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Figure 1 iliustrates ABC's income slide over the period 1990 to 1996. = 3 3 .5 V a: 5 E '5 2 Net Income (in thousands) Figure 1:

Read the following case study and answer the questions that follow:

ABC Company was on its way up. During the mid-1980s, the company enjoyed rapid growth and rising revenues. As a manufacturer of sports equipment, ABC served a growing core of customers who are willing to pay a premium price for better quality innovations. ABC's products were well received because experts said they were user friendly. Initially, ABC focused on maintaining a high degree of innovation, and this strategy generated a steady stream of new products.

Unfortunately, problems associated with ABC's subsequent rapid growth soon led the company into financial trouble. The company's CEO had promised the investment banking community that immediately after going public in 1990, the company would expand its management team. However, the CEO did not bring in new talent from the outside until 1991. When the CEO finally added experienced management talent who could improve ABC's corporate strategizing, he found it increasingly difficult to keep the company focused on R&D. Corporate expenses exploded, and productivity dived.


Meanwhile, the company began losing market strength, partly owing to resistance to introducing new models with simple cosmetic changes. As the company was not introducing enough new products to keep customers interested, its dealer base began to deteriorate. In 1994, ABC had only 230 dealers, half as many as in 1990. Net income declined sharply after 1991, followed by a heave sales slump in early 1993.

ABC's problems persisted. The company cut costs by laying off a third of its workforce, but when sales rebounded, it could not rebuild its staff strength fast enough to meet the new demand.


During the second half of 1994, ABC tried to get back on track by developing and releasing 20 new products. But as these new product lines were developed, the core products became even more outdated. During 1995, ABC saw its net income rebound and sales increase over 1994. This time the CEO hoped the quality improvements would make a lasting difference. However, the continuing cycle of ups and downs that followed ABC's rapid growth suggests an uncertain future for the company.

(So teacher, could you help me to capture qustion 4,5 & 6 because I have a doubt on doing the BOT graph( behaviour over time ). Please check my answers for question number 1, 2 & 3 as well). Thank you so much, please help me)System Concept 2.jpg

System Concept.jpg

System Concept 2.jpg

Figure 1 iliustrates ABC’s income slide over the period 1990 to 1996. § A

2 Net Income (in thousands) Figure 1: ABC’s Income Slide

System Concept.jpg

1i 2i 3i 5i 5} 1li'lihat was the long-standing, chronic problem facing ABC Company?
Not enough new products introduction due to lack of R&D and make them greatly
lost their dealers What two variables triggered the initial steady growth in demand from ABC’s customers?
— Developing and releasing 20 new products
— Quality improvements which deliver a good quality
— Generated strategy on high degree innovation — The products were user friendly Dnce ABC Company went public, what variable limited its ability to continue handling the
growth in demand?
-The CEO did not bring in new talentfrom the outside until 1991 —Added experienced management talent which increase the corporate expenses
—l.acl< of manpower Sketch a graph showing the behavior over time {BOT} of the three variables you identified in questions {ii} and (iii). Then add on the same graph, the behavior over time of two more
variables: "Demand” and "Ability to meet customers' needs" Looking at the graph you have sketched, describe what you observe about the behavior of
the variables over time. Looking at the same graph, what relationships do you observe among the variables?

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