Steelcast is considering the acquisition of another business which is into making of smart watches. This would help Steelcast to focus on its conventional watch designs, while the other business would create smart models and penetrate this new market. The company will use its brand name with that of Steelcast for the new products.
You are required to answer the following:
- What strategic risks do you envisage in such arrangement with the new business?
- What key factors do you consider while deciding upon to proceed with the proposal. Your answer should also justify the factors?
The new design testing has not come upto the expectations. It appears that the design will blend the technological and advanced features requirements and fit the size to bring a smart look. Already, significant investments have been made, and the failure of the technology does not sound well, especially when the shareholders were expecting a positive result of the outcome of the research. The information is still confidential of course.
I need your report suggesting the following:
- Should we make a public announcement of this information? Also, please mention of any impact on relationship with our shareholders and any ethical issues that may be considered while discussing this
- How does it impact our share prices considering that the announcement is made?