Corning Case Study: Corning

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To answer the question if the top management were making decisions on the right things with GSC, it requires analysis of the state of affairs of Corning, using the following tools and models:
i. Industry analysis; Corning’s competitive environment (using Porter’s 5 forces).
• Understanding the industry environment would allow Corning to better compete with its competitors, increase market share, and develop intelligent business strategies. Analysing the threat of new entrants, bargaining power of suppliers and buyers, threat of substitutes, and rivalry among competitors, will demonstrate that this is an attractive industry with high profit potential. Porter’s 5 Forces Analysis

• The threat of new entrants is low in view of the following:
a) there
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b) unique process of creating increasingly innovative products.
c) it is hard for competitors to emulate in terms of its diverse product lines.
v. Financial Analysis
• The GSC has led to a strong performance post the telecom crash, which means the top management were making decisions on the right things, capitalizing on Corning’s competitive advantages as analysed above. Net sales increased 90% from $3.1 billion in 2003 to $5.9 billion in 2007, demonstrating great growth and improving revenue. Net income rose by 1,064% during the period, from a negative $223 million to $2.2 billion. Return on Equity increased from 4% to 23%, proving that Corning has a strong ability to generate profit and manage shareholders’ funds, while Return on Assets grew from 2% to 14%. The operating margin has improved from 21% to 18%, indicating the ability to generate increased profits. Asset turnover ratio has decreased, reflecting that the pressures from production capacity have lessened. The financial metric reveals that Corning has a strong ability to recover from debt, generate higher profits, grow and succeed

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