Merrill Case

1
Merrill Case

• By- Dr. Francisca Beer
• UCRX

2
Agenda

• Case Overview
• The Problem
• Brainstorm
• Rules

3
Merrills history and background

• Founded in 1950 by Thomas Merrill
• Core business
• HW/SW electronic equipment distributor
• Business expansion by importing consumer
  electronics from Japan
• Entered in the PC market by the mid-1980
• Exclusive import agreement with Goldstone Corp.
  in 1984
• Became the national distributor for Fuji
  Electronics

4
Relationship with suppliers
Global Electric Company
Goldstone Corporation of Taiwan
Fuji Electronics of Japan
1984
1991
1950 - 1980
1984
Distributor of GEC since the companys
establishment
Merrill became the national distributor of HW/SW
products
Merrill established an exclusive import agreement
Competition have increase and price cutting
become rampant
5
Shareholder share capital structure
Patricia Merrill and mother 75
Patricia Merrills fathers brother and
sister 25
Patricia Merrill President

• 75 of firms share capital controlled by
  Patricia Merrill mother

6
Merrill Electronics Corporation

• The Problem
• The yen-denominated purchases had increased
• Half of the equipment sold were imported from
  Japanese suppliers
• From a volume of US 12 million 20 million
  (past 12 months)
• Growing volume expected in the PC product line
• Increase yen purchases with Fuji Electronics and
  other Japanese suppliers
• Half of the equipment sold were imported from
  Japanese suppliers.
• Merrill had an exposure of 90-day yen currency
  for each order

7
Brainstorm!!

• Nothing
• Hedge Lock-in-today an exchange rate that will
  be used in the future
• Forward Contract
• Money Market Contract
• Currency Futures Contract
• Options
• When should we hedge?

8
Next Step

• Establish groups
• Prepare PowerPoint
• Make Presentation