Cyberproblem

Issues in Capital Budgeting at Applied Technologies

A company's capital budgeting program evolves from and is a function of its corporate strategy. The firm must evaluate itself and identify its place and direction in the business environment. However, even the most sound of investment practices may not be able to save a company from financial distress, if the entire economy takes a downturn. For instance, the recession in 2001 caused many companies to suffer through declining sales and profits. In such economic conditions, the need for sound investment and budgeting practices is amplified This cyberproblem looks at a company in the superconductor industry, Applied Technologies, that seeks to use sound financial decision-making and aggressive investment to stimulate growth. To answer the following questions, use the Letter to Shareholders and Editorial sections of Applied Materials' 2001 annual report, found at http://www.appliedmaterials.com/investors/annual_report_2001/home.html.

1. What is Applied Materials' mission statement?
   
   
2. What major trends are cited as potential catalysts for stronger growth in the superconductor industry?
   
   
3. How does Applied Materials define global leadership?
   
   
4. Describe Applied Materials' approach to research and development investment. Specifically, what kind of investment is the company making in its Equipment and Process Integration Center and Process Module Technology Center? What is EPIC, and how did it come to fruition?