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please can you give me more details of each question and each answer , please. for the previous questions: Below are 5 scenarios, these are the questions that you should be thinking and writing about ( and graded on ) for each scenario: What is the challenge facing the supervisor? 2. As an HR professional what advice would you give the supervisor? 3. What HR issues are there in the scenario? 4. Are there any legal implications in terms of laws or regulations? Q1- You are a supervisor in a warehousing operation. You recently instituted a “No Smoking” policy in the facility. All employees were notified of the policy change. It was not well-received. As you walk down aisle B in the warehouse, you see a cloud of smoke and then see Chris running to aisle A. You need to talk to Chris. Q2- You are an office manager overseeing a department of 25 people. One of your employees comes to you and complains about Pat’s unpleasant body odor and how difficult it is to work in the same area. You agree to talk to Pat. Q3- You are the sales department manager at an upscale store. Your boss has talked to you about the appearance of some of your sales clerks— particularly Alex. Alex is sporting on his forearm a new, large tattoo of a devil eating a rat. You agree with your boss that some customers might find it offensive and that it should somehow be covered up. You need to talk to Alex. Q4 You are the director of human resources. You asked your benefits administrator, Morgan, to immediately send new benefit information to your boss for her review. The next day, you are chewed out by your boss for not sending her the information. You look bad. You decide to talk to Morgan. Q5- You are the vice president of finance. Your administrative assistant, Ryan, is often late getting to work. You have tolerated it for the past year, but your workload has increased and you need all the help you can get, especially at the start of the day. With Ryan coming in late, it is starting to affect your ability to get your job done. You need to talk to Ryan. Please do not make a copy from web. Thanks very much Comment Answer to question No 1: Challenges are: Maintain the Quality of the stock, Proper storage condition of stock and healthy environment of the warehouse. Advise: It should be quality and availability of the stock for smooth running of the business. HR Issue : “No Smoking” policy in the facility, All employees were notified of the policy change and It was not well-received. Legal implications in terms of laws or regulations: compliance of Pollution control act & compliance corporate social responsibility, Answer to question No 2: Challenges are: Healthy work environment, Good team and Teamwork Advise : Healthy work environment by ensuring proper working conditions. HR Issues: Unpleasant body odor and difficult work environment. Legal implications : Sexual harassment policy compliance. Answer to question No 3: Challenges are: Quality Products and customer stratification Advise : Staff should be maintain products at customer requirement and cleanness of the department. HR Issues: Alex is sporting on his forearm a new, large tattoo of a devil eating a rat.. Legal implications : compliance of Trade policy. Answer to question No 4: Challenges are: Timely information / MIS and Maintain work hierarchy. Advise : You should have to send the information to your boss instead of asking your administrator. HR Issues: Benefits administrator, Morgan, to immediately send new benefit information to your boss for her review. Legal implications : Non compliance or work hierarchy. Answer to question No 5: Challenges are: Timely & accurately completion of the huge work. Advise : Guide the team for work schedule and time importance. HR Issues: Late getting to work Legal implications : Compliance of work schedule and office timings. Comment

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Collen Von
Collen VonLv2
29 Sep 2019

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On Monday, May 26, Tina Brown walked into Innovative Patios to begin her new job as Payroll Manager. She was met by Julie Thornbury , President and major shareholder of the company. Julie got to the point: “Good, you’re here. I need a payroll plan by Friday. This place is a mess.

Yesterday I got a call from Human Resources & Skills Development Canada . He said we aren’t filing ROEs. Do you know what they are?

We’ve got employees telling us that they get more tax deducted than their friends who earn the same amount. Jim, our production manager is barking that he should have a tax credit for his kid. We’ve been fined for sending in employee taxes late. I don’t get it. I pay two people to run the administrative side of things and they mess things up.

I hear there are changes in the pipeline. I heard the federal budget, but I don’t know if we will benefit or not. Will it be just more paperwork? The bottom line is that I don’t want any more government types coming around here threatening me. Tell me what we have to do.”

Company History

Innovative Patios is a private corporation that installs patios stones made from recycled material. The company was started twenty years ago by Julie’s parents Elena and Seamus. Elena and Seamus were immigrants to Canada and earned a living through a small landscaping business. They hired workers on contract and paid in cash for many years until they were audited by the tax department.

To avoid further problems, they incorporated the company five years ago, put their workers on the payroll and hired Mary as a bookkeeper to fill out all the government forms.

Payroll Department

Mary quickly became Innovative Patios’ office manager, human resources manager, financial administrator and payroll manager. The workload was overwhelming and she convinced Julie to hire Liza to help her. Liza suggested they use Quicken to keep track of all accounts including payroll.

Mary and Liza fill out all cheques by hand for the ten employees and fill out all the government forms by hand. The company’s remittances are based on a checklist Mary developed in 2009 (See Exhibit), Mary is unhappy because she works very hard, but everyone complains about things being wrong. When Julie landed a large contract that would require 15 more people be hired, Mary recommended that Julie hire a professional payroll manager. “I can handle the other stuff, but the Canada Revenue Agency and the employee complaints are driving me crazy. I just can’t keep up. I will be as helpful as I can”.

Julie led Tina to her office and rushed off to take care of a crisis on the loading dock. Before Tina could get settled, Mary walked in, “I’m so happy to meet you. Just tell me what you need and Liza and I will get it for you. The employees are paid bi-weekly and this Wednesday is a payday. I haven’t prepared anything

because I knew you would be here.

Exhibit: Mary’s 2009 Remittance list

Item

Amount

How much to remit

When

Payroll

Annual $500,000

$1,000 payroll remittance

Monthly

Pay balance plus interest when assessment arrives

CPP

4.95% earnings (to annual max)

$2,062.50

Monthly

EI

1.98% earnings (to annual Max)

$49,000

Year -end

GST

Net annual subject to HST $200,000 at 13%

$1,500

Monthly

Use refund to go toward payroll remittances due

Please answer the following questions:

a) Who are the key stakeholders in this case?
b) What are the resources needed?
c) What resources are available?
d) What is the main issue in this case?

Thank you in advance!

Introduction:

You are the senior financial analyst for Fosbeck Generic Drug Co (Fosbeck). The firm manufactures and sells generic over-the-counter drugs in plants located throughout the country. You have been asked to generate some answers to questions emanating from the Board of Directors. These questions can be grouped into two broad categories – what projects to choose for the near future and how to finance these projects.

Deliverable:

Please present your recommendations in a report written for your supervisor, the firm Controller. Clearly show your analysis and communicate your conclusions and recommendations. Support your report by calculations in the Excel spreadsheets. In your report, explain the results of each portion of your analysis (represented by the tabs on the Excel template). Submit all the completed Excel worksheets with the completed responses to the questions posed to support your report and recommendation.

Steps to Completion:

Individual Project Analysis

Your first task is to analyze the company’s three projects and provide your recommendations about their implementation.

Automation project

One of Fosbeck’s plants is trying to decide whether to automate its drug manufacturing by purchasing a fully automated bioreactor machine complex.

The proposed machine costs $400 M and it will have a five year anticipated life and will be depreciated by using the 3-year MACRS depreciation method toward a zero salvage value. (MACRS depreciation rates are: Year 1: 33%, Year 2: 45%, Year 3: 15% and Year 4: 7%) However, the plant will be able to sell the machine in the after-market for 25% of its original costs at the end of year 5. The firm estimates that the installation of the bioreactor will bring annual costs savings of $50 M from reduced labor costs, $10 M per year from reduced waste disposal costs, and $80 M per year from the sales byproduct of bioreactor process net of selling expenses. Fosbeck requires a 12% of return from its investment and has a 35% marginal tax rate.

Decision Criteria – NPV and IRR

Calculate the NPV and IRR for the project.

The manager of the plant raised some concerns about the revenues from the byproduct sale. He projects that the price of the byproduct in year 1 could be 10% to 50% less than what was projected. However, the savings from reduced labor costs and reduced waste disposal costs would remain same. He presented the following probability distribution on the projected reclaimed plastic sales:

Remain same as projected 40%

Decrease by 10% 30%

Decrease by 30% 20%

Decrease by 50% 10%

Estimate the NPV and IRR for each of these scenarios. Estimate the expected NPV.

Break-even Analysis

At what volume of byproduct sales would Fosbeck have a break-even NPV=0?

Fosbuvir Project

The company considers development of a new drug to treat Hepatitis C, code-named the Fosbuvir Project. Fosbeck has already spent $420 M on preliminary research for drug development and it will need another $600 M on development this year (tax deductible) and $2 B in CapEx next year (these cash outlays are not part of the cash flows that you have estimated earlier, because this project is not approved yet). Capital expenditures will be depreciated over 10 years using straight line depreciation.

The patent for the drug is pending and the company expects to receive an FDA approval and start selling the drug in two years. Its expected revenues in the first year of sales are $1 B ($10 B revenue with a 10% probability) with subsequent annual growth of 50% over the next three years, after which the sales will be stable for another 7 years. Even if Fosbuvir gets approved by FDA, each year there is a 5 % probability of the patent becoming obsolete due to a new drug entering the market, in which case the revenues will drop to zero. After that the drug will lose the patent protection and its manufacturing is expected to stop. The CoGS are estimated to be 15% of revenues and SG&A expenses are $2 B a year if the drug is produced and zero otherwise.

NPV and IRR

Please estimate the NPV and IRR of the Fosbuvir Project, using the company’s WACC of 12%.

Real Option Scenario Analysis

Expected revenues and expenses take into account the uncertainty of getting the patent and FDA approval. The company estimates the probability of getting the approval in two years is 10% (i.e., if the company gets the approval the revenue is $10 B, if it does not, the revenue is zero). Even if Fosbuvir gets approved by FDA, each year there is a 5 % probability of the patent becoming obsolete due to a new drug entering the market, in which case the revenues will drop to zero.

Therefore, your next task is to evaluate these two scenarios for the Fosbuvir Project (see the template) based on probability of FDA approval in two years and patent obsolescence in each subsequent year.

One of your colleagues pointed out that instead of starting construction before the FDA approval, the company can invest only $0.8 B next year (depreciated over 10 years) and delay the remaining $1.2 B investment (depreciated over 8 years) for two years until the drug gets approved. Only if the drug gets approved will Fosbeck proceed with the second stage investment, which will take place in three years. The sales will commence in four years at the level of $10 B (with a probability of 10%) with subsequent annual growth of 50% over the next three years, after which the sales will be stable for another 5 years – due to delay the company will lose two years of revenues. The probability of patent obsolescence remains the same as before – 5% each year.

What is the NPV of this two-stage investment?

Is the option to delay the project valuable? Explain.

Pharmaset, Inc. Acquisition

The reason of the low probability of FDA approval for Fosbuvir is that another company, Pharmaset, Inc., is working on a similar drug, called FosbuvirP, and is very close to getting FDA approval and a patent. If Pharmaset gets a patent, Fosbeck’s own application will be denied. Therefore, instead of developing Fosbuvir internally, Fosbeck can acquire Pharmaset. Pharmaset already has manufacturing facilities in place and FosbuvirP is its only product. The book value of the company’s fixed assets is $3 B, which will be depreciated using the straight-line depreciation over the next 10 years. Pharmaset expects to receive the FDA approval and patent by the end of this year with sales starting next year. Its next year revenues are expected to be $4 B ($10 B revenue with a 40% probability) with subsequent annual growth of 50% over the next three years, after which the sales will be stable for another 7 years. After that the drug will lose the patent protection and its manufacturing is expected to stop. The CoGS are expected to be 15% of revenues and SG&A expenses are $3.5 B a year if the drug is produced and zero otherwise. In other words, in case of FDA approval Pharmaset’s revenues and costs will be similar to Fosbeck’s, but SG&A expenses will be higher. If Fosbeck were to acquire Pharmaset, it would be able to bring SG&A costs down to Fosbeck’s level. The probability of FDA approval is 40% and the probability of patent obsolescence remains the same as before – 5% each year.

Mergers and Acquisitions. Target (Pharmaset) Valuation

Pharmaset’s management would be open to the sale in the valuation range of $ 20 to 24 Billion. Please estimate Pharmaset’s value to Fosbeck, if it gets acquired.

Recommendations

Upon reviewing Fosbeck’s choices, what project(s) would you recommend?

Venture Capital Financing

Finally, to further reduce its risk Fosbeck considers to keep acquired Pharmaset as a separate company. In this case Fosbeck will eventually shift its R&D to Pharmaset, which will continue as a viable business even after the initial patent expires. Therefore, we can ignore the probability of a patent becoming obsolete. However, if FDA approval is not received this year, Pharmaset will go bankrupt, in which case its assets will be sold at residual book value.

A venture capital (VC) firm Menlo Ventures is willing to provide financing of up to $5 B in acquisition of Pharmaset.

If the VC agrees to invest in Pharmaset, it plans to exit after eight years at which time it expects that the company’s value would be eight times its year 8 EBIT.

Menlo Ventures offers three different ways of structuring the financing:

Straight common stock where the VC will not receive any dividend for the first four years and will receive 20% of NOPAT as a dividend for the remaining four years. The tax rate for Pharmaset is 38%. In addition, the VC will receive a 20% ownership of the company’s equity at the end of eight years.

Redeemable convertible debt with 10% coupon rate (interest is tax-deductible). The debt will be converted for 15% ownership of the equity of Pharmaset at the end of eight years. In the case of bankruptcy the debt will be immediately redeemed at its face value or at the residual assets' book value, whichever number is lower.

Redeemable preferred stock with 7.5% dividend plus warrants for 15% of the equity for an exercise price of $150 M. In the case of bankruptcy the debt will be immediately redeemed at its face value or at the residual assets' book value, whichever number is lower.

Which financing method should be selected by Fosbeck? Explain your answer.

Frequently Asked Questions/Helpful Hints:

Is it enough to submit Excel file?

No! The deliverable outcome is your written report to the CFO. You use Excel to support your recommendations

Is there a minimum or maximum size of the report?

Although there is no formal minimum size of the report, it has to address all issues raised and provide your analysis and supporting evidence. To complete the thorough analysis required for this assignment you will probably need 3-4 pages. It is also a good idea to add a one-page executive summary to your report.

Similarly, there is no maximum limit for the report, but please avoid adding superfluous information to your report.

How do I explain whether the option to delay the project valuable?

Analyze the costs and benefits of making the capital investment in two steps and delaying the project’s positive cash flows by two years and shortening the revenue stream.

Are preferred dividends tax deductible?

No, unlike coupon payments, preferred dividends are not tax deductible.

How do I decide which financing option is better?

One approach would be to see which option is less costly from Fosbeck’s management point of view.

Project 4 - Business Continuity Plan

Create a three page policy for business continuity for the White House security staff. Prepare a plan based on the critical nature of information that is presented within the executive department and military strategies that are reviewed for action. Address each item in the policy headings below:

The information to use as a resource for your policy is provided below (taken from SunGard Availability Services at www.sungardas.com, limited use for educational purposes) and also in your reading for the week (See Appendix 1 for policy information).

Plan purpose: for example, to allow company personnel to quickly and effectively restore critical business operations after a disruption.

Plan objective: for example, to identify the processes or steps involved in resuming normal business operations.

Plan scope: for example, the work locations or departments addressed.

Plan scenarios addressed: for example, loss of a primary work area, loss of IT services for a prolonged period of time, loss of workforce, etc.

Plan assumptions: for example, you may want to call out the number of work locations impacted at any given time that key personnel are available for any recovery efforts, or any assumptions you may have made about vendor or utility service availability.

PLAN SECTION:

Recovery Strategies and Activities

After the initial introductory section, there are usually a number of paragraphs about the strategies outlined in the plan, as well as the specific personnel undertaking the recovery and the recovery activities. Examples of sections that you may want to consider for your own BC/DR plan include:

Recovery Strategy Summary: In this section, a plan will typically outline the broad strategies to be followed in each of the scenarios identified in the plan Introduction section. As an example, if “loss of work area” is identified as a possible failure scenario, a potential recovery strategy could be to relocate to a previously agreed-upon or contracted alternate work location, such as a SunGard work area recovery center.

Recovery Tasks: This section of the plan will usually provide a list of the specific recovery activities and sub-activities that will be required to support each of the strategies outlined in the previous section. For example, if the strategy is to relocate to an alternate work location, the tasks necessary to support that relocation effort could include identifying any equipment needs, providing replacement equipment, re-issuing VPN tokens, declaration of disaster, and so on.

Recovery Personnel: Typically, a BC/DR plan will also identify the specific people involved in the business continuity efforts, for example, naming a team lead and an alternate team lead, as well as the team members associated with any recovery efforts. This section of the plan will also include their contact information, including work phone, cellphone, and email addresses. Obviously, because of any potential changes in personnel, the plan will need to be a “living” document that is updated as personnel/workforce changes are made.

Plan Timeline: Many plans also include a section in the main body that lays out the steps for activating a plan (usually in the form of a flow chart). For example, a typical plan timeline might start from the incident detection, then flow into the activation of the response team, the establishment of an incident command center, and notification of the recovery team, followed by a decision point around whether or not to declare a disaster. A plan timeline may also assign the recovery durations or recovery time objectives required by the business for each activity in the timeline.

Critical Vendors and their RTOs: In this section, a plan may also list the vendors critical to day-to-day operations and recovery strategies, as well as any required recovery time objectives that the vendors must meet in order for the plan to be successful.

Critical Equipment/Resource Requirements: A plan may also detail the quantity requirements for resources that must be in place within specified timeframes after plan activation. Examples of resources listed might include workstations, laptops (both with and without VPN access), phones, conference rooms, etc.

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