Intel vs Arm Case

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MEMO To: Warren East, Chief Executive Officer – ARM Holdings From: Team 8 Consultants Date: April 3, 2012 Subject: XXXXXXXXXXXXXXXX DECISION SUMMARY Should JBT buy Key Technologies’ sorter division for $50 Million? To answer this question, our team conducted an examination of the value the division will provide to both your company and your customers, and the effects the purchase will have on your company’s financials and yearly marketing goals. After analyzing these factors, we recommend that JBT should move forward with this purchase. DISCUSSION Value Added to Customers. The proposed acquisition of the sorting division provides JBT customers with an enhanced portfolio of products they…show more content…
The overall risk associated with the purchase of Key Technologies sorting division is low. A breakeven estimate of 5.6% total market penetration of establishments in United States and Canada within seven years provides JBT with an attainable target for its sales team; and also assures your investors that financial loss from this acquisition is very slim. The untapped demand of international markets only helps the case for the acquisition of the sorting division. In addition, the equipment’s high technology barrier provides the company with a sustainable competitive advantage over the competitors for the next 7 years. Key Assumptions. The recommendation is postulated on the following assumptions: ● an automated sorting machine replaces 20 manual sorters and will require two machine operators to operate ● both manual and automated sorting systems produce the same quality of service ● annual average salary for US manual sorters is $23,608 ● annual average salary for US machine operators is $30,000 ● number of food processing companies in the US and Canada is 5,511 ● market demand for food processors in the US and Canada will not decline in the next seven years ● Interest rate for long-term debt is constant at 6.45% for five years ● Service accounts for 1/8th of total revenue and provides a gross margin of 23-25% Appendix A Customer Value. Customer Savings were based on

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