Question 1
Pls help to answer the following questions: Ques. 1) Which of the following is not an advantage of the corporate form of business organization? a. Sell debt or equity in public capital markets b. Owners have limited liability c. Owners are subject to double taxation d. May continue in business in perpetuity Ques. 2) Working capital management involves decisions related to the following: a. Purchase of production machines b. Extending credit to customers c. Signing a 3 year lease for an office building d. Negotiating with city officials a 2-year tax abatement plan for a new factory Ques. 3) Which of the following statements is correct: a. Market forces provide sufficient incentives for ethical behavior b. It would be easier to do business if there were no ethical norms c. Government regulations are necessary to ensure ethical behavior d. An ethical culture with good internal controls promotes ethical behavior Ques. 4) In 2010, Jack's Art Gallery sold 200 original works of art for $1,240,520. The gallery acquired the works sold for $530,000. Each painting was framed using predesigned framing kits in the gallery's own workshop. The firm bought 100 kits in January for $50,000, 100 kits in March for $60,000.,100 kits in May for $40,000 and 100 kits in August for $30,000. Other costs of operation, including salaries, supplies, rent, etc., totaled $200,000. The company depreciated its assets by $120,000 and paid interest on loans totaling $55,000. Assuming no other costs and that Jack's Art Gallery used FIFO in its inventory management, the firm's EBITDA for 2010 was: a. $280,520 b. $230,520 c. $400,520 d. $440,520 Ques. 5) Jake Smith opened his Balinese coffee shop business in downtown Boise on January 1st 2010. On December 31st, 2010, he sat down with his accountant to figure out how his business had done in its first year and heaved a sigh of relief when his accountant reported that his EBT came to $20,000. Revenues, at $1,050,000 looked good. His expenses were as follows: Salaries and benefits paid to employees $210,000 Jake's own salary $100,000 Supplies (coffee, tea, milk, pastries, etc.) $620,000 Cost of Restaurant grade coffee machine $30,000 Miscellaneous operating costs $44,000 Interest on loan $12,000 How much did Jake's accountant allocate for depreciation and amortization? a. $44,000 b. $14,000 c. $4,000 d. $0.00 Ques. 6) Timber firewood company reported the following numbers in its 2010 income statement: EBIT $520,000 Depreciation $35,000 Interest expenses $24,000 General expenses $110,000 If it's marginal tax rate was 30%, what were Timber's cash flows from operating activities for 2010? a. $347,200 b. $382,200 c. $496,000 d. $520,000 Ques. 7) For the year ending June 30, 2008, the Austin Corporation has current assets of $ 275,000 and total assets of $ 900,000. It also has current liabilities of $ 150,000, equity of $ 200,000, and retained earnings of $ 100,000. The marginal tax rate for the firm is 30%. How much long-term debt does the firm have? a) $ 250,000 b) $ 350,000 c) $ 315,000 d) $ 450,000 Ques. 8) The Johnson and Baker Company increased investments in foreign securities by $ 120,000, funded fixed asset acquisitions by $ 1,500,000, and sold $ 90,000 of long-term debt. Also, the firm had a net inflow of $ 300,000 from the sale of assets. What is the net cash used in investing activities? a) $ 1,320,000 b) $ 1,230,000 c) $ 1,410,000 d) $ 1,800,000 Ques. 9) Net working capital is: a) equal to the expenses on the income statement b) a traditional measure of a firm?s liquidity c) reduced by the firm?s outstanding treasury stock to determine profits d) equal to total assets plus total liabilities Ques. 10) Intangible Assets include all the following except: a. Trademarks b. Goodwill c. Patents d. Capital leases e. All of the above Ques. 11) Owners Equity consists of all the following except: a. Additional paid in capital. b. Par value stock c. Debentures outstanding d. Retained earnings Ques. 12) On the statement of cash flows an increase in accounts receivables is considered: a. A cash inflow b. A use of cash c. A source of cash d. None of the above Ques. 13) Which of the following best describes how corporations are taxed on dividend income? a. Like individuals, corporations are taxed on all dividends received. b. Seventy percent of dividend income received by corporations is tax exempt. c. Varying amounts of dividend income received by corporations are tax-exempt, depending on the percent of the paying corporation that the receiving corporation owns. d. In order to avoid triple taxation of earnings, dividend income received by one corporation from another in which it owns stock is 100% tax-exempt. Ques. 14) Kleaner Kars has a return on assets of 6.75 percent, a total asset turnover rate of 1.3, and an equity multiplier of 1.6. Using the Dupont Identity, what is the return on equity? a. 8.30 percent b. 8.78 percent c. 10.80 percent d. 14.04 percent e. 14.33 percent Ques. 15) Jefferson and Sons has total assets of $807,200, total equity of $509,500, total sales of $945,300, and net income of $25,600. What is the profit margin? a. 1.17 percent b. 1.86 percent c. 2.71 percent d. 3.17 percent e. 5.02 percent Ques. 16) A firm has a debt-to-equity ratio of 0.5. What is the firm?s equity multiplier? a. 0.33 b. 1.50 c. 0.50 d. 2.00 e. 5.00 Ques. 17) Knox Corp. plans to sell 1,000 units in 2011 at an average sale price of $40 each. Cost of goods sold will be 40% of the sale price. Depreciation expense will be $2,500, interest expense $1,500, and other expenses will be $3,000. Wessel's tax rate is 35%. What will Knox Corp.'s net income be for 2011? a. $ 9,500 b. $ 6,875 c. $14,200 d. $11,050 e. $28,430 Ques. 18) What is the return on stockholders' equity for a firm with a net profit margin of 4.9 percent, sales of $350,000, an equity multiplier of 1.6, and total assets of $215,000? a. 12.76% b. 15.24% c. 12.57% d. 8.88% Ques. 19) Assume a firm has an average inventory of $50,000, sales of $250,000, gross profit of $100,000, and net income of $25,000. The preferred formulation for an inventory turnover results in an inventory turnover of: a. 1 time b. 3 times c. 4 times d. 5.5 times Ques. 20) The higher the rate of interest: a. the smaller the future value of an amount invested to-day b. the smaller the present value of a future sum of money c. the larger the present value of a future sum of money d. all of the above Ques. 21) Holding all other variables constant, an increase in the interest rate will cause ________ to decrease. a. Future values b. Annuity payments c. Present values d. Growth rates Ques. 22) You have just calculated the present value of the expected cash flows of a potential investment. Management thinks your figures are too low. Which of the following actions would increase the present value of your cash flows? a. assume a longer stream of cash flows of the same amount b. decrease the discount rate c. increase the discount rate d. a and b Ques. 23) Ed Sloan wants to withdraw $25,000 (including principal) from an investment fund at the end of each year for five years. How should he compute his required initial investment at the beginning of the first year if the fund earns 10% compounded annually? a. $25,000 times the future value of a 5-year, 10% ordinary annuity of 1. b. $25,000 divided by the future value of a 5-year, 10% ordinary annuity of 1. c. $25,000 times the present value of a 5-year, 10% ordinary annuity of 1. d. $25,000 divided by the present value of a 5-year,10% ordinary annuity of 1. Ques. 24) What amount will be in a bank account three years from now if $5,000 is invested each year for four years with the first investment to be made today? a. ($5,000 x 1.260) + ($5,000 x 1.166) + ($5,000 x 1.080) + $5,000 b. $5,000 x 1.360 x 4 c. ($5,000 x 1.080) + ($5,000 x 1.166) +($5,000 x 1.260) + d. ($5,000 x 1.360) e. $5,000 x 1.080 x 4 Ques. 25) On January 1, 2004, Carly Company decided to begin accumulating a fund for asset replacement five years later. The company plans to make five annual deposits of $30,000 at 9% each January 1 beginning in 2004. What will be the balance in the fund, within $10, on January 1, 2009 ( one year after the last deposit)? The following 9% Interest factors may be used. Present Value of Ordinary Annuity Future Value of Ordinary Annuity 4 periods 3.2397 4.5731 5 periods 3.8897 5.9847 6 periods 4.4859 7.5233 a. $195,699 b. $179,541 c. $163,500 d. $150,000 Ques. 26) Your uncle promises to give you $550 per quarter for the next five years starting today. How much is his promise worth right now if the interest rate is 8% compounded quarterly? a. $9,173.14 b. $13,363.57 c. $13,630.84 d. $8,993.27 Ques. 27) Your bank account pays a 6% nominal rate of interest. The interest is compounded quarterly. Which of the following statements is CORRECT? a. The periodic rate of interest is 1.5% and the effective rate of interest is 3%. b. The periodic rate of interest is 6% and the effective rate of interest is greater than 6%. c. The periodic rate of interest is 1.5% and the effective rate of interest is greater than 6%. d. The periodic rate of interest is 3% and the effective rate of interest is 6%. e. The periodic rate of interest is 6% and the effective rate of interest is also 6%. Ques. 28) Suppose an ExxonMobil Corporation bond will pay $4,500 ten years from now. If the going interest rate on safe 10-year bonds is 4.25%, how much is the bond worth today? a. $2,819.52 b. $2,967.92 c. $3,116.31 d. $3,272.13 e. $3,435.74 Ques. 29) You want to go to Europe 5 years from now, and you can save $3,100 per year, beginning one year from today. You plan to deposit the funds in a mutual fund that you think will return 8.5% per year. Under these conditions, how much would you have just after you make the 5th deposit, 5 years from now? a. $18,369 b. $19,287 c. $20,251 d. $21,264 e. $22,327 Ques. 30) A portfolio with a level of systematic risk the same as that of the market has a beta that is: a. equal to zero b. equal to one c. less than the beta of the risk-free asset d. less than zero Ques. 31) The expected return on KarolCo. stock is 16.5 percent. If the risk-free rate is 5 percent and the beta of KarolCo is 2.3, then what is the risk premium on the market assuming CAPM is true? a. 2.5% b. 5.0% c. 7.5% d. 10.0% Ques. 32) Using the above information, what is the rate of return on the market? a. 2.5% b. 5.0% c. 7.5% d. 10.0% Ques. 33) The expected return for Stock Z is 30 percent. If we know the following information about Stock Z: Return Probability Poor 0.2 0.25 Lukewarm ? 0.5 Dynamite! 0.4 0.25 What return will stock Z produce in the Lukewarm state of the world? A) 20% B) 30% C) 40% D) It is impossible to determine. Ques. 34) The risks that diversification cannot eliminate are: a. Interest rate risk. b. risk due to a recession. c. inflation risk. d. systematic risk. e. all of the above Ques. 35) Kevin purchased a stock a year ago that pays a dividend. He has earned a 50%. The stock was purchased for $16 and is now worth $21. What is the amount of dividends received during the year? a. $5 b. $4 c. $3 d. $2 Ques. 36) John is investing in the S&P 500. His expected return on the S&P 500 is 10% with a standard deviation of 4%. If John is investing $200,000, then what is the dollar range of returns that John can have with 90 percent confidence at the end of the year? a. $212,000 - $228,000 b. $206,840 - $233,160 c. $204,320 - $235,680 d. $199,400 - $240,600 Ques. 37) Microsoft?s beta is 1. The risk free rate of return is 2%. If the expected return on the market is 12 percent, then the expected return on Microsoft is: a. 12 percent b. 15 percent c. 8 percent d. 10 percent Ques. 38) What is the relationship between present value and future value interest factors? A. The present value and future value factors are equal to each other. B. The present value factor is the exponent of the future value factor. C. The future value factor is the exponent of the present value factor. D. The factors are reciprocals of each other. E. There is no relationship between these two factors. Ques. 39) An investment that costs $50,000 will return $15,000 operating cash flows per year for five years. Determine the net present value of the investment if the required rate of return is 14 percent. Should the investment be undertaken? ( Your answer might be slightly different due to rounding. Select the best answer from those available.) A. Yes, the profit is $25,000. B. No, the accounting return is less than 14%. C. No, the net present value is negative at $11,045. D. Yes, the net present value is positive at $1,496.50. Ques. 40) What is the net present value of a project with the following cash flows if the required rate of return is 15 percent? Year Cash Flow 0 -$42,398 1 13,407 2 21,219 3 17,800 A. -$1,574.41 B. -$1,208.19 C. -$842.12 D. -$2,991.34 E. $1,311.16 ",hi tutor - i have just posted my questions again. correct attachment is also updated. thanks,
Question 2
"I reviewed your report regarding Organizational Diagnosis and thought you did a nice job. I presented your recommendation to HP and Palm and had several discussions with them. They finally decided they want to use the Nadler-Tushman Congruence Model to analyze the overall congruence in the company - they like the Input and Output analysis that this model provides. First, the execs are interested in the Inputs, including the Strategy. They are interested in getting an objective opinion of what their critical inputs are and how they align with their strategy. So I suggest that you brush up more on the Congruence model, particularly for this assignment on inputs. For the analysis, I suggest that you start with strategy, since you have already done some work on this aspect in your first report. Review Palm's strategy and then determine which one of Porter's competitive strategies fits with this strategy. Then review the company's inputs and determine one or two specific critical inputs from each input category: environment, resources, and history. Ultimately, I want you to determine how aligned the critical inputs are with the strategy. Is there high congruence (alignment), some congruence, or little to no congruence? I expect you to support your claim with a good, logical argument using the information you have collected. Case Expectations: In order to make this case, you first need to review the strategy and then classify it as one of Porter's competitive strategies. Then identify the Key Input factors in the first three categories. Explain why these are the critical input factors. Then determine how congruent the three input factors are with the strategy. First discuss the organization's strategy and classify it according to Porter's three generic competitive strategies. Then identify the most critical inputs in each of the first three categories and justify WHY they are critical. Also explain what effect the inputs from one category have on inputs from the other categories. How well does the strategy fit with the environmental, resource and historical inputs you identified? Make a Case for your propostion as to how the Key Inputs support (are congruent with) the Strategy. Specifically make a claim: "The inputs at Palm, Inc., consisting of Organizational Environment factors, Internal Resource factors, and Historical Tradition factors are, [highly, partially, or minimally] congruent with the company?s strategy." Support your analysis with objective evidence. Sources of information for the entire project may include interviews, organizational documents and reports, articles in newspapers and trade publications. Be sure to cite your sources and provide a list of references. Write up your report in a 4-6 page paper and submit it by the end of the module." "Background Information: For Case 3, you should focus on the Inputs aspect of this model. Read pages 35 to the top of 43. You can stop at the Outputs section. David Nadler is the founder and CEO of Mercer Delta Consulting Group. An internationally recognized expert in organizational change, Nadler has written seven books and numerous articles for practicing managers. Michael Tushman is a Full Professor at the Harvard Business School. He has written or edited eight books and is widely published in academic and practitioner journals. According to the authors, "Our congruence model of organizational behavior is based on how well componenets fit together - that is the congruence among components; the effectiveness of this model is based on the quality of these 'fits' or congruence." (p.39). From the reading you will see that there are four input categories: Environment (factors external to the organization) Resources (factors internal to the organization) Organizational history (Persistent Traditiona) Strategy (goals, objectives and strategic initiatives) Link to pages 35-43: http://hevra.haifa.ac.il/~soc/lecturers/samuel/files/651234873697.pdf My personal previous answer the 2nd question, not the third (this one) is attached. Please do not duplicate, copy, or distribute the attached. Thanks." DO NOT COPY OR DISTRIBUTE MBA Integrated Project Case Week 2 By: Date: University: It is first necessary to understand the concept of organizational diagnosis and how it will help HP integrate Palm within its overall business. Organizational diagnosis is an effective way, or ways in which to look at any organization in order to determine gaps between the current as well as desired performances. It also takes a look at how the organization can achieve or accomplish the goals as set by the company. In order to effectively carry out and utilize organizational diagnosis, it should be processed in an organic matter in that you start to really look at an organization and its structures and what it does or does not do. There are many different types of organizational diagnosis concepts, all developed by different theorists. In total, there are about 15 different models to date. There may or may not be additional models, but these serve to be the more notable of the bunch (if more exist, of course). In alphabetical order, the list of models is as follows: ? Beckhard, Richard ? GRPI ? Beckhard, Richard & Pritchard, Wendy ? Change Model ? Blake, Robert & Mouton, Jan ? Managerial Grid ? Bolman, Lee G. & Deal, Terrence E. ? Four Frames Model ? Burke, W. Warner & Litwin ? Causal Model of Performance & Change ? Freedman, Arthur M. ? Swamp Model of Sociotechnical Systems ? Galbraith, Jay R. ? Star Model ? Killman, Ralph ? Five Track Model ? Kotter, John P. ? Organizational Dynamics Model ? Leavitt, Harold J. ? Mckinsey Consulting ? 7S?s Model ? Morgan, Gareth ? Metaphors ? Nadler, David A. & Tushman, Michael L. ? A Congruence Model for Diagnosing Organization Behavior ? Weisbord, Marvin R. ? Six-Box Diagnostic Model ? Harrisom & Shirom ? Sharp-Image Diagnosis Model Of course, we will only be referring to a total of six in connection to the issues that Palm Incorporated is facing and how these issues can be rectified. The six that will be discussed in detail are the six-box model, the sharp-image model, the 7S?s model, the congruence model, the causal model of performance & change, and the five track model by Killman. We will discuss first the overview of the models, describe the relationship or differences between them, and then discuss their strengths and/or weaknesses, if applicable. I?m sure that Palm Inc. is fully aware of its mistakes that it made in the past, and is currently attempting to correct them. Let?s refer back to a big mistake by the CEO of Palm Inc. The CEO of Palm at the time was Carl Yankowski, and during his time the value of the company significantly declined. How much did it decline you ask? It declined some 95%, an impressive and astonishing decline to any investor or economist. The question that is probably circulating in everyone?s mind is, aside from how Mr. Yankowski kept is job at Palm Inc. is how did it decline so rapidly within one year?s time? This was due to several reasons. The first is due to the shift in consumer demand. At the time, there was a major downturn in the market for computers, or within the computer industry. The second mistake was due to a decision that Yankowski made on his part that seemed rather irrational and rash, something that only a desperate individual would do in order to bring the company back to profitability. Unfortunately, his decision to incorporate ?more? models of hand-held computers into the market obviously didn?t work. Putting more computers into a market where a downturn exist for it is much like throwing pebbles in a lake expecting them to skip without the actually water being present. So, now we understand the major issue, and how is it that it can be fixed? We all agree that putting more hand-held computers into the industry is obviously not going to work, so other scenarios will be looked into. The first step is understanding how to approach the organizational diagnostics models before even looking at any of them. Looking at how to formulate an effective solution to a problem by utilizing the organizational models is much like how a biologist comes up with a scientific theory. The central phases of organizational diagnosis first start out with entry. The rest of the phases include collection of data, formulation of a hypothesis, an analysis of data, and feedback on the results. Unfortunately, it?s quite improbable to do all within such a short time of writing this paper, but perhaps we will improvise a bit and do what we can. The six-box model has six different elements to focus on the organizational diagnosis. The six are as follows: ? Organizational strategy ? Structure ? Rewards ? Internal relationships ? Helpful mechanisms ? Leadership Outside of these six elements exists the environment of the organization at hand. For each of these six elements follows a series of suitable questions. The advantage of using this model is that it?s relatively easy to use and understand. The disadvantage is that because it?s so simple, it really lacks the theoretical foundation to adequately solve an issue, but does with shortcomings. The sharp-image model scans the organization much like a virus scans a computer and does so to determine signs of core problems and/or challenges for close examination. This model involves two or more theoretical perspectives to understand the underlying causes of the issue. The four steps that this model includes are as follows: ? Gathering data to understand the problem ? Use of theoretical models targeted to the specific needs ? The development of a model to identify the root causes of the issue ? Feedback on relevant data to clients One of the main drawbacks of this model is that it lacks predefined tools to carry-out the diagnosis. Other than that, it?s a solid model. The five-track model was developed by Ralph Killman, and the five tracks that he suggests are the culture track, the management skills track, the team-building track, the strategy-structure track, and the reward system track. These tracks serve as ?leverage? points for almost any organization to take on radical change. Each track has certain emphasis on what it actually means. For instance, track 1 enhances trust, communication, and information sharing. The disadvantage to this system is that it usually is meant for good organizational sustainability, and is not really meant to solve an issue, but can if looked at in a different manner. For example, if a company is lacking in one department or track, then hopefully by focusing on this track will help the company. This doesn?t necessarily mean that it will solve the issue, though. The causal model of organizational performance and change suggests different linkages that typically hypothesize how the company performance is affected by factors coming from internal as well as external issues. The model is centered on 12 organizational dimensions. Some of the dimensions are leadership, structure, systems, and work unit climate. The disadvantage of this model is that it is very complex. Another disadvantage is that it may contradict itself. In other words, the organizational change may be coming from one of the dimensions rather than by internal or external factors. The congruence model is about an organizations performance by way of four elements consisting of tasks, people, structure, and culture. The higher the compatibility within these elements, the greater the performance is said to be. For example, if a company has excellent workers but the culture is mildly bad, then their excellent working skills will not be taken full advantage of. The problem with using this model is that it is problem focused rather than solution focused. It is however, very helpful in providing a checklist for those involved in making the change within their organization happen. The 7s model consist of 7 different elements broken down or separated into two groups, the hard elements and soft elements. The hard elements consist of strategy, structure, and systems. The soft elements consist of skills, style, and staff. Hard elements consist of organizational charts and reporting lines. For Mr. Yankowski, it would have been advisable that he take advantage of using the appropriate model and I would have suggested the sharp-image model, which focuses on the following: ? Gathering data to understand the problem ? Use of theoretical models targeted to the specific needs ? The development of a model to identify the root causes of the issue ? Feedback on relevant data to clients Understand the problem first and using the model to identify the root causes of the issue would have been quite suitable in this situation. If the underlying cause was found and understood, further catastrophe could have been avoided at all costs. References A Causal Model of Organizational Performance & Change (Burke & Litwin Model) | Reflect & Learn. (n.d.). Reflect & Learn | Learning together about Organizational Assessment. Retrieved January 31, 2011, from http://www.reflectlearn.org/discover/a-causal-model-of-organizational-performance-change-burkes-litwin-model Causal Model of Organizational Performance and Change (Burke and Litwin). (n.d.). 12manage - The Free Management Encyclopedia and Network. Retrieved January 31, 2011, from http://www.12manage.com/methods_burke_litwin_model.html Corporate Strategy of Palm Inc.. (n.d.). Janhoo.com - Premium Ad-Free Email, Search Engine And News. Retrieved January 31, 2011, from http://www.janhoo.com/skole/university/palm.html Organization Development. (n.d.). Upload & Share PowerPoint presentations and documents. Retrieved January 31, 2011, from http://www.slideshare.net/aman22jan/organization-development-presentation Organizational Development: Organizational Diagnostic Models. (n.d.). Organizational Development. Retrieved January 31, 2011, from http://armandojusto.blogspot.com/2009/04/competency-profiling.html Organizational Diagnosis and Development. (n.d.). RapidBI - Rapid Business Improvement through effective management, leadership & business methods. Retrieved January 31, 2011, from http://rapidbi.com/created/OrganizationalDiagnosisandDevelopment.html "
Question 3
case number: 9-201-037. Netflix.com, Inc case - Harvard. How should we calculate the number of new subscribers for this case? Please contact me if you do not have the case.,Given the subscription nature of the NetFlix business model along with its limited and varied operating history, a subscriber model is the most logical method of forecasting future NetFlix cash flows. With this methodology, you are expected to determine the expected cash flows associated with the tenure of an individual subscriber, produce a forecast of the number of new subscribers that the company expects to acquire, aggregate the expected cash flows associated with the projected new subscribers, and account for the company?s fixed expenses. Please refer to the document (in the syllabus), ?Guidelines for all case write-ups? for specific instructions about the format of your written report. Your analysis of the ?NetFlix.com, Inc. Case Analysis? case should include well-articulated answers to the following questions: 1. What is NetFlix?s long-run objective? How does NetFlix plan to achieve its long-run objective? How would you assess NetFlix?s performance to date? 2. Why does McCarthy use a subscriber model to forecast NetFlix?s future cash flow requirements? What are the basic elements of a subscriber model? 3. Construct an annual subscriber model for NetFlix that can be used to forecast the expected cash flows for a new subscriber over the next five years. What is the value of a new NetFlix subscriber? Assume a discount rate of 20%.) Based on your analysis, should NetFlix be acquiring new subscribers? (Hint: It is helpful to develop a timeline of the events that take place when a new subscriber signs up for service.) 4. Assuming that NetFlix does not change its current business model, what is the value of NetFlix.com? What changes, if any, would you suggest be made to its existing business model? What are the value implications of these changes?
Question 4
Assignment # 2 ? Chapter 14 Case ? ?Hewitt-Packard Company? You are to write a three to five (3-5) page report that answers the following questions: 1. Discuss the three most serious problems you have identified in the case. Defend why you think they are the most serious. 2. Describe how the company should attempt to correct each of the three most serious problems. 3. Recommend a leadership style or combination of initiating structure and consideration the CEO should adopt to address the problems of distrust and declining morale. Explain your answer. 4. After having examined all of the issues facing HP, recommend whether the CEO should focus on the approach to the current strategy or on implementation and execution. Defend your decision. The format of the report is to be as follows: o Typed, double spaced, Times New Roman font (size 12), one inch margins on all sides, APA format. o Type the question followed by your answer to the question. Week 8: Week 8 - Case Study Hewlett-Packard Read the case. After Hewlett-Packard fired CEO Carly Fiorina, new CEO Mark Hurd found himself in charge of a struggling, dysfunctional corporation. The strategic vision Fiorina had been using to guide the company?"digital, virtual, mobile, personal"?was vague, and no one knew if it was being executed or not. A confusing matrix structure blurred accountability lines and slowed decision making, and the company reward system was so complex that no one knew how performance affected their bonuses. Talented executives were leaving, and H-P was having trouble attracting new ones. If those troubles weren't enough, H-P was struggling financially. After acquiring Compaq Computers for $19 billion, it cost H-P another $10 billion to integrate the H-P and Compaq systems. The combined company was riddled with pervasive distrust. And when a board member leaked confidential information to the press, the subsequent scandal (involving spying and phone tapping) ended with Hurd having to testify before Congress regarding what he knew of the situation. One of H-P's major problems was that it was under managed. Fiorina had been known as a broad visionary, who was highly visible in the press. Many inside H-P, however, felt she didn't provide enough direction. The board ultimately hired Hurd because of his focus on execution (management). Hurd began working with the lower divisional levels to make sure operations were running smoothly. Hurd said, "We need to temper the idea that this company needs to have some earthshaking event every 15 minutes...our job is to execute." After a review, Hurd asked divisional manager Nora Denzel how he could help improve her division. Denzel said, "I asked for three things. By the time I got back to my office, they were all done." One of Hurd's first decisions was what to do with Fiorina's strategic vision. Hurd chose to keep the strategy but recast it into something more concrete, offering specific visionary purposes. Executing this strategy involves tackling operational issues, like the matrix structure, which had H-P's single sales division reporting to four or five division heads at once. Hurd divided up the sales division, so that each of the major H-P product divisions had its own dedicated sales division. Similar simplifications were implemented in the bonus system, which was so complex that no one understood how their performance affected their bonuses. The new plan links bonuses directly to divisional and company performance. In the past, H-P management had been friendly, approachable, and supportive of its employees. Under Fiorina's more autocratic style, many employees felt that they were no longer working with her but for her. When Hurd arrived, his work style proved to match more closely to the traditional "H-P Way". Some decisions, however, had to be made to ensure productivity, and these ultimately led to the lay off of 14,500 employees to help keep H-P under budget. Within two years of Hurd taking the CEO position. sales at H-P increase by $10 billion, and the stock price rose 80 percent. Though it's still early to tell, Hurd's leadership looks promising. H-P "is a company that is transforming," Hurd said. "We are not [yet] transformed." Copyright ?2008 South-Western. All Rights Reserved.
Question 5
Springfield Express is a luxury passenger carrier in Texas. All seats are first class, and the following data are available: Number of seats per passenger train car 90 Average load factor (percentage of seats filled) 70% Average full passenger fare $160 Average variable cost per passenger $70 Fixed operating cost per month $3,150,000 What is the break-even point in passengers and revenues per month? What is the break-even point in number of passenger train cars per month? If Springfield Express raises its average passenger fare to $ 190, it is estimated that the average load factor will decrease to 60 percent. What will be the monthly break-even point in number of passenger cars? (Refer to original data.) Fuel cost is a significant variable cost to any railway. If crude oil increases by $ 20 per barrel, it is estimated that variable cost per passenger will rise to $ 90. What will be the new break-even point in passengers and in number of passenger train cars? Springfield Express has experienced an increase in variable cost per passenger to $ 85 and an increase in total fixed cost to $ 3,600,000. The company has decided to raise the average fare to $ 205. If the tax rate is 30 percent, how many passengers per month are needed to generate an after-tax profit of $ 750,000? (Use original data). Springfield Express is considering offering a discounted fare of $ 120, which the company believes would increase the load factor to 80 percent. Only the additional seats would be sold at the discounted fare. Additional monthly advertising cost would be $ 180,000. How much pre-tax income would the discounted fare provide Springfield Express if the company has 50 passenger train cars per day, 30 days per month? Springfield Express has an opportunity to obtain a new route that would be traveled 20 times per month. The company believes it can sell seats at $ 175 on the route, but the load factor would be only 60 percent. Fixed cost would increase by $ 250,000 per month for additional personnel, additional passenger train cars, maintenance, and so on. Variable cost per passenger would remain at $ 70. Should the company obtain the route? How many passenger train cars must Springfield Express operate to earn pre-tax income of $ 120,000 per month on this route? If the load factor could be increased to 75 percent, how many passenger train cars must be operated to earn pre-tax income of $ 120,000 per month on this route? What qualitative factors should be considered by Springfield Express in making its decision about acquiring this route?
