Pc&D Inc.

Topics: Subsidiary, Entrepreneurship, Division Pages: 3 (1057 words) Published: May 14, 2013
When in February 1976 Martell received the letter from McElroy, he was not surprised a lot. All the problems that had occurred over time, and punctually postponed, now appeared. When Martell was elected as the new president of PC&D, he brought his “entrepreneurial spirit” that quickly spread across the organization. This had a positive effect on the company, especially in terms of profitable growth. In fact it led to the creation of 11 entrepreuneral subsidiary, of these 4 had successfully been merged into the company. This allowed to Electric Division, to double its sales, during 1971-75 period going from 193.6 million to 561.4 million(of these 179.2 arising from the new subsidiary),and also the sales of the Machinery Division have been overcome, 440.6 million in 1975 (Exhibit7) . However, this result had not come without cost. First about 60 million by the end of 1975, of these a small part was achieved through the retained earnings, but much was new money raised in the form of long-term debt. Further, stock issued to capitalize subsidiaries and to pay bonuses to entrepreneurs had a diluting effect on of PC & D’s shares, due to exchange one-to-one. The situation could worsen if other companies were merged into the company, because the number of shares issued would be significant if you think that the avg. Stock price in 1975 is $ 238. During last years, the company has recorded an impressive growth, as well as in sales than in size. Byside some problems that can affect the future growing of the company arise. The company, as a result of various mergers, has lost flexibility. Martell’s focus on finding "wild ducks" turned against him. People requested by the president has by nature, an advantage and cons. In fact they can be great challenges’ s lovers and be entrepreneurs of small growing companies, but they are not suitable for large divisions and hardly want to share their ideas. In addition, this caused additional costs. Each Subsidiary has...
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