Silicon Arts Inc. (SAI), a four-year-old manufacturing company that produces Integrated Circuits (ICs) for exercising in medical and scientific electronic, maintains an annual sales turnover of $180 million in North America, Europe, and South tocopherol Asia (University of Phoenix, 2009). A task force directed by SAI chairman, Hal Eichner, active 2 capital enthronization proposals for analysis: 1) Dig-image proposes expanding merchandise consider of the Digital Imaging Semiconductor by increasing its return base through setting up a set in Sunnyvale, CA. 2) W-Comm proposes production of its IC 1032 on a commercial scale to capture a portion of the data enabled agile handset foodstuff, which requires plant, production, and research and development capital outlay. This paper considers two proposals in the context of internal investment strategies, external investment strategies, and risks associated with investment decisions.
Valuation Techniques to External Investment Strategies
SAIs market research indicates that the mobile handset market will stretch to grow rapidly over the next seven years, 50 % are data enabled and will require semiconductor chips much(prenominal) as the IC 1032.
Predicting sales in excess of 15 % in years 2-3 and four percent of the global market in year 4, expansion into the mobile handset market promises an increase in revenue and shareholder wealth. However, competition and corresponding products were identified by SAI as possible barriers to entry, causing a potential five percent fall in toll in years 2-3 (University of Phoenix, 2009). With a marketing strategy that includes a robust distribution network and expansion into global markets, SAI power benefit from the synergies derived from the acquisition of a company that is strong in these areas. Ross suggests four types of synergy gained through acquisitions: 1) revenue enhancement, 2) cost reduction, 3) put down taxes, and 4) lower cost of capital (2005). The merger should be considered if the...If you fatality to get a full essay, order it on our website: Orderessay
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