Premium Essay

Anacomp

In: Business and Management

Submitted By tweetywonghoyi
Words 1114
Pages 5
1. Identify all the economic entities involved in the development of Anacomp’s CIS software system.

Anacomp, a limited partnership: RTS Associates - BANKSERV 10000, CEFT, CDA and CIBS, thirteen major banks including the National Bank of North America in New York, the Shawmut National Bank in Boston, Provident National Bank in Philadelphia and the First national Bank in Kansas City as advisory banks.

2. i. Describe the contractual arrangements between the economic entities involved in the CIS development.
Anacomp would develop the CIS system on behalf of the partnership. In return, the four banks collectively contributed $6 million and 24 software development people for 2 years to the project. The same considerations were present in each of the four subsequent partnerships. Each partnership assumed development risks; except for BANKSERV 10000. Any product developed becomes the property of the partnership. Upon completion of the development of the CIS system, Anacomp agreed to market CIS for 5 years on a commission basis. Anacomp also had the option to acquire all rights to the CIS system at the greater of its appraised fair market value or RTS’s investment plus a fixed profit but is under no obligation to exercise this option. RTS had the right to extend Anacomp’s 5-year marketing agreement an additional 5 year or to cancel it if Anacomp did not use its best efforts to market CIS. If the CIS development expenses exceed $6 million, the RTS was required to pay further development fees, Anacomp agreed to loan RTS, without recours

For the thirteen advisory banks, they had to pay a nonrefundable fee of $150,000 each in order to participate. Then, they were permitted to review the project during development and provide input regarding changed to enhance the ultimate marketing of CIS.

ii. Who bears the majority of the risk of failure of the development effort?...

Similar Documents

Premium Essay

Anacomp

...This is because Anacomp will market the product for...

Words: 1069 - Pages: 5

Premium Essay

Case Study Anacomp

...Anacomp also had the option to acquire all rights to the CIS system at the greater of its appraised fair market value or RTS’s investment plus a fixed profit. RTS had the right to extend Anacomp’s five-year marketing agreement an additional five years or to cancel it if Anacomp did not use its best efforts to market CIS. For the contractual arrangements between Anacomp and banks, thirteen major banks, including the National Bank of North America in New York, the Shawmut...

Words: 1939 - Pages: 8

Premium Essay

Anacomp Case Business

...Anacomp new product development strategy was to implement a new software product which would help the company to become a leading supplier of software and services to the banking industry. The computer service industry was rapidly growing, but software production line, one of the segments of the industry, had a more prospect of rapid growth with an annual growth rate of 33 percent between 1981 and 1986. Anacomp mostly focused on this segment, believing that investment made in software segment would bring more than other segments. But, Anacomp followed its development strategy in an unusual and unique way. In this new strategy Anacomp tried developing a software system called CIS to financial intuitions. Because they believed CIS is a major upgrade to their existing software, they had an agreement with RTS associates because developing CIS had a weight cost for the firm. Under the agreement, Anacomp were to develop the CIS on behalf of the partnership. RTS would be paying a development fee of $6 million. Anacomp would be marketing the CIS for five years on a commission basis. Also, Anacomp had the option to buy all the rights of the CIS system at predetermined conditions. RTS also had the right to extend the 5-year marketing agreement but also to cancel the compliance. RTA financed the CIS development with their own money, a bank loan, and a personally guaranteed bank loan from Anacorn....

Words: 1128 - Pages: 5