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CT370 Chapter Notes - Chapter pg. 13-18: Guesstimate, Shap, Psy

40 views7 pages
13 Jan 2016
School
WLU
Department
Contemporary Studies
Course
CT370
Professor
Natalie Kouri- Towe

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Document Summary

Zinn, maxine baca ; hondagneu-sotelo, pierrette ; messner, michael a. As cheryl chase stepped to the front of the packed meeting room in the sheraton boston hotel, nervous coughs made the tension audible. Chase, an activist for intersexual rights, had been invited to address the may. 2000 meeting of the lawson wilkins pediatric en- docrine society (lwpes), the largest organization in the united states for specialists in children"s hor- mones. The topic was hardly a novel one to the assembled physicians. Yet chase"s appearance before the group was re- markable. Three and a half years earlier, the american. The in- tersex society of north america (isna) even issued a press release: hermaphrodites target kiddie docs. It had done my 1960s street-activist heart good. In the short run, i said to chase at the time, the picketing would make people angry. But eventually, i assured her, the doors then closed would open.

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Related Questions

The New York Times reported that the FDA was holding a hearing to scrutinize the way prescription drugs are marketed to consumers in advertisements. Critics, lik then Senator John Edwards, claimed that's misleading for an ad to show a woman running through a field while the fine print says "may cause serious side effects," said Michael Briggs, the senator's press secretary. "The F.D.A. should require drug manufacturers to provide fair and balanced information about a drug's risks as well as the potential benefits." (Ives, Nat, "F.D.A. ponders pros and cons of the ways prescription drugs are promoted to consumers." New York Times September 29, 2003, late Ed.). The hearing which lasted for two days, was held in Washington, D.C. All comers were permitted to present original research at the hearings.

Consumers stand to benefit from more accurate and informative advertising. Accept, for the sake of argument, that the advertisements do create a false impression. Pharmaceutical companies, publishers, and broadcasters have an interest in maintaining the status quo. Imagine these groups (consumers and the relevant industries) as opposing armies.

Based on the theory of public choice and political equilibrium presented in Chapter 14 (Parkin Microeconomics, 12th Ed), which side of this issue is likely to assemble the stronger force? Explain.

Scenario Description:

Overview: James Pratt has just been tasked with handling international clients. He needs to close a deal with Norio Tokunaka from PopWear that has already been thoroughly worked out with Michael’s predecessor, Roger Small. Michael is unaware of the need to establish a relationship with Norio before he discusses business. Norio becomes disenchanted and refuses to sign the deal.

Profile:

James Pratt is the Director of Foreign Sales at Mustang Jeans, a U.S. company. After working at Mustang as a real estate attorney for six years, acquiring property for retail and manufacturing, Michael moved into sales at an executive level.

James is very much a no-nonsense straight-ahead kind of guy. He is friendly, but not big on small talk. He fits the stereotypical American businessman in many ways: informal, a little loud, all about money, very direct and forthright. Michael’s career has centered in national sales—this is his first foray into international business. Mustang Jeans is reorganizing to increase efficiency. All managers are now assuming larger territories.

Norio Tukunaka has worked at PopWear, a large Japanese retail clothing chain for his entire career. He has also been working with American companies for many years, importing a variety of products. Most of these American companies are alliances that were formed by Norio’s superiors, many years before. All of Norio’s accounts are pre-existing accounts as opposed to newly created accounts. This year, PopWear is expanding its contemporary clothing line, which includes adding new suppliers and new brands.

In his current position as Vice President of Merchandising, Norio is responsible for expanding the contemporary clothing line, which includes adding new suppliers and brands for PopWear’s 36 stores throughout Japan.

Norio has been working on a deal with Michael’s associate Roger Small for a very long time. Michael has just taken over this region. Roger’s report indicates that the Norio account is a done deal, with only logistics and details remaining. Michael and Norio are having their first meeting.

Scene Set-up: Norio arrives at Michael’s office after arriving from Japan.

Scene Location: Michael’s office at Mustang Jeans corporate headquarters in the U.S.

The Meeting - Summary: Michael spends less than a minute building rapport with Norio. He then begins to talk about signing the deal that had been previously worked out with Michael’s associate Roger. Norio wants to continue to talk about good Japanese food and seems insulted that Michael doesn’t like eel. Michael continues to press for the deal but Norio is very evasive.

Michael then gets interrupted by his assistant notifying him of his next appointment. He apologizes to Norio about the short amount of time that he has to spend with him.

3 Days Later – Norio comes back and Michael apologizes for the prior meeting. When asked to sign the deal again, Norio suggests that he’s been talking to other companies in the past few days in New York. He doesn’t commit to the deal and says he’d enjoy hosting Michael in Japan and hopes they can maintain their relationship. He leaves before signing the deal to catch a plane.

Afterthoughts – Summary: Michael notes his frustration with the interaction. He acknowledges that he should have waited for Norio to start talking about the deal first. He understands that Japanese businesspeople place a high priority on relationships but also points out that he didn’t have a long time to devote to small talk when it was unclear whether Norio was going to sign the deal or not.

ANSWER THE QUESTIONS BELOW!!!!!!!!!!!! THANKS


1. How did the differences between Japan’s and the United States’ national cultural values affect communication between Norio and Michael?

2. What information should Michael have possessed before meeting with Norio?

3. Why is Norio acting somewhat evasive with his responses? What is Norio hinting [when he mentions that Roger likes sushi]?

4. What could Michael have done better in the second meeting to continue the business relationship?

5. How can business communicators effectively learn more about different cultures? Should business communicators memorize isolated facts (e.g., a culture’s typical greeting or attitude toward punctuality) or try to create a more holistic picture?

6. Besides broad cultural values and differences, what other main factors often vary between cultures and may have influenced the interaction between Michael and Norio?

7. Despite their many differences, do Michael and Norio share some common goals? If so, what are these goals and how might Michael have used some persuasive communication techniques to emphasize these shared goals?

8. What can business communicators do to enhance their cross-cultural communication skills?

Continued on from case study 8. According to the InvestorPresentation, what is one strategy that Michael Hill has plannedfor its cash flow? 1. Michael Hill International Limited (hereafterknown as “Michael Hill”) ordinary shares are listed on theAustralian Securities Exchange (ASX). Michael Hill owns andoperates approximately 300 retail jewellery stores acrossAustralia, New Zealand and Canada. According to the ASXannouncement made by Michael Hill on Date: 27/08/18 and Headline:Investor Presentation, part of Michael Hill’s planned capitalexpenditure of $25 million is to open new stores. Michael Hill hasalready performed a substantial amount of data analysis related toone particular planned new store in the southern Sydney suburb ofEngadine. However, the capital expenditure associated with theconstruction of a new store and the operating expenses aresubstantial. Therefore, before Michael Hill commits to building thenew store a financial analysis is needed to determine if it willcontribute to the goal of creating wealth for its shareholders. 2.You are employed in Michael Hill’s corporate finance department andhave impressed senior management with your aptitude for financialanalysis. This talent was developed through the practice-orientedassignments that you completed at University. You recall howexciting it was learning about listed companies by searching andreading announcements made to the ASX. The Chief Financial Officer(CFO) has asked you to perform a financial analysis of the plannedEngadine store using a purpose-built preformatted EXCELspreadsheet. The CFO has suggested you liaise with companyemployees from a variety of different departments to collect theinformation that is necessary to perform the analysis. You willalso search through public documents to identify some of theassumptions that will be required in your financial analysis, andcertain additional information. Your analysis will be provided tothe Board of Directors who must approve substantial capitalexpenditures. 3. The two major cash outflows associated with a newstore are the cost of the building and the fixtures and fittingssuch as specialised jewellers’ equipment and display cabinets. Thedirectors are accountable to the shareholders and so a financialanalysis is necessary to be confident that the investment in thenew Engadine store is justified. The following paragraphs contain asubstantial amount of information that has been gathered fromacross the business and it is your job to determine whichinformation is relevant to the analysis. 4. The capital cost of theEngadine building is expected to be $2.3 million today. MichaelHill has $7.2 million cash and it plans to use $1.6 million of thisamount to pay for the building which will reduce the cost to just$700,000. If the new store is built, some redundant jewelleryequipment must be sold. The equipment had a total capital cost in2016 of $600,000 and for tax purposes have a ten-year life. Theequipment can be sold today for $130,000 and Michael Hill will usethe sale proceeds to distribute a $130,000 dividend to itsshareholders today. 5. According to the Investor PresentationMichael Hill recently completed a comprehensive brand review torespond to a changing consumer landscape. This review cost $375,000and there is debate among management about whether the cost of thisreview should be classified as a tax-deductible expense in thefinancial analysis. 6. The annual sales for a new store aredifficult to predict. However, Michael Hill is confident that theEngadine store can achieve sales in the first year of operationthat are similar to an ‘average’ Michael Hill Australian store. Youread the Investor Presentation to identify the following twofigures relevant to MICHAEL HILL AUSTRALIA for the year endingJun-18: a) Revenue b) Total stores open You use these two figuresto calculate an average revenue figure per store for 2018. 7. SinceMichael Hill plans to build the new store in the year 2019, forcapital budgeting purposes the first year of revenue is expected in2020. However, the retail environment is very challenging asevidenced by the disappointing Australian same-store sales growthrate stated in the Investor Presentation. Therefore, you forecastthat the Engadine store’s revenue in 2020 is equal to the averagerevenue figure per store for 2018 that you calculated in Paragraph6 compounded by the same-store sales growth rate. Beyond 2020revenue is forecast to increase by 2% p.a. reflecting the benefitsof the brand review. 8. The Investor Presentation states thebusiness has gross profit margins of approximately 63%. Therefore,your analysis assumes that costs of goods sold at the Engadinestore are 37% of revenue. Fixed costs at the Engadine store in 2020are $240,000. Management is confident that with rigorous costcontrol they will be able to contain the increase in fixed costs to2% p.a. for each subsequent year. If the Engadine store is built,Michael Hill anticipates that total cash operating expenses willequal 26% of sales. 9. Starting in 2020, employees at the Engadinestore will receive annual training. Michael Hill performs alltraining in-house using a dedicated facility that was establishedin 2017. The facility has an annual budget of $655,000 and inductsnew employees in all aspects of the jewellery business. Ordinarily,Michael Hill would charge an arms-length amount of $75,000 perannum for staff training. However, the training division hassufficient spare capacity to train the Engadine store’s employeeswithout the facility incurring any additional costs. The accountsdepartment recommends internally invoicing the $75,000 trainingexpense to the Engadine store each year. 10. For taxation purposesthe new building has a twenty-year life. However, Michael Hill willperform the financial analysis of the Engadine store over aten-year period. The new store requires $300,000 of displaycabinets. The Australian Taxation Office (ATO) confirms thatdisplay cabinets have an eight-year tax life. In Michael Hill’sexperience, display cabinets be operated effectively for a full tenyears before they need replacing. Michael Hill’s managementaccountants depreciate all assets over an operational six-yearlife. 11. Michael Hill’s Research & Development department hasspent $130,000 in recent years developing a wedding ring sizingapp. This project is still several years away from fullscalerelease but to ensure this expense generates the required returnsthe directors want to include it in the analysis of the Engadinestore as a cash outflow in 2019. 12. Michael Hill will borrow $1.2million today to finance the Engadine store. The tenyearinterest-only loan has annual interest repayments of $48,000(assuming a 4% p.a. rate). Michael Hill’s accountant confirms thatinterest payments are classified as a business expense and aretherefore tax deductible. 13. To promote the new Engadine store themarketing department has budgeted $85,000 of advertising for thestore’s opening in 2020. Because this expense will reduce the newstore’s profitability in 2020, managers have suggested that theadvertising expense be spread out over the new store’s ten-yearuseful life. The ATO states that expenses associated with theEngadine store’s grand opening can be claimed as a business expensein the year incurred. Michael Hill’s total advertising budget for2020 is $3.4 million and predicted to increase by $200,000 eachyear. If the Engadine store opens, the annual advertising budgetwill remain unchanged. For cost accounting purposes Michael Hillmust allocate overheads across each business unit. Therefore, it isproposed that the Engadine store be assigned a fraction of 1/171 ofthe total advertising budget. 14. Michael Hill assumes that theEngadine building can be sold for $400,000 in the year 2029. At anypoint in time the resale value of the display cabinets is just$26,000. In ten years’ time Michael Hill assumes that it will havecash holdings of $4.4 million. You note the ATO regulation that allnon-current assets be depreciated to zero. 15. If the Engadinestore proceeds, then Michael Hill will implement a privateplacement to raise $800,000 from institutional investors to fundthe store. The CEO’s annual salary in 2018 is $1,511,738 and is notexpected to change whether the Engadine store opens or not. 16. Ifthe directors approve the Engadine store Michael Hill anticipatesthat it will require an additional $400,000 of inventory today ontop of the existing level of $1.5 million, and accounts payablewill increase by $270,000. The accounts receivable balance willincrease from the current level of $5.4 million to $6.2 million ifthe Engadine store proceeds. 17. Michael Hill has a required rateof return of 9%. Assume the company tax rate will remain at30%.