Merill Electronics Case
Merrill Electronics Corporation
Case Context Merrill Electronics Corporation, founded by Thomas Miller in 1950 and a major distributor for the Global Electrical Company (GEC), is one of the largest manufacturer of electrical and electronics products for consumer and institutional markets. Over the years, it has expanded its operations with its noncompeting lines of electrical appliances, records, compact discs, and cassettes and through importing from and distributing to Taiwan and Japan.
However, Merrill is faced with steadily severe declining margins in the electrical distribution business in recent years. This worsens its poor financial condition and inability to meet payments to suppliers and the current $3 million debt to its principal bank.
Problem Statement
Merrill needs to evaluate the sustainability of its current market strategy to be at par in the electronics distribution business and consider if it can stay in the business or not. As Merrill’s new president and largest shareholder, what is the necessary action that Patricia Miller should do that would be the most effective and beneficial to the company and its shareholders? Should she choose to retain interest in the company or sell out? Methodology 1. Analyze the financial statements highlighting operating efficiency, profitability, financial leverage, and liquidity. Do a trend analysis and compare the company ratios to its industry peers. 2. Evaluate the current strategy implemented by Brown. 3. Suggest and test the feasibility of other alternative strategies to maintain healthy margins and levels of profitability. 4. Recommend the best course of action to ameliorate the current problem.
Analysis Framework The alternative courses of action shall be evaluated using cost-benefit analysis.
I. Areas for Consideration
Suitability to the Business Environment Merrill’s suitability to the industry it belongs should be considered for this will be the
Case Context Merrill Electronics Corporation, founded by Thomas Miller in 1950 and a major distributor for the Global Electrical Company (GEC), is one of the largest manufacturer of electrical and electronics products for consumer and institutional markets. Over the years, it has expanded its operations with its noncompeting lines of electrical appliances, records, compact discs, and cassettes and through importing from and distributing to Taiwan and Japan.
However, Merrill is faced with steadily severe declining margins in the electrical distribution business in recent years. This worsens its poor financial condition and inability to meet payments to suppliers and the current $3 million debt to its principal bank.
Problem Statement
Merrill needs to evaluate the sustainability of its current market strategy to be at par in the electronics distribution business and consider if it can stay in the business or not. As Merrill’s new president and largest shareholder, what is the necessary action that Patricia Miller should do that would be the most effective and beneficial to the company and its shareholders? Should she choose to retain interest in the company or sell out? Methodology 1. Analyze the financial statements highlighting operating efficiency, profitability, financial leverage, and liquidity. Do a trend analysis and compare the company ratios to its industry peers. 2. Evaluate the current strategy implemented by Brown. 3. Suggest and test the feasibility of other alternative strategies to maintain healthy margins and levels of profitability. 4. Recommend the best course of action to ameliorate the current problem.
Analysis Framework The alternative courses of action shall be evaluated using cost-benefit analysis.
I. Areas for Consideration
Suitability to the Business Environment Merrill’s suitability to the industry it belongs should be considered for this will be the