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Advanced Systems Ltd

question 92

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Advanced Systems Ltd. (ASL), a high-technology company with 20,000 employees, has just acquired LiteForce Ltd., a 5,000-person company where you work as a photonics (fibre optics) engineer. ASL mainly acquired LiteForce to reduce its competitive threat in the marketplace, as well as to increase the number of engineers and researchers in lightwave technology. You and five other engineers and scientists at LiteForce were working on new technology that would dramatically improve lightwave transmission to communicate data across the Internet. Your team's discovery occurred just before the acquisition and was not well known in the organization. Also, the key executives who strongly supported your team's research have left the company through generous buyout packages during the acquisition. (ASL offered share options to encourage you and other engineers and researchers to remain.) The result is that only your team members and a few other people are aware of the potential benefits of the project. Your team has similar education and experience as many other engineers in the combined organization. Moreover, your team's authority is limited to expenditure within the existing project budget, which ends in a few months. Further support would require executive approval. Describe the sources and contingencies of power that you and your team have in this situation to continue the project.


Definitions:

Direct Approach

A method used in cash flow statements where cash receipts and payments are reported directly to calculate net cash from operating activities.

Indirect Approach

A method used in cash flow statements where net income is adjusted for non-cash transactions and changes in working capital to calculate operational cash flow.

Investing Activities

Transactions involving the purchase or sale of long-term assets and other investments, part of a company's cash flow analysis.

Investing Activities

Financial activities related to the acquisition or sale of long-term assets and other investments that are not equivalent to cash.

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