A-1 Lanes

and the Currency Crisis of the East Asian Tigers

CASE ASSIGNMENT

As owner of A-1 Lanes, you have thought long and hard about how to proceed, given the
company's current situation. In order to share your plans with A-1 Lanes' executive team
and solicit their agreement, you have decided to summarize the results of your analysis in
writing and to propose specific actions for moving forward. You will prepare a ten-
minute overview presentation of the analysis and recommended action plan to deliver at
next week's management meeting.

Your report results will cover the following key points:

1. Based on your assessment of the external environment, what conclusions have you
drawn, and what actions are required of the company?
2. Based on your assessment of the internal environment, what conclusions have you
drawn, and what actions are required of the company?
3. Define A-1 Lanes' business-level strategy. What changes are necessary to exploit the
company's capabilities, maximize the value of the firm, and secure long-term
positioning for the company?
4. Based on competitor actions (such as price cutting) and increased rivalry in the
industry, describe competitive measures that A-1 Lanes can take to protect the
company's performance.
5. Despite your success in Asian markets, define the current risks of doing business in
this region. What protective measures are necessary?
6. How can your cooperative relationship with Dacos help A-1 Lanes achieve its
immediate and long-term strategic goals?

At the outset of your analysis, you were considering three options for moving forward:
(1) liquidate the company, (2) sell the company, or (3) stay in business and try to weather
the impending storm. Which option does your analysis support?

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and the Currency Crisis of the East Asian Tigers

STRATEGIC MANAGEMENT INPUTS

1. Based on your assessment of the external environment, what conclusions have

you drawn, and what actions are required of the company?

Bowling peaked in the U.S. in the 1960s, and despite growing domestic populations, the
number of bowling centers has steadily declined since that time. The number of lanes per
center has increased, but the total number of lanes is currently below the number of lanes
in the 1970s.
With few new lanes expected and limited financial resources for independent owners to
replace existing lanes, the domestic market is reduced to servicing worn and damaged
lanes with synthetic overlay systems to prolong the life of existing lanes.
A-1 Lanes' future strategy is tied to a global strategy, with maintenance goals only in the
U.S. and other mature or saturated markets (such as Europe, Taiwan, and South Korea).
Growing Asian markets offer A-1 Lanes access to sales volume and margin potential.
Social and demographic trends favor continued growth in the market, from a current level
of 15,000 lanes up to possibly 100,000 lanes before growth tapers off. China represents
one-third of Asian sales and is a key market to target. Baker and his Asian distributors
have identified increasing interest in bowling in other untapped Asian markets, such as
Singapore and Malaysia, where an increase in volume sales can possibly offset lower
margins per unit.
Foreign-based manufacturers are nonexistent due to limited raw material supplies, and
Asian bowling operators have a preference for bowling products made in the U.S.
However, competition is strong amongst U.S. producers, with vertically-integrated rivals
(such as AMF and Brunswick) also fighting to penetrate this promising market. Recent
price cuts by these major competitors have cut into margins across the industry.
In addition, although Asia's economy is growing at twice the rate of other world regions,
the IMF has warned that the aggressive investment, heavy borrowing, wasteful use of
resources, speculative excess, and limitations in skilled labor resources threaten to impact
the growth rates of several Southeast Asian economies. Analysts are also wary of
inflation, the inadequacy of current accounts, and the potential for failure in developing
countries' financial markets.
With 80% of A-1 Lanes' sales derived from the Asian Pacific Rim and more than $1
million in accounts receivable from this region, the 11% devaluation of the baht poses a
very real threat to the industry and to the company.
So long as a market exists for new lanes, A-1 Lanes needs a strategy to capture a larger
share of the market. However, in the long run, world markets will be saturated at some
point, and building a successful maintenance strategy and competitive advantage for the
overlay business at this time will secure a long-term industry position for the company.

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 A-1 Lanes
and the Currency Crisis of the East Asian Tigers

2. Based on your assessment of the internal environment, what conclusions have

you drawn, and what actions are required of the company?

A-1 Lanes has become an important player in the international bowling industry within
ten short years. The company's strategic strengths include:
• Innovative Skills - the company has internally developed a popular synthetic
substitute for wood flooring and innovative capping systems. Continuous
improvement to products is crucial, if not necessary, for survival. And the ability
to develop radical improvements could revolutionize the industry (which is
stagnant in many markets). Technological enhancements could alter the entire
bowling equipment industry and accelerate the development of bowling in foreign
markets. With this skill set, the company is in a good position to discover the
"next big idea" in the industry.
• Distributor Relationships - working with over 30 capital equipment distributors
worldwide has developed the company's ability to establish vertical partnerships
with mutually-beneficial objectives and has extended the reach of this small
company. In particular, the Dacos relationship offers A-1 Lanes a competitive
presence in Asia where strong ties are crucial for conducting business over time.
• Knowledgeable and Direct Sales Force - although smaller than its competitors'
sales forces, the company's sales team has been successful at meeting customer
needs, particularly in Asia where responsive and accessible company executives
are signs of respect to customers.
• Few Organizational Layers - the company's small size offers flexibility and
responsiveness to market changes and needs.
• Versatile Product Line - the company's ability to produce both wood and
synthetic systems makes it one of only a few firms who can serve diverse
customer needs.
• Quality Product - The quality of wood and the advanced synthetic design of A-1
Lanes' products are acknowledged in the industry. The performance and overlay
technology of UltraLane offers an improved approach surface and a potential
competitive advantage to capture a greater share of the after market (maintaining
and extending the life of existing lanes).
• Prime Location - proximity and access to key raw material resources gives the
company a sourcing and cost advantage.
• Consistent and Reliable Service - particularly beneficial in Asian markets where
ongoing relationships are emphasized.
• Operational Efficiency - modernized plant and efficient operations.
• International Market Capabilities - experience selling to markets throughout
the world.
• Cost Advantage - advertising expenses are minimized by positive coverage of A-
1 Lanes in trade publications.
Based on the four criteria for judging the sustainability of any competitive advantage, the
company's capabilities are valuable and can serve to neutralize threats or exploit
opportunities. However, it is difficult to label A-1 Lanes' core competencies as notably
rare, overly costly to imitate, or nonsubstitutable. Therefore, measures to improve
sustainability of the company's competitive advantage are necessary.

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 A-1 Lanes
and the Currency Crisis of the East Asian Tigers

In this case, the company's weaknesses can be revealed by noting critical accounting
measures. The table below highlights some of the important financial factors for A-1
Lanes to address.

Changes to Key Financial Measures

Percentage
Change Past
1994 1995 1996 Year
Revenue 7.8 9.3 12.4 33.33%
CGS 6.0 6.5 9.9 52.31%
Gross Profit 1.7 2.9 2.5 -13.79%
GP Margin 21.8% 31.2% 20.2% -35.34%
Operating Expenses 0.7 1.3 1.7 30.77%
EBIT 1.0 1.5 0.8 -46.67%
Interest Expense 0.070 0.045 0.111 146.67%
Income Tax Expense 0.317 0.448 0.204 -54.46%
Net Income 0.616 1.047 0.476 -54.54%

Accounts Receivable 0.95 1.42 2.1 47.89%

Inventory 1.57 2.42 2.05 -15.29%
Total Current Assets 2.6 4.0 4.5 12.50%
Total Assets 2.8 4.3 5.2 20.93%
Long-Term Debt 0.07 0.55 1.30 136.36%
Non-percentage numbers are in millions.

Relative to a revenue increase of 33% over the previous year, cost of goods and interest
expenses have risen disproportionately. Consequently, profit, earnings, and income have
all declined. Also, accounts receivable and long-term debt are up significantly over the
past two consecutive years. The average collection period has increased from 45 days to
62 days in the past two years.
These financial results have been impacted by the decision to expand manufacturing
facilities and by competitive and market pressures. A review of the company's
accounting reports illustrates the need for a professional financial advisor who can
establish an effective collection policy and properly hedge against currency losses. A-1
Lanes also needs a controller who is able to work with operations management to
determine appropriate inventory levels, analyze capacity goals, and drive a competitive
cost position.
The decision to modernize facilities has already been made, but A-1 Lanes should
estimate available industry capacity and determine if its competitors have made similar
expansion commitments. Although its added capacity allows A-1 Lanes to meet
increased demand, if competitors are also trying to utilize excess manufacturing capacity,
industry prices are likely to fall even further.
In addition to operating at only 60% capacity, A-l Lanes has deliberately increased its
inventory above 1994 levels to increase responsiveness to foreign sales opportunities. An
experienced controller can help the company identify an appropriate investment level in

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and the Currency Crisis of the East Asian Tigers

inventory and can encourage improvements to production turnaround performance to

meet customer needs with a lower investment in finished goods inventory.
When compared to industry averages, A-1 Lanes' falling operating profits are still twice
the industry's level. Return on equity, while lower than in previous years, also exceeds
industry performance. However, both inventory and accounts receivable turnover are
below industry averages, again indicating a need for better inventory and collection
strategies.

STRATEGIC ACTIONS: STRATEGY FORMULATION

3. Define A-1 Lanes' business-level strategy. What changes are necessary to exploit
the company's capabilities, maximize the value of the firm, and secure long-term
positioning for the company?

According to Baker, “The key to our success is the quality of the wood and the advanced
synthetic design of our bowling lanes supported with responsive service, operational
efficiencies and proven accomplishments at penetrating international markets.” A-1
Lanes has strived to provide competitively priced, premium-quality bowling lanes and
related equipment to domestic and international markets and has earned a favorable
reputation in the industry by doing so.
A-1 Lanes is in a position to implement a more deliberate integrated cost
leadership/differentiation business strategy. The company strengths highlighted above
demonstrate that its cost position, matched with high quality and uniqueness, justify an
approach that aims to efficiently manufacture products with differentiated attributes.
Efficient production is the source of maintaining low costs, while differentiation is the
source of providing unique value for customers. Firms that successfully use the
integrated cost leadership/differentiation strategy usually adapt quickly to new
technologies and rapid changes in their external environments. Simultaneously
concentrating on developing two sources of competitive advantage (cost and
differentiation) increases the number of primary and support activities in which the firm
must become competent. Having skills in a larger number of activities increases the
company's flexibility. Combined with A-1 Lanes' nimble size and inherent
responsiveness, these competitive conditions are suitable for creating a sustainable
advantage.
Value chain analysis is a management tool which allows firms to understand areas in
their operations that create value and those that do not. It is a template that A-1 Lanes
can use to understand its cost position and to identify the basis for implementing its
strategy.
Following a product from raw material input to installed systems at customer sites
requires looking at primary activities (involved with a product’s physical creation, its
sale and distribution to buyers, and its service after the sale) and support activities (which
provide the assistance necessary for the primary activities to take place).

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 A-1 Lanes
and the Currency Crisis of the East Asian Tigers

In a global context, the most valuable links on the value chain are often the people who
have knowledge about end-user customers. In this case, Baker and his immediate
management team are the key players satisfying this role. Additionally, the company's
distributors have valuable insight into the problems and needs of customers, and
communication between A-1 Lanes and its distributor partners is critical to understanding
and meeting customer expectations.
Inbound logistics (materials handling, warehousing, and inventory control) and outbound
logistics (collecting, storing, and distributing products to customers) often account for
significant portions of the total cost to produce goods. A competitive advantage in terms
of logistics can create great value when focusing on a cost leadership strategy.
Having the lowest-cost position is valuable in dealing with rivals. Because of the cost
leader’s advantageous position, rivals hesitate to compete on the basis of price, especially
before fully evaluating the potential outcomes of such competitive actions. Developing a
competitive cost advantage based on logistics is possible due to A-1 Lanes' location near
natural raw material supplies and is an appealing way to combat the price cutting
practices of its larger competitors.
Consideration of the following activities will also help to determine value-creating
potential within the company.
• Operations - Activities necessary to convert the inputs provided by inbound logistics
into final product form (such as machining, packaging, assembly, and equipment
maintenance).
• Marketing and Sales - Activities completed to provide means through which customers
can purchase products and to induce them to do so. To effectively market and sell
products, firms develop advertising and promotional campaigns, select appropriate
distribution channels, and select, develop, and support their sales force.
• Service - Activities designed to enhance or maintain a product’s value. Firms engage in
a range of service-related activities, including installation, repair, training, and
adjustment.
• Procurement - Activities completed to purchase the inputs needed to produce a firm’s
products. Purchased inputs include items fully consumed during the manufacture of
products (e.g., raw materials and supplies, as well as fixed assets—machinery, laboratory
equipment, office equipment, and buildings).
• Technological Development - Activities completed to improve a firm’s product and the
processes used to manufacture it. Technological development takes many forms, such as
process equipment, basic research and product design, and servicing procedures.
• Human Resource Management - Activities involved with recruiting, hiring, training,
developing, and compensating all personnel.
• Firm Infrastructure - Firm infrastructure includes activities such as general
management, planning, finance, accounting, legal support, and governmental relations
that are required to support the work of the entire value chain. Through its infrastructure,
the firm strives to effectively and consistently identify external opportunities and threats,
identify resources and capabilities, and support core competencies.

Each item should be examined and rated relative to competitor capabilities to identify
resources or capabilities with the potential to create a sustainable competitive advantage.
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 A-1 Lanes
and the Currency Crisis of the East Asian Tigers

Conditions which create value for customers and establish opportunities to capture that
value include (1) performing an activity in a manner that provides value superior to that
provided by competitors or (2) performing a value-creating activity that competitors
cannot perform. Based on market conditions, developing marketing and service
programs to support the after-sale market should be prioritized to ensure that A-1 Lanes
establishes a long-term foothold as a premium overlay maintenance supplier to the
worldwide industry.
Sometimes value can be generated by uniquely reconfiguring or recombining parts of the
value chain, making this a valuable tool in the strategy development process. In cases
where particular primary and support activities do not offer capabilities that are a source
of core competence, outsourcing is a valid consideration.
An integrated strategy also requires differentiated goods and services. Some methods of
accomplishing this include the use of unusual features, responsive customer service, rapid
product innovation and technological leadership, perceived prestige and status, appealing
to different tastes, and engineering design and performance.
Again, analyzing its value chain can contribute to determining whether A-1 Lanes is able
to link activities to create value through differentiation. Primary and support activities
that offer the potential for differentiating goods and services should be identified and
developed to support the company's strategy.
A-1 Lanes' innovative skills are an obvious source of differentiation that could create a
competitive advantage for the company in the bowling equipment industry. Although
critical to long-term corporate success, the outcomes of R&D investments are uncertain
and often not achieved in the short term, meaning that patience is required as the firm
evaluates the outcomes of its R&D efforts.
Most innovations are incremental and build on existing knowledge bases to provide small
improvements in existing product lines. The markets for incremental innovations are
well-defined, product characteristics are well understood, profit margins tend to be lower,
production technologies are efficient, and competition is primarily on the basis of price.
On the other hand, radical innovations usually provide significant technological
breakthroughs and create new knowledge. Radical innovations, which are revolutionary
in nature, typically use new technologies to serve newly created markets. Entrepreneurial
ventures produce more radical innovations than do their larger, more established
counterparts. The strategic flexibility of A-1 Lanes and its willingness to take risks will
contribute to its ability to identify valuable opportunities (tied to customer needs) and
then develop radical innovations to exploit them.
With a global strategy, A-1 Lanes has been offering relatively standardized products
across country markets. By identifying features attractive to specific Asian markets, the
company might be able to leverage innovative product developments back into more
mature markets.
Continuous success at differentiation requires consistent upgrades to differentiated
features that customers value and/or the creation of new innovations without significant
increases to cost. Product lines should be continually enhanced. The offering of a
portfolio of complimentary products enriches the differentiation for customers and can
satisfy multiple consumer needs. A differentiated product which satisfies unique
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and the Currency Crisis of the East Asian Tigers

customer needs also offers A-1 Lanes the opportunity to charge premium prices for
perceived value and realize substantial margin improvements.
Long-term strategic competitiveness will result only when A-1 Lanes is able to satisfy a
group of customers by using its competitive advantages as the basis for competing in
individual product markets. Pursuing the company's integrated strategy, it is critical to
concentrate on the needs of its core customer group. More discussions with customers
about specific issues will open up a dialogue for developing solutions to customer
problems and will enhance the customer relationship building process. These
conversations should be aimed at determining how A-1 Lanes' core competencies can
satisfy customer needs.
Relationships with customers are strengthened when the company delivers superior
value. Strong interactions often provide the foundation for the firm’s efforts to profitably
serve unique customer needs. The company can become skilled at the art of managing all
aspects of their customer relationships, including:
• the reach dimension of relationships, which is concerned with the firm’s access
and connection to customers,
• the richness dimension of relationships, which is concerned with the depth and
detail of the two-way flow of information between the firm and the customer, and
[This might involve electronic connections - or interconnectivity - with customers and
broader, deeper information-based exchanges to better understand customers and their
needs. Through advancements in communication technology, the costs of meaningful
information exchanges have dropped dramatically in recent years.]
• the affiliation dimension of relationships, which is concerned with facilitating
useful interactions with customers.
[Viewing the world through the customer’s eyes and constantly seeking ways to create
more value for the customer have positive affects in terms of affiliation.]

4. Based on competitor actions (such as price cutting) and increased rivalry in the
industry, describe competitive measures that A-1 Lanes can take to protect the
company's performance.
Although A-l Lanes has matched AMF's lower prices for wood and synthetic flooring in
world markets, profits have suffered substantially. Continuing to following the larger
company's lead will be detrimental to A-1 Lanes' ongoing success.
As noted above, differentiating products to satisfy unique customer needs presents the
company with an opportunity to charge premium prices for perceived value. Customers
tend to be loyal purchasers of products differentiated in ways that are meaningful to
them. As their loyalty to a brand increases, customers’ sensitivity to price increases is
reduced.
The relationship between brand loyalty and price sensitivity insulates a firm from rivalry
and competitive attacks to price levels. In addition, establishing a strong cost leader
position deters rivals from competing on the basis of price and further protects A-1 Lanes
from margin erosion.

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and the Currency Crisis of the East Asian Tigers

Flexibility is required for firms to perform primary and support activities in ways that
allow them to produce somewhat differentiated products at relatively low costs. Flexible
manufacturing systems, information networks, and total quality management systems are
three sources of flexibility that are particularly useful for firms trying to balance the
objectives of continuous cost reductions and continuous product enhancements called for
by the integrated strategy. Each of these should be fully evaluate by A-1 Lanes to
identify ways to create flexibility toward differentiating the company's offerings.
• Flexible manufacturing systems (FMS) - increase flexibilities of human,
physical, and information resources integrated to create relatively differentiated
products at relatively low costs. A significant advancement in technology, FMS
is a computer-controlled process used to produce a variety of products in
moderate, flexible quantities with a minimum of manual intervention. Flexibility
is often derived from modularization of the manufacturing process or other value
chain activities. (A-1 Lanes will have to determine if additional manufacturing
investments are justified and if FMS can be integrated easily into its new factory
design and processes.)
• Informational Networks - link company to suppliers, distributors, and customers.
When used effectively, these networks can help satisfy customer expectations in
terms of product quality and delivery speed. (Informational networks are a
promising way to build communication and service opportunities for A-1 Lanes'
distributor and end-customer bases.)
• Total quality management (TQM) - emphasizes total commitment to the
customer and to continuous improvement of every process through the use of
data-driven, problem-solving approaches based on empowerment of employee
groups and teams. TQM systems can increase customer satisfaction, cut costs,
and reduce the amount of time required to introduce innovative products to the
marketplace. Most firms use TQM to improve product and service quality.
o Product Quality Dimensions that can enhance A-1 Lanes' differentiation
include performance, features, flexibility, durability, conformance,
serviceability, aesthetics, and perceived quality (or product image).
o Service Quality Dimensions that can enhance A-1 Lanes' differentiation
include timeliness, courtesy, consistency, convenience, completeness, and
accuracy.

5. Despite your success in Asian markets, define the current risks of doing business
in this region.

Foremost among the economic risks of international business strategies are the
differences and fluctuations in the value of different currencies. The value of the dollar
relative to other currencies determines the value of the international assets and earnings
of U.S. firms. An increase in the value of the dollar can harm U.S. firms’ exports to
international markets. The value of different currencies can also dramatically affect a
firm’s competitiveness in global markets because of the effect on product prices.

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Government oversight and control of economic and financial capital in a country affect
local economic activity and the success or failure of foreign sales in the country.
Shrinking reserves for maintaining the baht’s value at the Bank of Thailand forced the
Thailand government to devalue its currency on July 2, 1997. Because the Asian Pacific
economies are interconnected, this event is likely to affect the currencies of the whole
Asian Pacific region. With 80% of its sales in this region, it is very uncertain how A-1
Lanes would survive an Asian financial crash. The uncertainty of facing a potential
currency crisis puts the firm's viability into question.
As the case material states the situation, American bowling manufacturers exporting to
East Asia are concerned about the baht devaluation for three reasons.
1. U.S. firms fear that their Asian customers will be unable to pay off their accounts
(usually payable in U.S. dollars). A-1 Lanes' accounts receivables and days
outstanding have both been on the rise, and its current A/R account is worth $2.1
million (or 17% of 1996 revenues).
2. A significant devaluation will make U.S. exports substantially more expensive
across the entire region. The higher prices of capital equipment could reduce
sales for new bowling equipment.
3. Governments usually raise interest rates in conjunction with any devaluation to
assist in the stabilization of their currency. Manufacturers are worried that the
higher interest rates could quash Asian investment in bowling centers almost
overnight, especially if governments act quickly.
Credit and currency risks are partially reduced by sales contracts with foreign customers
(which specify payment in U.S. dollars) and by the common use of irrevocable letters of
credit (used in international transactions to guarantee that a buyer's payment to a seller
will be received on time and for the correct amount). However, the fluctuations of
foreign currencies against the dollar produce risk for both the customer and for A-1
Lanes.
Standard industry practice is to ship to foreign customers only after receipt of full
payment in U.S. dollars, or upon presentation of irrevocable letters of credit. However,
A-1 Lanes has made exceptions for longstanding key accounts. Applied to several major
Asian customers, this decision has opened the company to greater exposure of non-
payment.
Although the idea of using hedging techniques to reduce A-1 Lanes’ transaction
exposure has been previously dismissed, the company must seriously consider hiring an
accounting or investment expert to advise them on practices which can reduce the
financial risk of operating in potentially unstable markets. And it can be argued that
changing its credit policy will serve to protect customers as well as the company.
Also worthy of consideration is the use of business-level strategic alliances to hedge
against risk and uncertainty. A-1 Lanes' distributor relationships in Asia can play a role
in establishing less risky payment terms. As this is the only growth market available to
the company, it must establish a secure manner of conducting business in the region to
continue its success. Also, evidence suggests that complementary business-level strategic
alliances, especially vertical ones, have the greatest probability of creating a sustainable
competitive advantage.
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6. How can your cooperative relationship with Dacos help A-1 Lanes achieve its
immediate and long-term strategic goals?

Doing business in Asian markets requires a long-term view. Customer relationships are
critical to success, and A-1 Lanes' position with its foreign distributors, Dacos in
particular, gives the company an edge over its competitors.
In a vertical complementary strategic alliance, firms share their resources and
capabilities from different stages of the value chain to create a competitive advantage.
This type of collaborative or relational advantage enhances the potential for marketplace
success. Market changes in the global economy challenge firms to constantly make
upgrades to maintain strategic competitiveness, and A-1 Lanes' key distributor
relationships help the company respond to these challenges.
Dacos is an established distributor of bowling equipment and accessories. The ongoing
relationship between Dacos and A-1 Lanes provides the distributor with a reputable and
versatile U.S. source of manufactured lanes to offer complete turn-key packages to
bowling center owners and developers all over the world. In turn, the arrangement
enables A-1 Lanes to compete directly with the largest firms in the industry (Brunswick
and AMF), despite its smaller size.
With 50% of its sales channeled through its partnership with Dacos, it is easy to see how
the cooperative relationship can fit within the company's integrated cost
leadership/differentiation strategy.
Because outbound logistics account for a considerable share of the cost to produce and
deliver products to customers, arrangements with vertical partners in the distribution
chain can contribute to reducing total costs and establishing an advantage based on a cost
leadership strategy.
As the discussion above suggests, Dacos can also fulfill a critical role in establishing
information and communication networks between A-1 Lanes and end-user customers.
In addition to solidifying close ties in regional markets, the distributor compliments A-1
Lanes' small sales team and can facilitate the identification of customer needs and
features valued by the market.
Additionally, the partnership offers to keep A-1 Lanes at the forefront of emerging
growth opportunities in markets like Malaysia and Singapore for continued growth.
Alliances of this sort can contribute to innovation (which has been identified as both a
company strength and a way to effectively differentiate from others in the industry).
Information on new business opportunities and how to exploit them can be shared and
acted upon. Social capital in the form of relationships with other firms provides access to
the knowledge and other resources necessary to develop innovations. New knowledge
helps firms develop new capabilities. By aligning complementary assets between A-1
Lanes and Dacos (and perhaps other distributors with complementary resources), the
company increases the potential for future innovations that will create value in the
industry.

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SUMMARY

At the outset of your analysis, you were considering three options for moving
forward: (1) liquidate the company, (2) sell the company, or (3) stay in business and
try to weather the impending storm. Which option does your analysis support?

There is sufficient reason to believe that the company, with proper guidance from
financial experts, can successfully compete and protect itself from the environmental
threats and risks that it faces in today's global marketplace. Even in a worst-case
scenario, with a crash in Asian financial markets eliminating sales of new lanes and a
default on payments due from customers, A-1 Lanes could cover its own obligations with
assets and equity in the business before having to close shop and liquidate assets.

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