Case Study : The Financial Problems Incurred By Williams Essay

1152 Words Oct 24th, 2014 null Page
The Williams 2002 case study assesses the financial problems incurred by Williams, a company that specialized in activities such as purchasing, selling, and distributing energy commodities. The company has a long history and was founded in Tulsa in 1918 by Miller and David Williams, who previously owned a pipeline construction business in Arkansas. The growth of the company during the late 1990s and early 2001 can be partially attributed to its success in the energy market. However, it primarily attributes its success to its profitable investments in the telecommunications business. An economic recession combined with poor financial management contributed to decreased profitability in its telecommunications segment. This case study will assess the dilemma posed by the poor performance of the telecommunications segment of the business from a management and finance standpoint. Williams serves as an example of a multi-product firm because of its emphasis on two separate segments: energy commodities and telecommunications. The positive feature of multi-product firm is that it can decrease exposure to risk by enabling firms to diversify their portfolios. Yet, in this case, Williams made a mistake by selecting two high-risk industries. The energy market is sensitive to economic fluctuations while the telecommunications market relies upon the performance of technologies that often have immeasurable influences on the market.
The primary problem faced by Williams is that it invested…

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