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CASE 5A ASI Inc. is a small privately owned company which designs, develops, and produces miniature, electromechanical components used by other manufactures in guidance systems for aircraft and missiles. Practical 100% of its product are used in national defense work the company is located in a small, non-industrial, but progressive whose main center of interest is a technical education institute having a student body and faculty of some five thousand persons in a total population of about 7000. The company was started in this town in 1953 in a small shop, with a capital ad seven employees. The company weathered the problems usual faced the enterprises by new enterprises and grew steadily and soundly expanding to several vacant store building until in 1958 it enjoyed a capitalization of 300000$ and had some 200 employees, 67 thousand $ monthly payroll, 115 thousand$ monthly sales in a backlog of orders exceeding 420 thousand $. By this time however, the backlog had grown alarmingly, reflecting the company’s in ability to increase production in a rate to match increase orders. For a while the company sought to meet demands for expansion by bank loans receivable, but urgent need for major expansion persisted. The company was facing a new stage of growth, but the stockholders had exhausted their cash resources; either it had to get outside financial help or freeze the size of the company artificially low level. Analysis of the company’s needs indicated that it ought to have (1) a new plant at an estimated cost of 350 thousand $, an amount that exceeded; and (2) long term financing of about 200 thousand $ to cover additional equipment and machinery and to provide more working capital in finance training of additional personnel. The company considered the possibility of locating in some other city where it had offered inducements of a new building and tax free

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