Teradyne Case Study Essay
Teradyne Case Study
The vision that Nick DeWolf had for Teradyne’s value proposition was to provide quality electrical test equipment to fulfill the large need in the market for reliable electronic components in the 1960’s industrial market. DeWolf felt that there was a problem in the market as many users had to build their own equipment to test as there was a lack of competent and capable producers in the semiconductor component testing field. These users and companies must use valuable time to make their own test equipment, which would incline them to purchase the equipment from an outside source.
To establish themselves in the market, Teradyne focused on cutting down the cost of the expensive test equipment and improving the equipment’s reliability by reducing the test equipment’s size and through the use of military grade components. Teradyne expected to have equipment that would have a useful life of five years with a maintenance cycle of three months at the most. Implementing their strategy, Teradyne expected that the capabilities of their equipment would be ten times better than what was currently on the market.
Teradyne projected to see themselves become profitable in the sixth quarter. They expected a quarterly profit of $6300.00 (in thousands). The projected cash flow at the end of the quarter is ($40,400.00) (in thousands). In the quarters leading up to when they became profitable, Teradyne expected to consume $140,300.00 (in thousands).
Teradyne’s business plan describes the problem and need that they are setting out to solve in a good matter. From discussing the problem and needs, they have a good approach on the customer base that would utilizes their products. Several sections discuss the business needs of their potential customers and then provides solid concrete numbers that support Teradyne’s resolution to create the products that will fulfill the needs.