Solved Case Analysis: ATH MicroTechnologies: Making The Numbers (Download Now)

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3 min readFeb 1, 2021

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Solution Pages: 10

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Questions Covered in the Solution:

  1. Does the Earn-Out Structure Focus on the right performance Goals?
  2. Should Scepter Pharmaceutical put additional controls on this entrepreneurial firm?
  3. If you were president of ATH MicroTechnologies, how would you communicate and motivate employees to achieve profit and performance goals?
  4. What are the appropriate performance goals for employees to focus on?
  5. How would you communicate and control events and employee actions that could put business objectives at risk?
  6. What are the best financial measures to assess ATH MicroTechnologies’ performance? Why?
  7. How would you evaluate the performance of ATH MicroTechnologies, Inc. during the growth period?
  8. What is the strategy of the business?
  9. How should performance be measured and analyzed?
  10. What additional measures would you use to implement the strategy?
  11. What are the characteristics of a good measure?
  12. If you were president of ATH MicroTechnologies, what would you do to focus attention and efforts of your employees?
  13. How did managers at ATH MicroTechnologies, Inc. achieve their profit and performance goals during 2003?
  14. What role did control systems play in ATH’s success and problems?
  15. How could top management have avoided the actions by employees that led to the FDA investigation?
  16. What are the possible consequences of these events on the company’s reputation?
  17. If you were the president of ATH, what would you do to get the business back on track?
  18. Why did senior managers introduce a vision and belief statement?
  19. Why did managers at ATH MicroTechnologies, Inc. change their performance measures?
  20. John Frost includes both process and output measures. Why? What is he trying to accomplish?
  21. He also includes ratio and ordinal measures. What are the advantages and problems of each type?
  22. What are the risks for ATH MicroTechnologies going forward? How should these risks be monitored and controlled?
  23. Why did ATH MicroTechnologies experience problems with its new products? What role did measurements and control systems play in these problems?
  24. How should Janet Isabella design and use performance measurement and control systems to implement her agenda and take charge of the situation?
  25. What are the critical performance drivers of success going forward?
  26. What variables should be measured?
  27. How easy or difficult should goals be?
  28. How should financial expectations be set and communicated?
  29. How can she use control systems to scan the competitive environment to ensure that the business is not again surpassed by new technology?
  30. What events or employee actions could put business objectives at risk? How would you ensure that these risks are adequately communicated and controlled?
  31. How would you measure and evaluate Scepter’s decision to purchase ATH MicroTechnologies in 2000?

Sample of Solution:

I. Founding

  1. Does the Earn-Out Structure Focus on the right performance Goals?

Since, the Earn-Out structure is also associated with specific scenarios, approval from different entities, without explicitly detailing the extent of benefit realizations. The performance goals may infer incompatible results as compared to the costs. Moreover, the performance goals have focused only on the sales revenue and earnings of the company. While there can also be intangible concerns like customer satisfaction, employees’ commitment, internal control efficiency, and management effectiveness, which must be considered while formulating the performance of the company. Moreover, the earn-out system is also narrowly focused on the short-term profitability, without consideration of long-term sustainability. Hence, these performance goals aren’t perfectly right to focus on.

  1. Should Scepter Pharmaceutical put additional controls on this entrepreneurial firm?

Scepter Pharmaceutical should lay down additional controls on ATH, as the company must realize economies of scale and scope through this synergy. Moreover, effective controls for the optimum resource utilization of ATH would add value to the operational efficiency of Scepter.



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