Ath Case Study

Background and Identifying the Issue

ATH MicroTechnologies is a medical technology company that competes in a highly competitive and innovatively aggressive industry, characterized by large investments in research and development and high levels of product obsolescence. In early 2001, Scepter Pharmaceutical acquired ATH in order to increase their product line and market share in the industry. Throughout the next few years, ATH has struggled with high volatility in its yearly earnings due to its benchmarking strategies and managerial incentives. As such, it can be seen that measurements of strategic success have changed year over year to overcome performance failures in the year preceding. However, this constant fluctuation of strategy has led the company into a situation where their products have become obsolete due to an influx of new competitors and technology. As ATH approaches their stage of maturity, they are facing new challenges in order to remain competitive in the industry that is impacting their going concern.

Analyze the Situation

ATH can be broken into three stages of life, Funding, Growth and Maturity. Each stage has impacted the company's performance positively and negatively based on management's performance dashboards.

Funding - The Acquisition of ATH by Scepter - From an NPV analysis (Exhibit ____ ) of Scepter's investment, we can see that there is an negative return on the investment of purchasing ATH. From an investment point of view, this negative NPV should have deterred Scepter from purchasing ATH. However, Scepter is a 10 Billion Dollar pharmaceutical and medical products company whose main goal was to increase their market share and the introduction of a new product line. The 90 million dollar investment amounts to less than 1% of its 10 billion dollar net worth, while opening up a new market will allow Scepter to offer its other vast range of products to ATH's current market. Hence the actual return for Scepter through secondary...