SmartTool Inc Essay Example | Topics and Well Written Essays - 1250 words

SmartTool Inc - Essay Example Doug has been taking high risks in business especially in bagging orders that cannot be delivered readily using the core competencies of the organization. Such orders would either require structured R&D mechanisms, or else uncontrolled costs in trial & errors. The findings of Elwood pertaining to a loss of $190000 on seven projects pertaining to 3D dies present the objective evidence against this conclusion. Also, the company took the route to ISO 9000 certification while the processes in a mess and were not automated. In this scenario, the certification doesn’t qualify the organization to have an efficient QMS system. Overall, Doug is competent to start a business and run it till enough cash is generated but his money management skills were not adequate. From the gravy stamping job, SmartTools achieved financial flexibility which means there was surplus cash for self-funding of the working capital. Doug could have made the company debt free but instead preferred to expand int o areas that were lesser known to SmartTools thus increasing risk of uncertainty in order processing.Doug was technology savvy person and he wanted to expand the technology horizon and competency of the organization. He did not value the value of self-reliance thus ensuring operating profitability. Moreover, he was poor in handling working capitals efficiently for the growth of the organization. He kept on realizing more and more working capital loans from the Bank and losing profits and cash in the backend. He along with Janet tried to cover up the slumping profitability by inducing the accounting discrepancies detailed below and in this process risked the wealth of the shareholders as well as serious legal issues that could have put both Doug and Eb behind bars. Accounting Issues Operationally, Doug and Eb didn’t manage the accounting system properly. Given the requirements of section 404 of Sarbanes Oxley, spreadsheets with macros cannot