Case Study 10-2 Solartronics, Inc.
Solartronics, Inc, is a small company Texas-based manufacturer of solar energy panels, that has been in business since mid- 1977. By the end of 1983, it had survived some bad years and positioned itself as a reasonably good-sized firm within the industry. John Holden was the president and general manager of Solartronics, Inc, while operating the company he was concern with the incomes statement he received for January 1984. His was concern that such a poor start to the year might make it difficult to get back on stream.
Why are the reported results for January so poor, particularly in light of the expected, average monthly profit of $30,000?
January results were so poor because the budgeted average monthly sales should be $250,000. The way you are calculated this is by dividing the $3,000,000 in sales by 12 months. Unfortunately the actual average monthly sales turned out to be $ 165,000. Another reason that results were so poor is because they were in a normal seasonal downturn and during this time frame fixed costs also continued to be high which meant that the total allocation of the fixed costs was not spread over a large scale. In other words variable overhead and fixed factory overhead were unfavorable because these were higher than those of budgeted income statement.
What additional data would be useful in analyzing the firm's January performance? Why?
Various external forces could help the company analyze the January performance. Some of these factors include:
* The company should also consider using a balanced scorecard as a way to align their performance with their strategic goals. The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization...
...Tutorial 3 Making the Business Case Multiple Choice Questions 1. A mature, stable industry may need IS to ________ the current pace of operations, while a company in a newer, more volatile industry (i.e., a cellular phone company) may find it more important to __________________ technology. a. reduce, outsource b. maintain, be on the leading edge of c. advance, reduce d. accelerate, maintain 2. Porter’s five forces include: a. competitors, new entrants, customers, suppliers, distributors b. customers, suppliers, distributors, middlemen, stockholders c. stockholders, suppliers, distributors, customers, competitors d. competitors, customers, suppliers, new entrants, substitutes 3. Probably the most important factor that can affect IS investment is the nature of ________________ in the industry. a. competition or rivalry b. technology c. customer service d. marketing 4. When making a successful business case, "Arguments based on data, quantitative analysis, and/or indisputable factors" are known as: a. arguments based on faith. b. arguments based on fear. c. arguments based on fact. d. None of the above. 5. What type of argument is this: "This analysis shows that implementing the inventory control system will reduce errors by 50% and pay for itself within 18 months"? a. An argument based on faith b. An argument based on fear c. An...