Computek Electronics Ltd. is a wholly owned subsidiary of a US parent. The following information has been provided to you:
1. The principal activities of Computek Electronics Ltd are the importation and distribution of modems and personal computers (PCs). It has offices in all capital cities in US and around Australia.
2. All inventories are purchased either from its US parent or related companies in Hong Kong and Taiwan.
3. Computek Electronics Ltd was incorporated in 1991 and had operated profitably until 1996 when significant losses were incurred, principally due to the downturn in the economy, competition from other manufacturers and the availability of cheaper clones.
4. The company is well established in the modem market; however, it has not been doing well in the PC market for the reasons given above and has consequently decided to get out of the PC market and concentrate on enhancing its position in the modem market. This decision has been communicated to the public via computer journals and publications.
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