- May 7, 2020
Pegasus Technologies Case Study Your Name
PegasusTechnologies Case Study
GlobalIssues in Supply Chain Management
PegasusTechnologies Case Study
Theaim of the case study is to make a comparison between variouscompanies that have expressed an interest to supply LCD screenmonitors to firm. There shall be a need to go through variousfinancial information pertaining to the companies in question withthe aim of choosing one that has the potential of being profitable toPegasus technologies in the end. The process shall form a good causefor decision-making. The paper shall rely on Exhibit 1 provided inthe case to provide a keen analysis of the situation with the aim ofproviding recommendations on the entity that may be chosen.
Oncomparing the current ratios of the four companies, it is quite clearthat Kruger has an upper hand. It has posted an index of 2.56, whichis the highest. The concept shows that the assets of the companyexceed the liabilities by the stated value and, therefore, there is ahigh chance that the firm shall be in a position to pay off anyliabilities that it may have without experiencing any problems. Insuch a case, the situation of the firm shows that it is quite stableand, therefore, able to remain sustainable for many years (Masi,Micheli, & Cagno, 2013).In case the management of Petagus decides to reach a deal withKruger, there is a high chance that the company will continue tosupply the products needed without fail as it has a good balancebetween its assets and liabilities.
Thefirm, however, scores quite low in terms of fixed assets. Reeseappears to be quite endowed with fixed assets. It has posted anamount of US $1,091,800,000 in terms of fixed assets. The aspectshows that it has a huge capital base that accords it the financialmuscle that it requires to conduct business and handle projects andventures that do require an immense amount of capital. In such acase, given the huge amount of fixed assets that the firm has, thereare high chances that it may be in a position to get loans fromfinancial institutions, which will enable it to expand its scale ofoperations and ensure that it is able to meet the different needsthat the client may have. The company, however, appears to have amoderate earnings ratio which stands at 18.50. The case shows thatthe choice for a financial institution to accord it a loan shall,solely, be based on the discretion of the management of the saidinstitution (Masiet al., 2013).While the value is commendable, there are very few indications thatthe company could gain the chance to repay back any loan that itcould take in a timely fashion.
Payneis one company that has a considerably high priced earnings ratio.The aspect points to the fact that it has a high capability of makinga lot of profits as it makes more money through the sale of itsproducts per unit. In such a case, there is bound to be a case wherethe firm may attract a loan from financial institutions much fastercompared to all the others (Masiet al., 2013).One major flipside of the company is that it has a much lower amountin terms of fixed assets, and therefore, there is little chance thatit could obtain huge amounts of money from financial institutions inthe form of loans. The company has posted a fixed asset portfolio ofUS $206,300,000. The company also made the least amount of sales inthe previous year, which stands at a staggering US $253,800,000. Theaspect shows that, in relation to the other companies, the firm isbound to really struggle to meet its mandate, should Pegasus decideto choose it to provide the goods needed (Nair,Jayaram, & Das, 2015).The case is, more so, especially where Payne would get an equallyhuge order from another firm. Given the fact that Pegasus is growingquickly and aims towards ensuring that it has supplied a huge numberof products to the market in the coming year, it would not beappropriate for it to choose a company that is bound to derail itsoperations through some situations such as delay in the provision ofcomputer monitors that may be needed.
Interms of gross profit ratio, Reese is a company that appears to bequite promising. The firm has an index of 16.8% showing that, amongthe four companies that have expressed interest, it is the one thathas high potential to make huge profits. The case acts as a positiveshow for Pegasus because it indicates that the firm has the chance oftrading with another one that is equally huge and, therefore, has thepotential of meeting its financial obligations that may be necessaryto provide high-quality services. The company is also able to investin good talent and come up with products that meet and even exceedthe expectations that are set forth. The company also has the lowestdebt ratio which stands at 0.14. The case shows that it shall nothave the need to spend huge amounts of money from the one that itmakes to repay some of the loans that it has and, therefore,interfere with the likelihood of obtaining high levels of returnsfrom the specific endeavors that the company shall be involved in.
Krugercompany also appears to be well placed in terms of the percentage ofsales that it spends on research and development. At an index of8.29, the value clearly points out to the fact that the company hasthe ability to improve the quality of the products that it makes and,thereby, ensure that they shall readily be accepted in the market.Such products are also bound to create an element of customerloyalty, an aspect that will help to ensure that both Pegasustechnologies and Kruger remain in the market, should they reach adeal. The index of the amount of money that Kruger spends on researchand development is double the average that is spent by all companiesfound in the industry (Nairet al., 2015).The case shows that the firm has high chances of advancing on thequality, while finding ways through which it could further the salesof products that it makes.
TheCapozzi company, on the other hand, has an average collection periodof 26 days, which is much lower than the industry collection periodwhich stands at 30 days. The aspect shows the firm takes a very shortperiod to make profits compared to others. The aspect, therefore,means that it has a high bargaining power that could see it stand ina good position to gain huge amounts of money that it could use toadvance its operations (Nairet al., 2015).The firm, however, scores quite badly in the quick ratio that isaimed towards ensuring that there is a high chance of making returnsmuch quicker. Such an aspect provides a picture that lacks clarity
2Potential supplier that looks most attractive?
Allthe suppliers appear to have both advantages and flipsides. However,the one supplier that appears to be quite desirable is Reese. Inspite of the fact that the company does not spend a huge percentageof sales that it makes on research and development, the amount ofmoney that it ends up using the same is quite high, given the immensesales make at the end of the day. The company is also highly stable,because of the huge fixed capital base that it has (Nair et al.,2015).It also has an average inventory turnover of 12.65 which is above theindustry average of 12.50. The aspect shows that the firm has thepotential to provide all the necessary requirements that could beposted by Pegasus and deliver them in good time. The company isgenerally well placed, financially, an aspect that shows that it hasa high potential of providing the right amount of supplies that areneeded for the continued growth of Pegasus.
Itis quite clear that most of the companies that showed the interest ofproviding the supplies required by Pegasus are huge industrialplayers and are aware of the differences that are involved. They alsoseem to have an average to an excellent financial position that wouldenable them to provide the necessary supplies, effectively. In such acase, there will be a need to consider a company that is well placedin terms of the specific characteristics and strength, for thesuccess of Pegasus.
Masi,D., Micheli, G. J., & Cagno, E. (2013). A meta-model for choosinga supplier selection technique within an EPC company. Journalof Purchasing and Supply Management, 19(1),5-15.
Nair,A., Jayaram, J., & Das, A. (2015). Strategic purchasingparticipation, supplier selection, supplier evaluation and purchasingperformance. InternationalJournal of Production Research, 53(20),6263-6278.