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In the face of one of the toughest economic recessions in recent memory, many companies are increasing the amount of cash reserves they maintain. Even with claims that the economy is improving, companies continue to stockpile cash and increase these reserves. Stockpiling seems to be highest in the technology sector, but giants like Alcoa and Pepsico are following a similar strategy. Cash helps abate risk. Companies want to be sure they have access to cash without paying exorbitant fees to get it.

QUESTIONS:

  1. What are some of the benefits associated with holding extra cash reserves?
  2. What type of planning does this represent?
  3. The article reports a general trend reflecting what type of master strategy? Now look more closely. What type of strategy is Texas Instruments employing and what specific form does it take?

SOURCE: T. McGinty & C. Tuna, “Jittery Companies Stash Cash,” Wall Street Journal (Retrievable online at http://online.wsj.com/article/SB125712303877521763.html)

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