The ATH Case Study

The activity of the technology company is an object of current investment interest. ATH Micro Technologies has applied its internal resources in order to achieve benefits and performance goals. Therefore, economic outcomes of the company relied on control over entrepreneurial and innovation activities, measurement of performance, adaptation to rapid changes in market conditions, common business management, the emergence of franchise risks, and the implementation of the strategy. ATH Micro Technologies demonstrated a different focus during the stages of its business development. The business cycle of ATH Micro Technologies is carried out in a few chronological stages characterized by balancing the tension of profit, growth, and control of the company.

Gradual Business Growth

Founding Stage

Faced with different complexities and challenges at different stages of business development, the organization arises its own needs and resources. These periods of its functioning may reflect the evolution and revolution steps are taken through by the company in order to efficiently allocate economic resources, introduce an appropriate strategy, implement investment and innovation, and carry out the control over the company’s management and performance.

The opportunity of ATH Micro Technologies was to launch its own facilities and develop their perspective exploitation at the stage of founding the company. The activity of the company was planned, registered, and created. The business was started in 1997 from the manufacture and sales of medical products (Simons, 2009). Later, the primary goods of the organization became improved, reduced in costs, and advanced in technology. This stage was a primary, responsible, and difficult stage of its development determining the future development and perspective directions of the ATH Micro Technologies. Competencies and competitiveness of business were formed, according to the conceptual and strategic objectives of the organization. The market supply of the company was expanded with numerous similar products after regulatory approval (Simons, 2009). The quality of planning and managerial decisions affected the success of the business at this stage. A significantly developed business plan allowed the founders to launch economic performance and pass to the next stages. Founding the company strives to reach business growth due to a creative approach to managerial decisions (Hatten, 2015).

The main issues raised by the organization concern ensuring the business appeal, getting of customers, and delivering some necessary products. The actual performance moves to target customers and broader sales. Financial issues refer to the needed amount of money in order to cover the cash demands during a start-up. ATH Micro Technologies gained significant customer acceptance and loyalty. It reached a viable level of functioning.

The entrepreneurial activity was supplemented and supported with $ 3.6 million of investment in the corporate capital (Simons, 2009). The founders involved the research team of doctors to participate in the ventured business. Thus, innovation and entrepreneurial activities had been controlled during the start-up stage. The tension between profit, growth, and control at the initial step of business history was still low. The capabilities of the company were limited by hidden market opportunities and undisclosed reserves to increase profitability and efficiency. The organization’s growth was carried out gradually to an extent of obtaining experience by the management in this area, searching for business partners and the qualitative composition of staff, and purchasing some fixed assets, etc. This period was marked by the potential to grow and some foundations of profitable activity. The control system has worked poorly because the company lacked a conceptual framework and experience on the market.

This phase corresponds to the concept of growth. The founding step of ATH Micro Technologies addressed the first conceptual step connected with the growth driven by the creative approach determined by Gainer (Greiner, 2015; Jones, 2010). The entrepreneurs of the company used to provide a very powerful level of creative drive, trying to bring an idea to life and make others believe in it. Gradually, the organization began to grow. The entrepreneur loses direct control over the activities of their subordinates. The need for delegation of authority was becoming more urgent. Therefore, these circumstances led to a crisis of leadership.

Growth Phase

The second stage was the business growth at the very beginning of the 2000s. The main landmark of this next level of development was the rapid achievement of the break-even point. The business financing was predominately ensured by working capital. The business management system became sharpen. Much of the success of this stage depends on the competent management of the business. The business conduct and competitive behavior within its market-determined its perspective and the ability to reach the next step of the business cycle.

ATH Micro Technologies has limited the number of its employees, including the innovation group. It proceeded to the advanced business performance due to the acquisition carried out by Scepter in 2001. The most important change in the transition of ATH Micro Technologies to the growth phase was the changes in the roles of owners and performers being able to delegate responsibilities.

The owner continued to play the role of the executive officer and the head of functional areas. However, he did not perform the role of the performer. The owner organized functional departments and hired new employees who were able to accept the delegation of authorities and leading duties. However, the final decisions and responsibility for the outcome of all matters remained among the tasks of a senior manager or assistance of an executor. Key objectives of the founders and senior management during the growth phase were to allow a fast and efficient transition to the next level and continued the development of a business strategy. Therefore, the management performance was carried out, according to market tasks and forereached benefits of growth.

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This step was marked by the creation of the strategic vision of the company, expression, and reinforcement of perspective corporate projection of business, as well as its potential and growth opportunities (Aghion & Howitt, 2009). The performance was divided into daily activities of the personnel, strategic objectives, and managerial decisions. The company strived to adapt to changing conditions of the market due to the applied strategy, implementation of entrepreneurial amplified culture, and market goals. This phase of economic growth was supplemented with a franchise activity and development of new product lines.

The market completion was still a challenge for ATH Micro Technologies due to the appearance of new technologies based in Europe. In the first stages, the profit development was depressed and reflected a common economic containment. Thus, the tension on profit was significant as it did not ensure any opportunities for long-term economic growth. The findings of control monitoring demonstrated that the organization experienced with $37 million losses. Profit bias was caused by an unsuccessful investment in business growth and its expansion. It should be admitted that the expenses on research, development, and promotion of innovation were grown along with an increase in the net loss (Simons, 2009).

The founders of business preferred employees to form an initial professional team that would promote the values and principles of the company. The leaders of the organization were used to delegate responsibilities, set clear targets for performers, and required reporting on progress. This concept of the performance measurement was sustained by the establishment of estimation criteria and track of key performance indicators. The growth of the company’s profits was one of the most important ideas at this stage. Therefore, the organization consciously targeted and segmented markets as well as types of customers that would best stimulate the growth of ATH Micro Technologies. It was taking into account the external information from clients and potential customers, statistical and analytical data. In order to pursue business development and performance, the founders created business processes for certain functional units.

According to the specifics of the practical performance of ATH Micro Technologies, this phase corresponds to the growth stage through the direction. At this step, professional managers build the organizational structure defined by many functions and responsibilities on the individual items. The system of formal communication, rewards, and punishments, as well as the control scheme,  appeared. The gradually growing organization began to diversify and expand. Its tough functional structure showed its disadvantages. The lower levels lacked the information and freedom for a rapid reaction to changes in the environment. There is a crisis of autonomy resolved by only delegated powers (Greiner, 2015).

Push to Profitability

The third stage was the step of the push to profitability in 2003. The company had already reached its break-even point and began to make profits. When the soaring revenues captured the market, the organization’s sales increased and rapidly affected the growth of profitability. This stage was beneficial for investors due to the high dividends and return of investment costs. During the step of profitability, the firm started to profit from established businesses. The market expansion was characterized by an increase in personnel, office extension, and enlargement of channels of sales. It was very important to correctly form a team of employees, their cohesion, and the availability of particular resources.

The measurement of management was carried out through the special program dedicated to the promotion of profitability. The main goal of such provisions was the motivation of employees to reach a financial break in the coming period. Thus, the performance measurement was completed by a paid trip and cash bonuses to the workers of each division if they accomplished the financial goal. Such stimulation of productivity made the personnel of the organization more focused, increased labor productivity, and led to the drastically growth of net income (Simons, 2009).

The efforts of the firm were proved but in the short term. Later, ATH Micro Technologies experienced an increase in the number of customers’ complaints and regulatory premises of inspection. Thus, the company faced numerous irregularities in the quality of medical products. All manufacture and distribution of the ATH’s goods were affected by in compliance with regulatory demands. Therefore, this step demonstrated a close relationship between profit, growth, and control. In this case, the company was developing a plan to achieve the desired level of profit. However, all the expectations of ATH’s leaders were not materialized due to a misbalanced approach to setting the corporate growth and organizing labor processes. The ATH was dealing with the increase in profits and missed the satisfaction of consumer needs as its main mission. Thus, the sharp annual profit as a corporate goal was received. However, the growth was not achieved because of the failure in the mission’s performance. The cause of this shortcoming was its low quality of control and ongoing processes. Despite the establishment of measures of performance, the team was unable to fully achieve economic long-term success.

A push to profitability occurred in the practice of ATH Micro Technologies. It was much similar to the stage of Greiner’s model-driven by delegation. The stimulation of business profitability was guided by directives and the active participation of managers in business improvements.

The heads of individual business units and geographical areas were given the authority. There was an entirely new and unique motivation system, such as bonuses and profit-sharing. Mid-level managers have delegated enough power and authority for penetrating new markets and developing new products. The top of the company was focused on common strategic development, and it gradually lost control over the complicated organization of HR. Local managers spent more time and resources to achieve the goals of the enterprise. Thus, as a rule, they could not be simply and quickly replaced. A crisis of control resolved the development of coordination programs (Greiner, 2015).

Refocus on Process

Obtaining of negative outcomes and irregularities impacted on the strategic refocus of ATH Micro Technologies. In 2004, ATH Micro Technologies Incorporated addressed the findings of the FDA’s inspection (Simons, 2009). The company came to the conclusion on the development of its system of vision and belief being focused on high quality, investment, and customer value. The motivation system was not removed, but it was planned to align with a new corporate concept. Therefore, the company found a new measurement of the employees’ performance, including the criteria of quality, customer satisfaction, and product innovation (Simons, 2009).

As the focus of business productivity had changed, the organization established its strong control over the quality and innovation of product line-ups. It expected to overcome emerged complexities with reclamations and complaints. In the context of prevailing price competition and the saturated market, high-quality products were the main factors of success. In a year, the new strategy in quality management had been developed by managers. The quality approach and focus on ongoing processes were a guide to the activities of improvement of quality management. It demanded the establishment of specific quality objectives needed for its implementation. The improvement of product sort was associated with the achievements in the management system. In order to make high quality as a priority in the activities of enterprises, the team improved the system of management-oriented standards.

The participation of production units in the process of implementation of the focus on a process was active. The plans were tactical decisions being introduced in a new strategic vision. The measurement of performance was critically evaluated, according to defects, errors in customer contact, the number of backorders, and delays of new goods (Simons, 2009). These criteria were also included in a common methodology of employees’ evolution and education to promote an increase in labor productivity and HR advancements. However, the management of production units participated in the elaboration of the following fundamental decisions:

· Identification of opportunities for the use of existing equipment and the need for its reconstruction;

· Determination of relationships with the personnel in the areas of training, motivation, and wages, as well as in social issues;

· And examination of other business units to ensure the qualitative production process (Hanks, 2015).

Thus, these events provided control over product quality and its compliance with the expectations of consumers. Moving along this chain, the company provided its growth and promotion of the new goods’ quality. Through these processes, ATH was able to achieve some stability in profits.

The refocus on processes was performed through the involvement of coordination. It was expected to ensure the growth of ATH Micro Technologies. A coordinating activity is the circumstances that provide the combination and cooperation of weak business units into product groups. A complex system of distribution of investment funds among its business units is also facilitated to a franchise activity and promotion of innovation work. The workload of headquarters was enlarged due to the development of a powerful system of planning and plan monitoring. Gradually, ATH Micro Technologies was faced with the problem of a very complex system of planning, money allocation, and overloaded control workflow. Its reaction to changes in the environment accelerated significantly and caused a reduction in the level of organizational sufficiency. This stage clarified a crisis of red tape in the practice of ATH Micro Technologies.

The takeover by New Management

The change of management had a positive effect on the company’s results. Going through a serious crisis due to the focus on the elimination of errors and defects, the organization has reformatted its vision and beliefs concerning the quality products, compliance with quality standards, focus on customer service, time frameworks, quality of processes and outcomes, and new releases.

The stage of new management was characterized by its resistance to all sorts of unforeseen business circumstances. The company already has turned enough profit to survive the tough times when the market suddenly became unstable and challenged. The set of troubles was invoked by the emerged internal problems with low performance and product quality. At this stage, the restructuring of management was accompanied by the development and introduction of new goods. It is a phase of the business cycle that characterized such income and business conditions that required a certain restart.

The entrepreneurial activity was supplemented by re-engineering in 2006-2007. Manufacturing and selling processes included the fundamental rethinking and radical redesign of business procedures in order to achieve sharp and abrupt enhancements of performance indicators, like quality, cost, service, and rates. The common goal of business reformation was a flexible and quick adaptation to the expected shifts in consumer demand, i.e. the corresponding change in strategy, technology, organization of production, and management used effective computerization. The result of reengineering was a corresponding improvement of major quantifiable indicators. In addition, the company has changed its approach to the notion of quality. If the early stages of its historical evolution were characterized by the prevention of product defects, this step employed a new vision of quality attending ongoing processes and goals’ execution. Some shifts have been made to improve the system of control to particularly delegate these functions to the employees and ensure the organization’s growth in the market. In turn, the ensured growth was expected to contribute to the increase in its profits. This tension was palpable and specially built by new management to primarily achieve the mission and goals and not the ultimate profit.

Managerial and organizational reformation of the organization correlates to the final stage of the corporate growth followed by collaboration. The leadership of ATH Micro Technologies made the management system more flexible. It introduced the internal team of consultants and experts directing the departments and helping managers with professional advice. The changes have encouraged new ideas. Headquarters provide the monitoring of product quality to adapt to changing market conditions and monitor the implementation of the quality strategy.

Application of Models

.The growth of the business is explained by the modeling of dynamics and financial outcomes of the company during separate particular periods of the life cycle. These models demonstrate special conditions of management and utilization of assets.

A financial pyramid of growth models may be applied to the practice of ATH Micro Technologies. The initial stage of development of business is a period of implementation of the new assets, additional investments, and the purchase of materials, technical equipment, and financial instruments. The model indicates the time when the company’s financed the deficit of assets and strengthened its balance with new tangibles or additional stock issues. During the promotion of business, ATH received the smaller or larger value of profits. When the company was going from its survival to success and take-off phases, the profit experienced fluctuations and gradual growth. The tension of profit and the organization’s growth correlates in this model and allows forecasting the future behavior of financial assets. Resource maturity is the most critical stage of financial decisions on production and sales of medical products as the probability of bankruptcy is more hidden. The chance of a fundamental change in entrepreneurial activity was the highest and most profitable one at this step.

The financial growth model is a set of manifestations that have reflected the appearance of different financial opportunities during the evolution of the company. For ATH Micro Technologies, its financial growth template includes the business financial statements varied during the business life cycle. The organization engaged in the production and sales of medical products applied to the certain capital and invested it to later promote its ongoing processes and introduction of conceptual basis. The stages of foundation and growth were characterized by the collection and utilization of different forms of finance. Later, the market growth and push to profitability allowed wider opportunities to use diversified sources of profit. Therefore, the company had launched franchising relationships with different entities. The growing dynamics of business along with the depressing decline of profit’s pace reflected the particular deviations from a common increasing line.

The application of the model allows analyzing the perspectives for ATH Micro Technologies. This modeling toolset contains an economic and mathematical description of the change of economic indicators in time characterizing business processes of the organization and its individual economic units. The use of models to evaluate the response (sensitivity) of growth to changes in performance and financial policy of the organization allows fixing the problems and priorities in the management of financial resources. It is done to ensure the target growth strategies of the business.

The increase of quantitative indicators changed by some time characterizes the growth of the company. Initially, its development is considered as a macroeconomic category. However, at the same time, it has adequately reflected the theories of management. In most cases, the economic growth of the organization was treated as an extension of the scope of activities. The economic development of ATH Micro Technologies will be a long-term change in the natural level of the real output associated with the evolution of productive forces in a long-term perspective. The short-term decline in the key volume characteristics is allowed. It is more important than production has increased after a sufficiently long period of time. Thus, the economic growth of ATH Micro Technologies is an integral characteristic of the organization, which has to be assessed by an adequate system of interrelated indicators. Providing such a relationship is achieved in terms of modeling economic evolution. In some cases, there are management plans, market research data, the existing production capacity, variable orders or directives of superior or parent companies. They are being guided in the identification of economic growth.

Conclusion

To sum up, the business activity of any company and any of its projects correspond to the special phases of its life cycle or business workflow. Modeling of the economic development of the organization shows a logical sequence of circumstances and situations that accompany each solution in the market. ATH activities during a few years can be divided into five steps inherent only to this brand. However, these life phases correspond to the stages of the derived models. The company has come a long way from its foundation, growth, and profitability to the push to profits, refocus on processes and the change of management. These steps occur as characteristic preceding consequences of managerial decisions and developed strategies. The occurrence of particular market reactions to the strategy or entrepreneurial steps was the consequence affecting the subsequent stage of development of the organization. Each phase was accompanied by characteristic circumstances that needed to be changed or transformed. Practical activities of ATH can be considered from a standpoint of Gainer theory, application of financial pyramid development model, and its financial growth template. The applicability of these conceptual tools is wide. However, each of them should be adjusted according to the individuality of the business.