1. How should the Alcas Corporation answer these questions in its five-year strategic plan? Alcas Corporation is a company based in Olean, New York, which has manufactured and marketed CUTCO Cutlery, a very high quality kitchen cutlery, since its formation in 1949. Alcas was originally a subsidiary of ALCOA, but in 1982 four officers completed a management buyout and it is now privately held. Alcas exists essentially as a holding company. Its two major operating subsidiaries (wholly owned) are CUTCO Cutlery Corporation, the manufacturer of CUTCO Cutlery, and Vector Marketing Corporation, the direct sales marketer of CUTCO for all of North America. In 1994 the company established CUTCO International, Inc. as a subsidiary to handle the marketing of CUTCO on an international basis. As shown in Table 6.1, Alcas Corporation, for the past eight years particularly, has had strong and consistent growth. Since 1995 the average annual growth in total sales has been about 17%. International sales have not been a major component of that growth except perhaps for the year 2002.

In fact, 2002 was the first year that international sales generated a meaningful profit. The company has a very strong balance sheet with a very low debt-to-equity ratio and a significant cash reserve.