Quality Metal Service Center

Case Analysis QUALITY METAL SERVICE CENTER

LOW  OF  THE  CASE  F LOW 



Metal distribution Industry



Quality Metal Services Quality

Metal Strategy

Organization Problems

structure

and their possible solutions

METAL DISTRIBUTION INDUSTRY 

QUALITY METAL SERVICE 

CORPORATE STRATEGY  1.

To Focus sales efforts on targeted markets of specialty metal user 

2.

To identify those industries and geographic markets where these metals were consumed

3.

To develop techniques and marketing programs that would increase market share

ORGANIZATION STRUCTURE  Chairman Of the Board

President and CEO

Vice Presidents

District Manager 

Managers (Sales, Credit, purchase etc.)

THE T

CASE 

he case writer visit Ken Richards, district

Manager Columbus service center  Earning consistently above 30% ROA



For 1992 Targeted figure



Operating profit $3.8 million

y

 Asset $10 million

y

 Achievable ROA 38%

y

Capital investment proposal



PROBLEM STATED 1)

Is the capital investment proposal an attractive one for Quality Metal service Center?

2)

Should Ken Richards send that proposal to home office for  approval?

3)

What practice will motivate the district manager to use their assets most efficiently to acquire the proper amount and kind of new assets?

LOW  INVESTMENT PROPOSAL: CASH F LOW  Cash Flow (000s) (000s )

1992

1993 1993

1994

1995

1996

1997

1998

1

Sales

600

1375

1510

1665

1830

2010

2215 2215

Cost Of sales

(560 560)

(1145)

(1236) 236)

(1355)

(1490 1490)

(1660 1660)

(1845)

Earning before Tax

40

230

274

310

340

350

370

Tax 50%

(20)

(115)

(137)

(155)

(170 170)

(175)

(185)

(

Earning after T after  Tax

20

115

137

155

170

175

185

1

Depreciation

110 110

100

85

75

65

55

45

Working Capital investment

(120)

(155)

(25)

(35)

(30)

(35)

(45)

Cash Flow

10

60

197

195

205

195

185

(

(

PROBLEM STATED 1)

Is the capital investment proposal an attractive one for Quality Metal service Center?

2)

Should Ken Richards send that proposal to home office for  approval?

3)

What practice will motivate the district manager to use their assets most efficiently to acquire the proper amount and kind of new assets?

PROBLEM STATED 1)

Is the capital investment proposal an attractive one for Quality Metal service Center?

2)

Should Ken Richards send that proposal to home office for  approval?

3)

What practice will motivate the district manager to use their assets most efficiently to acquire the proper amount and kind of new assets?

E CONOMIC CONOMIC V  ALUE  A DDED DDED

Thank You