Financial Institutions 1 the Current Case Study

Excerpt from Case Study :

The playing field was further leveled when at&T in 1982 had to breakdown their services, giving MCI an opportunity to shine and show what they were capable of accomplishing.

During the mid to late 70's growth potential for MCI was almost non-existent considering the court orders that were in place. However, one bonus proved to be that since there was an inability to expand there was no need for investment potential at that current time. MCI began to deal in preferred stocks. Stock increased by three dollars within a 1-year range. This allowed for an 85% tax deduction without hurting the company's tax benefits. A method that would allow for some type of evaluation regarding accessibility to MCI, and quality; it was also difficult to decipher the impact of access charges.

There is a need to determine effective ways of charting and assessing growth in revenue, as well as effective means for projecting working capital etc. MCI must be able to determine its financing needs as well as project those figures into future requirements. It is evident that in the 1970's MCI had numerous financial stability issues that were finally rectified in the 80's when at&T was not able to continue to do business as it had up to that point. MCI however has continued to lack preparation and foresight. There came a time when MCI had to determine how it was going to conduct business and how much it would cost to do so. This determined how business would go from that point on.

Had the foresight to see that drastic changes were necessary in order to stay a true top competitor in the market. This would require projected revenue needs, projected budgets for repairs, and updated to current and future equipment. It would also determine how much their shares would go for and what effect this would have on future business. It is important that MCI is able to grow and increase, however it is also important not to leave a negative opinion in the eyes of prospective stockholders and other companies that one may want to acquire. MCI should create a team that continually checks to insure that business is meeting current projections as well as new markets and technology, as well ways to determine if these methods are beneficial to MCI in whole. There should also be a team that strictly creates new methods, search for new technologies etc. this will gave MCI an advantage and a way to determine their next step.

CASE # 5 - MSDI - Alcala de Henares, Spain

Primarily there is reason for concern when a company projects profits in the billions and only makes an estimated $600 million. Therefore, research needs to determine the cause for such a significant shift between the estimated projection and the actual amount of revenue created by the company. The company also needs to acquire more sufficient methods of checking the reliability or equipment, the production process as well as the product that is being produced. This will allow them to be more efficient as well as allow the company to see where they can improve and grow in their day-to-day business.

The current case discusses the efficiency of methods used to create and check ampules. Another area of consideration is whether the peso would ever be able to compare closely to the USD. Production was at 200% and this was well beyond what was anticipated. However, it was discovered that there was an even more efficient method available. In fact, it was possible to decrease the numbers of employees on hand, and continue to maintain the level of productivity and in turn decrease the occurrences of errors and wasted materials and time. There was available equipment that provided and increases of ampules by 25%, which is more, that six million ampules per year. Training for employees was reduced or comparable to current methods and does not require excessive amounts of time from work. Testing utilizing the new equipments indicates that the rate of rejection drops from an estimated 11% to 3%, this too accounts for an increase in materials use. Therefore, it is evident to see the benefits here; however research is necessary to weigh the pros and cons. Even though you may be able to decrease the number of employee's new methods and machines will not account for human error, nor will they account for machine malfunctions. Systems should be put in place to run routine checks regarding the efficiency of machines and the efficiency of employees in their respective job functions. This will give much needed insight and help the company to see if the new methods and machinery are actually cost effective, in association with the new increased productivity.

Another important issue raised in the writing is regarding the peso and the USD.There is question as to whether or not it is more economical to deal in pesos or the USD. The research indicates that inflation in Spain will have increased by over 8% over the life of the entire project.

New equipment is more efficient and has a longer life expectancy than previous machinery utilized. This issue was without resolve in the writing. Researchers were not sure if it mattered as to which currency they would deal in. The U.S. prime rate was at 8.5%. Analyst did believe however that the peseta would have a significant appreciation value over the next five consecutive years.

Referring to Exhibit 2 it is easy to determine that although ampule volume was up in 1988, there was a significant decrease in volume by 1997. This needs further assessment, considering that the new equipment was reported to increase productivity and cut cost and waste; this is not evident in the numbers. In fact, volume decreases and cost appears to increase rather significantly using the older equipment. However, the new equipment appears to shift the numbers in a minuscule way, and therefore do not show an enormous difference in cost.

Exhibit 4 further supports the concerns over whether or not to utilize the peso or the USD. The chart indicates that from 1980 to 1897 the three-month t-bill dropped drastically and did not rebound to even half of its worth over the long period. Further research is needed to determine in fact what method is best, as well as the efficiency of the new machinery and decrease in employees regarding overall productivity.

The current article proposes a situation that many companies find themselves in, often attempting to determine the best methods that allow for increased productivity, decreased waste, and possibly a decrease in employee labor. However when one has a company that deals in different areas of the country with varying money and interest rates it becomes a pertinent issue to determine the most effective means for investment and expenditures. The current study does however utilize…

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