Case | HBS Case Collection | February 1989 (Revised November 1991)

Science Technology Co.--1985

by Thomas R. Piper

Abstract

The CEO of a U.S. electronics firm is assessing the financial forecasts and the financing plan prepared by the chief financial officer. Given the cyclicality of the industry and the volatility of the firm's performance, the CEO is unsure as to the usefulness of forecasts based on straight line extrapolation of rapid sales growth and stable relationships of profits and assets to sales. The teaching objectives include: 1) how many years into the future should the forecasts run given the level of uncertainty, 2) how can one deal with the high uncertainty when preparing the forecasts or designing a financing plan, and 3) how to estimate the financing needs under conditions of adversity.

Keywords: Risk and Uncertainty; Change Management; Industry Growth; Forecasting and Prediction; Financial Strategy; Volatility; Electronics Industry;

Citation:

Piper, Thomas R. "Science Technology Co.--1985." Harvard Business School Case 289-040, February 1989. (Revised November 1991.)