Paragon Tool Case Study

PARAGON TOOL CASE STUDY

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PARAGON TOOL CASE STUDY

According to the given case study of Paragon, the situation is quite intricate and requires an exacerbated amount of careful analysis. Evidently, Paragon Tools encountering a pell-mell decision-making time, through which it has to either go with the substantial decision of acquisition of MonitoRobotics or has to shun it entirely. Phenomenally, Paragon needs to shield its stability in the era of intense foreign competition, and therefore it is starving for stratagems that could augment the revenues, expand operations, and could boost the sales in target markets through aggressive pricing and sales tactics. A myriad of Paragon's initiatives are working well and have kicked out many foreign rivals from competition's arena, yet the issue of acquisition of MonitoRobotics features several facades (advantageous and adverse) and therefore is taking time to get sorted out.

Similar to any business venture, the subject acquisition involves several pros and cons, and by analyzing such ups and downsides, Paragon can weigh out its chances. In the following a brief description of the pros and cons is given:

Pros of acquiring MonitoRobotics

The idea of acquisition has significant potential of generating upbeat cash flows, that could be beneficial in long term. Moreover, through MonitoRobotics customers can be served with high-quality services, that in turn will increase and retain the valuable customer base. On the other hand, the subject initiative is advantageous in gaining a competitive edge as well.

Cons of acquiring MonitoRobotics:

Along with many pros, the implication has a few disadvantages as well, that include the peril of failure that in turn could affect the overall rapport of business to a great extent. Similarly, any potential downfall will reflect on profit margins and revenues and will generate expenditures for the business.

Porter's three tests and Acquisition of MonitoRobotics

In such situations where decision making becomes tricky, some authentic devices such as Porter's test and different other analyses are effective to conduct. In this regard, the attractiveness test or aspect of the situation affirms that the initiative is risky, and can boost the uncertainty both from suppliers and buyers' perspectives. However, on the contrary, the current situation is also not very favourable for paragon and in comparison; it will be preferable to take the risk instead of dealing with persistently declining profits. Secondly, the cost of entry test asserts that definitely the profits will take considerable time to get established, but yet the grasp of Paragon on both service and product faction will increase its productivity. Furthermore, it is projected that after a certain point, the profits will increase dramatically. Further, the better off test elucidates the efficacy of competitive advantages and the idea of acquisition is crucial in this regard. The decision promises fruition for Paragon in long-term prospect and through such implications, the business can elevate its level of commitment with its current and potential customers. Moreover, the inclusion of MonitoRobotics will magnify the brand effect as well.

Conclusion:

Risks are an integral part of the business world and in the competitive epoch, businesses have to go an extra mile to prove their worth. In this context, the acquisition of MonitoRobotics is favourable for the expansion of Paragon Tools.

Reference

Hemp, P. (2014, August 01). Growing for Broke. https://hbr.org/2002/09/growing-for-broke