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What Would You Do?

Case 2: Theater Supplies, Inc.* in 2001

In 2001, Theater Supplies, Inc. (TSI) was an industry leader in supplying theaters in the U.S. with everything they might need, from seating, aisle lighting, design services for remodels/multiplexes, projection and sound equipment, janitorial supplies, concession candy and food items, etc. The company's revenues and net income had been growing during the period 1996-2000. During the preceding decade, the major theater chains had been growing through multiplexing (converting existing theaters to accommodate multiple screens), expanding (building new multiplex theaters), and acquiring weaker chains. While this resulted in increasing market share, it also depleted their cash reserves, piled on more debt, and intensified competition for both good movies and attracting patrons. This emphasis on growth at any cost, combined with a bad year for blockbuster movies in 2000, resulted in a substantial drop in revenues and profits, causing the top five national theater chains to declare bankruptcy.

If you were CEO of TSI at the end of 2001, with your major customers close to emerging out of bankruptcy, would you:



  1. * This is a fictitious name, but the case is based on a real company

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