Optitech’s case

M5 Case analysis

Samuel Encarnacion
SUNY ESC
M5. Case analysis. Optitech case.

Introduction/summary of situation.

The present case shows us the birth and development of a business history about a
young entrepreneur, Jim Harris, who proves to be a competitive person with great
skills to develop in the professional world of business, taking advantage of market
niches to obtain the best possible advantage. However, the market takes him to a
situation where he must make an important decision that would determine the future
and the destiny of his life in business.

Problem identification.

The industry has been in a constant state of change for the last years because
market was increasingly aware of remanufacturing as an option, educated end users
continue to change the marketplace, retailers were offering refill programs, new
original equipment manufacturers strategies, tactics and trends were emerging such
as smart chips and licensing remanufactures. Finally, the investment community was
showing more aggressive interest in the consumables market.

In summary, the industry that Harris met in 1995, for the year 2007, was a completely
different one, because technological advances, as well as the supposed needs of
people, had changed notoriously forcing a change in the industry, and if he does not
adapt to the change he could be completely out of the market, since new
technologies would take over everything.

Supporting facts.

The problem identified is completely objective and is evident in a series of

circumstances that Jim himself affirms that he has been forced to confront. Such is
the case of its lack of structure, Jim was always shy when it came to expanding its
structure, and this despite having given results in its beginnings, could eventually
affect him in a negative way. Luckily for Jim, he had a highly integrated team and
also had people who let him know certain things and convinced him to do them for
the good of the company, such is the case when they convinced him to hire a
financial investor.
Alternatives.

As a result of the situation, Jim was forced to decide between the following
alternatives:

 Status quo:
Marketing approach that aims at keeping things as they are by not trying to
grab a larger market share, thus avoiding direct and expensive confrontation
with the competitors.

 Acquisitions.
Taking control of a firm by purchasing 51 percent (or more) of its voting
shares.

 Strategic sale.
Transfer of a block of shares to a strategic partner and transfer of
management control to the strategic partner.

As Harris said, status quo was not going to work at all, because in the industry if you
are not growing you’re shrinking. That was a way to get some money off the table.

Growing under an acquisition has multiple advantages, such as the increase in

power within the market, since this strategy increases your presence in the market
very quickly. Another good benefit is the acquisition of new resources that allow the
company to develop new and better skills to position itself in the market. However,
the acquisition brings with it certain risks, such as: the lack of cohesion between the
partners, which can cause some friction that would result in losses for the company.
Also, the acquisition can lead to high costs, which lead to a fall in finance.

The strategic sale supposes a loss of power and internal control of the company for
Jim, giving all this to the strategic partner. This option can give Harris a large amount
of money, according to the current value of the company, however it could mean the
end of his career in that business, which could also affect those employees and allies
that Jim had in the company, which could be unemployed, once the new
administration acquires possession.
Recommendations.

Our recommendation is to bet on the acquisition, since when analyzing the

opportunities and threats that this strategy could mean, we understand that in the
current situation in which the company is located, the opportunities that can be
obtained with the acquisition have a greater weight than the possible threats that
could face. In addition, this decision is based on the fact that Jim Harris is a very
young person, barely over 30 years of age, which means that such a young
retirement would be a great loss for the business world. Acquisition could give him:
immediate growth, continuity for management, ability to dividend funds to
shareholders and pursue continued growth strategy.

References.

ADAMS, R. AND SPINELLI, S. 2015. New Venture Creation Entrepreneurship for

the 21st Century. Pages 464-473.