, and 25%. This shows that the company’s growth percentage is declining as compared to past. It also shows that the company is unable to make mass sales over the period of time. It also highlights the inefficiency of sales strategies and sales workforce that they are unable to make huge sales of the company.RightNow Technologies Case Solution

In exhibit 2, a consolidated balance sheet has been made in order to analyze the financial position of the company and compare it with the financial position of the previous year. The calculation shows that the company’s current assets have increased dramatically over the past year. The significant increase in the current asset of the company is because of the increase in accounts receivables of the company...........

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