Science Technology Company Essay -- Science Technology Company Busines

Science Technology Company Bill Watson of Science Technology Company (STC) should not discuss the current 5-year financing plan prepared by Harry Finson, the chief financial officer, at the forthcoming board meeting. The industry that STC is in has short product life cycle, rapid technology obsolescence and fast growth with increasing competition. In fact, STC’s strategy to survive the competition is to maintain leadership in ATE segment and to further compete in the large scale integrated (VLSI) circuits segment by chasing market share and spreading high R&D cost over large sales. However, the large sales growth seems to be more difficult to obtain with the newly added competition. Based on historical trend, level of competition, and other related industry figures; It is suggested that a more reasonable 12.8% annual growth projection be used. STC is losing cash flow in both its operating and investing activities; therefore projections of 30% sales growth are overly optimistic and unreliable. When STC began they only competed against a handful of companies, and although they currently hold the dominant share of the market, this increase in competition could upset future revenue. Increasing competition in the ATE segment will inevitably induce price wars, which will further deplete the profit margin of the company. If price wars were to take place, Teradyne seems to be the reasonable winner. In fact, over the last 5 years, Teradyne has amassed a tota...