Mensa Case study Major Issues faced by Mensa

Question: #5669

Solution: #5670

Mensa Case study Major Issues faced by Mensa

Mensa Case study Mensa Case study Major Issues faced by Mensa Mensa, INC. had undergone a major renovation in its business portfolio and investment sectors. In the 1990’s, the firm sold out most of its non-profitable units and assets. It generated a capital of about 450 million$, 250 million$ short of their original target. Most of this capital generated was re-invested in their current 4 main business groups. They were: • Financial Services • Energy • Packaging • Forest Products The company is not yet firmly settled in the market and has mixed reviews in its performance in its different sectors. Some of them look promising while others have bleak prospects. The problems faced by them will be discussed separately. Financial services: Mensa, INC. bought Columbus Financial Corporation in the early 2000’s. The corporation was making good profits and had a positive cash flow and these were the reasons why Mensa decided to take over the firm. It soon added a chain of other insurance companies, including American Life Insurance Company and other mortgage and mortgage insurance companies. Soon the company had insurance underwritings in 3 major sectors; life, real estate and casualty. The company’s position in this sector looks pretty good. Although the company is not yet competing among the giants but it has a decent position in the market and occupies quite a decent market share. Now they have a decision to make, whether they are happy with the comfortable position their company is at or do they want to make any further investments and risk getting into the more competitive section of the market. Currently, Mensa is investing more capital per dollars of sale than their competitors. This can be solved by investing more money and increasing their sales. But that will lead them to be viewed as threats by the major companies who can then try to remove the competition from the market. So the decision at hand is an important one. Energy: In the energy sector, Mensa, INC. has bought Easy Gas Energy. This company is a reputed one and is involved in the exploration, development and production of oil and gas. It is the largest supplier of natural gas to the state of Florida. It is one of the six companies which are licensed by the Mexican National Oil Company to buy gas from it. Thus, it is a well set and profitable investment with relatively low risk. In 2006, with the help of Allied Corporation, Mensa took over Suppan Energy Corp. This helped the company in its efforts in exploration and it spent over 400 million$ in 2006 in exploration. The problem facing the company is that it is in no position to undertake such expensive exploration projects. The company did not have a strong capital to support these activities unlike its competitors. The risk involved is too high and may well lead to the collapse of the company in this sector. Hence they are faced with ...