EXPERTS IN BUSINESS ADMINISTRATION
CASE 13-1: EEI Corporation1
A CASE EXAMINE
EEI Organization was one of the oldest building companies in the Philippines that is engaged in the company of building professional plant features, installing tools, providing replacements parts and supplies, and providing specialized engineering companies to commercial companies in the Philippines and overseas, principally in Middle East.
Features of Procedures
EEI Corporation struggled in mid eighties where that they faced economic difficulties due to troubles with a large project in Central East. The battle was tackled by the business management group headed by the President who also channeled the efforts from the company in products and markets where completely distinctive proficiency.
The company controlled through two divisions which are the Construction-the primary service and revenue segment of the company, which was involved in constructing large-scale industrial facilities, and providing scientific skills, labor and specific engineering services; and the Equipment Division-which originated from the success of the Construction Division, who sold and developed marketplaces for the machinery and industrial items of visible foreign suppliers where they acted while distributor, subcontractor, or licensee of the overseas supplier.
The Group Manager and Controller of EEI Corporation was tasked to prepare a preliminary forecast from the sales and net profit of the firm for the next 36 months for the strategic planning workshop of senior managers.
EEI's managers were positive about the future, thus the forecast for three years needs to be guided by growth in revenues, expenses, and salary over the last four years вЂ“ using the 1991 to year 1994 financial transactions, because the company experienced the business enterprise crisis ahead of 1991 beginning with 1986. This seemed right to use the sole the most recent encounter as basis for a outlook because the consensus among the EEI's managers is that famine was not in sight for the next three years.
Forecasting Method / Requirements
вЂў Analyze the growth rates
вЂў Forecast the total revenues and net income for three years making use of the average and also the previous year's growth rates. вЂў Explain the method of forecasting utilized.
вЂў Meet the management's requirement to offer at least 20% return on collateral per year by using the forecast net gain вЂ“ forecasting the possessions and fairness based on earlier growth prices and net gain. Financial Highlights
Financial Illustrates of EEI Corporation and Subsidiaries 1991-1994 (in million pesos)
Construction1, 1152, 1511, 6901, 977
Commissions and others32506671
Gain on disposal of property,
plant, and equipment0200
1, 2962, 3251, 8872, 268
COSTS AND EXPENSES
Offering and administrative141182162207
Cost of products sold67523566
Expense of services45285377
1, 1942, 1001, 6572, 014
SALARY BEFORE TAX102225230254
Provision pertaining to Income tax36777988
Income just before minority interest66148151166
Minority curiosity on
net loss (income)00(1)(1)
ASSETS7311, 2101, 3502, 289
Monetary Highlights Examination
Division Talk about
Construction86. 03%92. 52%89. 56%87. 17%
Machinery13. 97%7. 48%10. 44%12. 83%
Construction78. 06%87. 38%84. 73%81. 78%
Machinery21. 94%12. 62%15. 27%18. 22%
Expansion Rates вЂ“ EEI COMPANY
Revenues-79. 40%-18. 84%20. 19%
Expenses-75. 88%-21. 10%21. 54%
Net Income-24. 24%1. 35%10. 00%
Development вЂ“ Every Division