Case of 3m

3M ltd. is a Global company having units in different parts of the world. It is an enterprise dealing with many projects or products simultaneously. It has three SBUs - Consumer electronics, electrical equipments and electronic components in US. The company is planning to expand its operations. The expansion is a gradual process due to resource constraints; hence the company has to prioritize and decide on the choice of SBU to begin with. Its natural first choice would be on the SBU doing well on cost – profit – sales parameters so that expansion is smooth and contribute resources for expansion of other SBUs.

The following data is available

Consumer Electrical Electronic

Electronics equipment components

Annual capacity (units) 2,000 000 500 000 1,00000000

Present Investment ($ m)

Fixed assets 120 40 60

Working capital 60 30 90

Variable cost to sales 40% 35% 50%

Selling price per unit 200 220 3.5

No. of employees 40 60 70

Operating fixed cost ($-m) 10 5 10

(excluding depn)

cost of funds used 10% 9% 7%

Credit to customers (days) 30 45...