Question and Answer - 23

Net Present Value Concerning NPV: a.
Describe how NPV is calculated, and describe the

information this measure provides about a sequence of cash flows. What is the NPV criterion
decision rule? b. Why is NPV considered a superior method of evaluating the cash flows from a
project? Suppose the NPV for a projectâ€™s cash
NPV Valuation The Yurdone Corporation wants to set up a private cemetery business.
According to the CFO, Barry M. beep, business is â€œlooking up.â€ As a result, the cemetery
project will provide a net cash inflow of $60,000 for the firm during the first year, and the cash
flows are projected to grow at a rate of 6 pe
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Calculating Discounted Payback An investment project costs $15,000 and has annual cash flows
of $3,700 for six years. What is the discounted payback period if the discount rate is zero percent
what if the discount rate is 5 percent, if it is 15 percent?
Problems with IRR Sweet Petroleum, Inc., is trying to evaluate a generation project with the
following cash flows: a. If the company requires a 10 percent return on its investments, should it
accept this project why? b. Compute the IRR for this project. How many 1RRs are there? Using
the IRR decision rule, should the c
Voting Rights some companies, such as Readerâ€™s Digest have created classes of stock with
no voting rights at all why would investors buy such stock?
Calculating Projected Net Income A proposed new investment has projected sales of $740,000.
Variable costs are 60 percent of sales, and fixed costs are $173,000; depreciation is $75,000.
Prepare a pro forma income statement assuming a tax rate of 35 percent. What is the projected
net income?
Modified Internal Rate of Return One of the less flattering interpretations of the acronym MIRR
is â€œmeaningless internal rate of return.â€ Why do you think this term is applied to MIRR?
Problems with Profitability Index The Shine On Computer Corporation are trying to choose
between the following two niutia1ly exclusive design projects: a. If the required return is 10
percent and the company applies the profitability index decision rule, which project should the
firm accept? b. If the company applies t
Stock Valuation Listen Close Co. is expected to maintain a constant 6.5 percent growth rate in its
dividends indefinitely. If the company has a dividend yield of 3.6 percent, what is the required
return on the companyâ€™s stock?
International Investment Projects In November 2004, automobile manufacturer Honda

announced plans to build an automatic transmission plant in Georgia and expand its transmission
plant in Ohio. Honda apparently felt that it would be better able to compete and create value with
U.S.-based facilities. Other companies such
Non constant Dividends Spears, Inc., has an odd dividend policy. The company has just paid a
dividend of Si per share and has announced that it will increase the dividend by $4 per share for
each of the next four years, and then never pay another dividend. If you require an 11 percent
return on the companyâ€™s stock, h
Valuing Preferred Stock Ayden, Inc., has an issue of preferred stock outstanding that pays a
$6.50 dividend every year in perpetuity If this issue currently sells for SI 13 per share, what is
the required return?
Calculating Payback what is the payback period for the following set of cashflows?
MIRR Slow Ride Corp is evaluating a project with the following cash flows: The Company uses
a 10 percent interest rate on all of its projects. Calculate the MIRR of the project using all
threemethods.
Stock Valuation No More Corp. pays a constant $11 dividend on its stock. The company will
maintain this dividend for the next eight years and will then cease paying dividends forever. If
the required return on this stock is 10 percent, what is the current share price?
Voting Rights When it comes to voting in elections, what are the differences between US
political democracy and U.S. corporate democracy?
Stock Values For the company in the previous problem, what is the dividend yield? What is the
expected capital gains yield?
Supernormal Growth Rizzi Co. is growing quickly. Dividends are expected to grow at a 25
percent rate for the next three years, with the growth rate falling off to a constant 7 percent
thereafter. If the required return is 13 percent and the company just paid a $3.10 dividend, what
is the current share price?
Stock Valuation most corporations pay quarterly dividends on their common stock rather than
annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or
maintains the current dividend once a year and then pays this dividend out in equal quarterly
installments to its shareholders. a.
Non constant Dividends North Side Corporation is expected to pay the following dividends over
the next four years: $8, $7, $5, and $2. Afterward, the company pledges to maintain a constant 5
percent growth rate in dividends forever. If the required return on the stock is 11 percent, what is
the current share price?
Analysts established an standard time of 0.0125 hours/piece for machining a small component. A
setup time of 0.32 hour is established also, as the operator performs the necessary setup work on
incentive. Compute: a. Total time allowed to complete an order of 860 pieces. b. Operator
efficiency, if job is completed in
What are the reasons that compensation plans fail?
What are the advantages and disadvantages of a straight salary for Baxter surgical supplies?
Internal Rate of Return It is sometimes stated that â€œthe internal rate of return approach
assumes reinvestment of the intermediate cash flows at the internal rate of return.â€ Is this
claim correct? To answer, suppose you calculate the IRR of a project in the usual way. Next,
suppose you do the following: a. Calcula
Growth Rate In the context of the dividend growth model, is it true that the growth rate in
dividends and the growth rate in the price of the stock are identical?
Workers new to carburetor assembly take 15 minutes to complete their first assembly. Assuming
a 95% learning curve, how long would it take them to reach a standard time of 10 minutes?
What are the ethical considerations, if any, in this case?
What can firms do to increase salesperson status?
How does role-playing into ergonomic teams?
In a plant where all the rates are set on a money basis (piece rates) a worker is regularly
employed at a job where the guaranteed base rate is $8.80. This worker's regular earnings are in
excess of $88 per day. Due to the pressure of work, the operator is asked to help out on another
job, classified to pay $10 per hou
Compare and contrast intrinsic and extrinsic motivators.
Why is training necessary for the operators?
From an MTM synthesis, the standard time for one C-assembly is calculated to be 1.0 min? A
new worker typically requires about 2 min. for the first assembly and drops to about 1.7 min. by
the 5th assembly. a) Calculate and plot the learning curve. b) What is the % learning? c) How
long will it take the new worker to
What is an ulterior transaction?
Use the five W's to determine if the sales process requires different sales roles.
A rate of 0.42 minute per piece is set for a forging operation. The operator works on the job for a
full eight-hour day and produces 1,500 pieces. Use a standard hour plan. a. How many standard
hours does the operator earn? b. What is the operator's efficiency for the day? c. If the base rate
is $9.80 per hour, comp
Find the direct labor costs for a batch order of 100 pumps. As this is a new order, there will be
some learning occurring during the assembly process. The first assembly takes 50 minutes and
that the second one takes only 35 minutes. The standard time is estimated as 10.0 minutes. The
base wage is $10.00/hr. a) Find t
A 60-40 participation plan is in operation in a plant (base rate is guaranteed and operator receives
60 percent of proportional gain after exceeding 100 percent). The established time value on a
certain job is 0.75 minute, and the base rate is $8.80. What is the direct labor cost per piece when
operator efficiency is:
Can You Fix a Failed Sales Compensation Plan?
How can firms reduce high turnover among new sales personnel?
What would you do if you were Rob?
A new employee at the Dorben Co. took 186 and 140 minutes to assemble the fourth and eight
assemblies, respectively. The standard time for assembling this product is 100 minutes. a.
Calculate this worker's learning curve. b. How many assemblies does it take the worker to
achieve the standard time? How long is this?
What are the ethical considerations, if any, in this case?
What would you do if you were Bill?
Determine the gaps that exist between the current sales process and the desired sales process.
What is meant by just-in-time production?
Why should experienced analysts be continually checked on their ability to performance rate?
A 'one-for-one' or 100 percent time participation plan for incentive payment is in operation. The
operator base rate for this class of work is $10.40. The base rate is guaranteed. Compute: a. Total
earnings for the job at the efficiency determined in problem 2(b). b. Hourly earnings, from
above. c. Total earnings fo
What level of moral development are Rob and Bill operating in this business situation? Explain
your answers.
What ego states exist in transactional analysis?
Formalize the sales strategy and quantify the sales opportunities that exist.
Name 12 ways you can get people to agree with your ideas.
What would you do if you were Scott Patterson?
How is the effectiveness of team selling demonstrated by the Reynolds team, and what are some
of the disadvantages to this method in this particular case?
What is remission and how does it affect learning?
Assume you are Al Kantak. What would be your recommended college recruitment program?
Describe the situation faced by both Scott Patterson and Larry Ingram.
What would you do if you were Rob?
What are the seven types of waste?
What is a crossed transaction?
Is the compensation plan causing a problem? How?
What would you do to correct the situation, if anything?
Define lean manufacturing.
Formulate and implement new sales roles.
What would you do if you were Kara?

What would you do if you were Steve?
What does SMED mean how does it relate to JIT?
Compare Joy's present job to what you think her previous job as a salesperson might have been.
How are they similar? How are they different?
A company would like to evaluate two incentive schemes that take effect once the worker
exceeds standard performance. In the first case the benefits are split 50/50 between the worker
and the company. In the second case, the worker receives a kicker up to 120% earnings and then
maintains level performance up to 150% ,
Should Rick Lester "turn in his keys?"
How should the standards analyst utilize learning curves?
Map out the sales process associated with the different products/services and the roles of current
sales and service personnel in the process.
Which three broad categories cover the majority of profit sharing installations?
Why do you think Joy may be disenchanted with her present job?
How is learning quantified?
How does job enrichment differ from job enlargement?
Why Is Motivation A Problem?
A worker assembly two units. The first takes 10 minutes and the second take 9.7 minutes. What
is the learning curve? What is the % learning? How long would it take the worker to reach a
standard time of 8.0 minutes?
What are the ethical considerations, if any, in this case? Make the following overhead to show
your class and lead class discussion.
What is the 5S system?
What is the difference between a push and a pull system?
Which five states related to the psychological and sociological reactions of the operator should
be recognized by the analyst?
An analyst has estimated that there will be an 84% learning curve for an assembly operation. The
first assembly takes 48 minutes and the standard time is set at 6 minutes. a. How long will it take
the operator to reach the standard time? b. Unfortunately, the operator falls ill after the first week
on the new assembly
Why is plant wide training in the areas of work measurement a healthy management step?
What is a quality circle?
A company would like to evaluate two incentive schemes that take effect once the worker
exceeds standard performance. In the first case the benefits are split 30% to the worker and 70%
to the company up to 120% performance. If the worker exceeds 120% performance, all of the
earnings go to the worker. In the second case
The Dorben Co. uses a standard hour plan with a base wage of $9.00/hour. It hires an IE
consultant to plan a batch production run of 300 units. This consultant has a worker on the line
produce two units. The first takes 10 minutes and the second 9.7 minutes. a) Find the equation of
the learning curve? b) What is the
How did the Reynolds team successfully execute the following critical roles in sales: client
access, client education/persuasion, and fulfillment?
Why is a new compensation plan needed at Mead, and what are the positive outcomes of a
successful sales compensation plan?
What would you do if you were Larry Ingram?
How does total quality management enter into modern management practices?
What is the difference between the Crawford and Wright Models of learning?
Develop a new budget based on how the ideal profit and loss statement should look if it reflects
the president's bottom-line objective for ZCT. Justify your expenses for each of the five budgeted
expense areas.
Determine the four most important objectives for each department. Be specific by detailing what
should be done and the time frame for reaching the objection.
Why do unions often train their own time study analysts?

A training expert suggest that one should allocate a minimum of 40 hours of learning. What time
would have the worker in problem #3 have achieved at this point?
What level of moral development are Patterson and Ingram operating at in this business
relationship?
What can professors do to better prepare students in sales classes?
What do we mean by 'the human approach'?
Describe the situation faced by Kara.
What is a Kanban?
In a single product plant where IMPROSHARE was installed, 411 employees produced 14,762
product units over a one-year period, and recorded 802,000 clock hours. In a given week, 425
employees worked a total of 16,150 hours and produced 348 units. What would be the hourly
value of this output? What percentage bonus would
What levels of transactions work best at dealing with workers?
What would be the net profit if sales: A. Remained the same, at $10 million, and budgeted
expenses increased to the projected levels? B. Increased to $14 million and budgeted expenses
increases to the projected levels?
An incentive plan employing a kicker is in use. Below standard performance the worker is
guaranteed a rate of $6 per hour and above standard performance the worker is paid $9.20 per
hour. A job is studied and a rate of 0.036 hours per piece is set. What is the direct labor cost per
piece at the following efficiencies:
What is continuous improvement and why is it important?
What managerial skills are depicted in the case? Which skill is most important for Joy to
possess? Why?
If you were Adidas, how would you compete with Nike?
Consider the broad shifts in marketing. Do any themes emerge in them? Can you relate the shifts
to the major societal forces? Which force has contributed to which shift?
The Wilson Company: Is a Sales Manager's Job Really For Me?

What are the risks and benefits of expanding the Disney brand in new ways?
Have â€œImagination at Work,â€ â€œEcomagination,â€ and â€œHealthymaginationâ€

successfully communicated GEâ€™s focus on its newer endeavors? Why or why not?
Sonic has decided to focus on total customer satisfaction as a way of encouraging brand loyalty
in a highly competitive marketplace.With this in mind, youâ€™ve been assigned to analyze three
specific issues as you continue working on Sonicâ€™s marketing plan. â€¢ How (and how often)
should Sonic monitor customer satisf
Martin Guitar Company is an interesting blend of old and new. The company employees remain
true to the principle of high standards of musical excellence and the customers expect
exceptional quality. Like many businesses, Martinâ€™s sales have dropped offâ€”some 20
percent since fall 2008â€”as consumer spending nosedive
At what level of moral development are Rob and Steve operating in this business situation?
Explain your answers.
Should Marketers Test Advertising? Advertising creatives have long lamented ad pretesting.
They believe it inhibits their creative process and results in too much sameness in commercials.
Marketers, on the other hand, believe pretesting provides necessary checks and balances to
ensure the ad campaign will connect with
Is there a difference between wrong decisions and bad decisions? Why do good managers
sometimes make wrong decisions? Bad decisions? How might managers improve their decision-
making skills?
Youâ€™re in charge of pricing Sonicâ€™s product for its launch early next year.Review the
SWOT analysis you previously prepared as well as Sonicâ€™s competitive environment,
targeting strategy, and product positioning. Now continue working on your marketing plan by
responding to the following questions. â€¢ What should
How else can Best Buy compete against new competitors like Walmart and online companies?
Is Consumer Behavior More a Function of a Personâ€™s Age or Generation? One of the widely
debated issues in developing marketing programs that target certain age groups is how much
consumers change over time. Some marketers maintain that age differences are critical and that
the needs and wants of a 25-year-old in 2010
What Good Is a Mission Statement? Mission statements are often the product of much
deliberation and discussion. At the same time, critics claim they sometimes lack â€œteethâ€
and specificity, or do not vary much from firm to firm and make the same empty promises. Take
a position: Mission statements are critical to a s
Online versus Offline Privacy As more firms practice relationship marketing and develop
customer databases, privacy issues are emerging as an important topic. Consumers and public
interest groups are scrutinizingâ€”and sometimes criticizingâ€”the privacy policies of firms and
raising concerns about potential theft of o
Is Mass Marketing Dead? With marketers increasingly adopting more and more refined market
segmentation schemesâ€”fueled by the Internet and other customization effortsâ€”some claim
mass marketing is dead. Others counter there will always be room for large brands employing
marketing programs to target the mass market. T
What are some of the things IKEA is doing right to reach consumers in different markets? What
else could it be doing?
Does HSBCâ€™s most recent campaign resonate with its target audience? Why or why not?
First we had the bird flu. Now, the H1N1 flu pandemic has been in the news recently. How could
organizations be prepared for an outbreak of H1N1 flu or some new unknown flu strain or
medical crisis? What types of planning would they need to do? Now, take a specific organization
(your college or university, your place o
What are the pros and cons to BMWâ€™s selective target marketing? What has the firm done
well over the years and where could it improve?
What does Disney do best to connect with its core consumers?
Sonic is a new brand with no prior brand associations, which presents a number of marketing
opportunities and challenges. Jane Melody has given you responsibility for making
recommendations about three brand equity issues that are important to Sonicâ€™s marketing
plan. â€¢ What brand elements would be most useful for d
The primary means of sustaining a competitive advantage is to adjust faster to the environment
than your competitors do. Do you agree or disagree with this statement? Explain your position.
What are Nordstromâ€™s greatest risks, and who are its biggest competitors?
As before, youâ€™re working with Jane Melody on Sonicâ€™s marketing plan for launching a
new smart phone. Now youâ€™re focusing on Sonicâ€™s positioning and product life-cycle
strategies by answering three specific questions. â€¢ In a sentence or two, what is an appropriate
positioning for the Sonic 1000 smart phone? â
Should Red Bull do more traditional advertising? Why or why not?
Does Marketing Create or Satisfy Needs? Marketing has often been defined in terms of
satisfying customersâ€™ needs and wants. Critics, however, maintain that marketing goes
beyond that and creates needs and wants that did not exist before. They feel marketers encourage
consumers to spend more money than they should on
Youâ€™re planning customer support services for Sonicâ€™s new smart phone product.
Review what you know about your target market and its needs; also think about what Sonicâ€™s
competitors are offering. Then respond to these three questions about designing and managing
services. â€¢ What support services are buyers of s
Discuss the importance of B-to-B marketing and a strong B-to-B brand to GE.
At this point, you need to make more specific decisions about managing the marketing
intermediaries for Sonicâ€™s first product. Formulate your ideas by answering the following
questions. â€¢ What types of retailers would be most appropriate for distributing Sonicâ€™s
smart phone? What are the advantages and disadvanta
Discuss how Intel changed ingredient-marketing history. What did it do so well in those initial
marketing campaigns?
The difficult business climate in 2008 and 2009 challenged Disney financially. As one of the
worldâ€™s largest entertainment and media companies, Disney has had a long record of
successes. Although Disney is a U.S.-based company, its businesses span the globe with
operations in North America, Europe, Asia Pacific, and
Why is Facebook unique in the world of personal marketing?
Are Great Salespeople Born or Made? One debate in sales is about the impact of training versus
selection in developing an effective sales force. Some observers maintain the best salespeople are
born that way and are effective due to their personalities and interpersonal skills developed over
a lifetime. Others contend
How is building a brand in a business-to-business context different from doing so in the

consumer market?

How Different Is Business-to-Business Marketing? Many business-to-business marketing
executives lament the challenges of business-to-business marketing, maintaining that many
traditional marketing concepts and principles do not apply. For a number of reasons, they assert
that selling products and services to a company
Your next task is to consider how marketing research can help Sonic support its marketing
strategy. Jane Melody also asks you how Sonic can measure results after the marketing plan is
implemented. She wants you to answer the following three questions. â€¢ What surveys, focus
groups, observation, behavioral data, or exp
Is Ciscoâ€™s plan to reach out to consumers a viable one? Why or why not?
Walmart does very well when the economy turns sour. How can it protect itself when the
economy is on the rise? Explain.
Jane Melody asks you to scan Sonicâ€™s external environment for early warning signals of new
opportunities and emerging threats that could affect the success of the Sonic 1000 Smartphone.
Using Internet or library sources (or both), locate information to answer three questions about
key areas of the macroenvironment. W
Coca-Cola has successfully marketed to billions of people around the world. Why is it so
successful?
Consider Porterâ€™s value chain and the holistic marketing orientation model. What
implications do they have for marketing planning? How would you structure a marketing plan to
incorporate some of their concepts?
Gillette has successfully convinced the world that â€œmore is betterâ€ in terms of number of
blades and other razor features. Why has that worked in the past? Whatâ€™s next?
What Is the Best Type of Marketing Research? Many market researchers have their favorite
research approaches or techniques, although different researchers often have different
preferences. Some researchers maintain that the only way to really learn about consumers or
brands is through in-depth, qualitative research. Ot
Can Gillette ever become as successful at marketing to women? Why or why not?
Evaluate Intelâ€™s more recent marketing efforts. Did they lose something by dropping the
â€œIntel Insideâ€ tagline or not?
Would Zaraâ€™s model work for other retailers? Why or why not?
In the end, IDEO creates great solutions for companies that then receive all the credit. Should
IDEO try to create more brand awareness for itself? Why or why not?
Could anything go wrong for Intuit now that it has beaten out Microsoft? Why or why not?
Consider customer lifetime value (CLV). Choose a business and show how you would go about
developing a quantitative formulation that captures the concept. How would that business change
if it totally embraced the customer equity concept and maximized CLV?
Discuss the pros and cons of Microsoftâ€™s most recent â€œIâ€™m a PCâ€ campaign. Is
Microsoft doing a good thing by acknowledging Appleâ€™s campaign in its own marketing
message? Why or why not?
BMWâ€™s sales slipped during the worldwide recession in 2008 and 2009. Is its segmentation
strategy too selective? Why or why not?
What are the pros, cons, and risks associated with Nikeâ€™s core marketing strategy?
Can Pepsi or any other company ever surpass Coca- Cola? Why or why not? What are Coca-
Colaâ€™s greatest risks?
Consider some of the consumer behavior topics for business-to-consumer (B-to-C) marketing
from Chapter 6. How might you apply them to business-to-business (B-to-B) settings? For
example, how might noncompensatory models of choice work? Mental accounting?
Because managers have software tools to use, they should be able to make more rational
decisions. Do you agree or disagree with this statement? Why?
Organizations that fail to plan are planning to fail. Do you agree or disagree with this statement?
Explain your position.
How else can Nordstrom continue to provide exceptional customer service and increase brand
loyalty?
Did Target do the right thing by tweaking its message to focus more on value and less on trends?
Why or why not?
What are the risks and benefits of HSBCâ€™s positioning itself as the â€œWorldâ€™s Local
Bankâ€?

Sonic is a new entrant in an established industry characterized by competitors with relatively
high brand identity and strong market positions. Use research and your knowledge of how to deal
with competitors to consider three issues that will affect the companyâ€™s ability to
successfully introduce its first product: â
Think of various product categories. In each segmentation scheme, to which segment do you feel
you belong? How would marketing be more or less effective for you depending on the segment?
How would you contrast demographic and behavioral segment schemes? Which one(s) do you
think would be most effective for marketers tr
Introducing a new product entails a variety of decisions about product strategy, including
differentiation, ingredient branding, packaging, labeling, warranty, and guarantee. Your next task
is to answer the following questions about Sonicâ€™s product strategy. â€¢ Which aspect of
product differentiation would be most v
What has Target done well over the years in terms of its integrated marketing communications
strategy? What should it do going forward?
Elaborate on Intuitâ€™s use of customer research. Why did it work so well for the company?
As an assistant to Jane Melody, Sonicâ€™s chief marketing officer, youâ€™ve been assigned to
draft a mission statement for top managementâ€™s review. This should cover the competitive
spheres within which the firm will operate and your recommendation of an appropriate generic
competitive strategy. Using your knowledge
Youâ€™re responsible for researching and analyzing the consumer market for Sonicâ€™s smart
phone product. Look again at the data youâ€™ve already entered about the companyâ€™s
current situation and macroenvironment, especially the market being targeted. Now answer these
questions about the market and buyer behavior. â€
With a portfolio as diverse as Googleâ€™s, what are the companyâ€™s core brand values?
What has Accenture done well to target its B-to-B audience?
Has Accenture done the right thing by dropping Tiger Woods as its spokesperson? Discuss the
pros and cons of its decision.
Why is decision making often described as the essence of a managerâ€™s job?
Whatâ€™s next for Google? Is it doing the right thing taking on Microsoft with the concept of
cloud computing, and Apple in the fight for smart phones?
What are the keys to Best Buyâ€™s success? What are the risks going forward?
What are Red Bullâ€™s greatest strengths and risks as more companies (like Coca-Cola, Pepsi,
and Monster) enter the energy drink category and gain market share?
At Sonic, you have been asked to develop a marketing channel system for the new Sonic 1000
smart phone. Based on what you know about designing and managing integrated marketing
channels, answer the three questions that follow. â€¢ Do you agree with Jane Melodyâ€™s
decision to use a push strategy for the new product? Ex
Whatâ€™s next for Tesco? Where and how can it grow? Who will it target?
Why do you think organizations have increased the use of groups for making decisions? When
would you recommend using groups to make decisions?
All of us bring biases to the decisions we make. What would be the drawbacks of having biases?
Could there be any advantages to having biases? Explain. What are the implications for
managerial decision making?
Under what circumstances do you believe MBO would be most useful? Discuss.
Is Target Marketing Ever Bad? As marketers increasingly tailor marketing programs to target
market segments, some critics have denounced these efforts as exploitive. They see the
preponderance of billboards advertising cigarettes and alcohol in low-income urban areas as
taking advantage of a vulnerable market segment.
Is there a conflict of interests in the way Unilever markets to women and young men? Is it
undoing all the good that might be done in the â€œCampaign for Real Beautyâ€ by making
women sex symbols in Axe ads? Discuss.
What does Coca-Cola stand for? Is it the same for everyone? Explain.
What makes personal marketing work? Why are Dove and Axe so successful at it?
Why has IDEO been so successful? What is the most difficult challenge it faces in conducting its
research and designing its products?
How does Target compete against mammoth Walmart? What are the distinct differences in their
IMC strategies?

Discuss the effectiveness of Red Bullâ€™s sponsorships, for example, Bull Stratos. Is this a
good use of Red Bullâ€™s marketing budget? Where should the company draw the line?
How is Zara going to expand successfully all over the world with the same level of speed and
instant fashion?
How should Intuit gauge the results of its research among younger consumers with mobile
devices?
Evaluate Walmartâ€™s new marketing campaign and tagline. Did the company make the right
decision to drop â€œAlways Low Prices. Always.â€ as a tagline? Why or why not?
Explain how a manager might deal with making decisions under conditions of uncertainty.
Describe in detail the six-step strategic management process.
Is Facebook just a passing fad or is it here to stay? What are the companyâ€™s greatest strengths
and risks?
Contrast formal with informal planning. Discuss why planning is beneficial.
Evaluate Microsoftâ€™s strategy in good and poor economic times.
Find examples in current business periodicals of each of Porterâ€™s generic strategies. Name
the company, describe the strategy being used, and explain why itâ€™s an example of that
strategy. Be sure to cite your sources.
How can Tesco take its customer loyalty programs to the next level?
Should National-Brand Manufacturers Also Supply Private-Label Brands? Ralston-Purina,

Borden, ConAgra, and Heinz have all admitted to supplying productsâ€”sometimes lower in
qualityâ€”to be used for private labels. Other marketers, however, criticize this â€œif you
canâ€™t beat them, join themâ€ strategy, maintaining
What mental accounts do you have in your mind about purchasing products or services? Do you
have any rules you employ in spending money? Are they different from what other people do?
Do you follow Thalerâ€™s four principles in reacting to gains and losses?
Do you think performance appraisal should be done? Is it worth the cost?
Has TV Advertising Lost Its Power? Long deemed the most successful marketing medium,
television advertising is increasingly criticized for being too expensive and, even worse, no
longer as effective as it once was. Critics maintain that consumers tune out too many ads by
zipping and zapping and that it is difficult to
Youâ€™ve been learning more about the business market for Sonicâ€™s smart phone. Jane
Melody has defined this market as mid- to large-sized corporations that want their employees to
stay in touch and be able to input or access data from any location. Respond to the following
three questions based on your knowledge of S
What is a SWOT analysis and why is it important to managers?
Some of Gilletteâ€™s spokespeople such as Tiger Woods have run into controversy after
becoming endorsers for the brand. Does this hurt Gilletteâ€™s brand equity or marketing
message? Explain.
Training provides workers with skills needed in the workplace. However, many organizations
have dynamic environments in which change is the norm. How can training requirements be
identified when job duties are a moving target?
You work for a medium-size, high-tech firm that faces intense competition on a daily basis.
Change seems to be the only constant in your workplace, and each worker's responsibilities shift
from project to project. Suppose you have the major responsibility for filling the job openings at
your company. How would you go a
It has been argued that training can lead to turnover, but career development can reduce it.
Differentiate between training and career development. Why might training lead to turnover
whereas career development might improve retention? Explain.
A possible negative impact of cultural-competency training is the furthering of stereotypes. For

example, training content might portray people of certain ethnic backgrounds as acting the same
way and lead to overgeneralizations. Do you think this problem could be avoided? How?
Place yourself in the position of an employee receiving a performance review. Would it matter to
you whether your performance review, the narrative description of your performance levels, and
suggestions for improvement were generated by computer or by your manager? Why?
What major issues and problems concerning the design and implementation of pay-for-
performance systems does this case illustrate? Explain.
Under what circumstances might a company's managers prefer to use layoffs instead of early
retirements or voluntary severance plans as a way to downsize the workforce?
Performance problems seem all too common in your workplace. People do not seem to be
putting forth the needed effort, and interpersonal conflict on the work teams seems to be a
constant. Is training the answer? If so, what kind of training should be done? What other actions
may be appropriate?
A customer survey for Landmark Company reports that people do not trust what sales
representatives say about their firm's products. How might you use the compensation system to
help change this negative image?
Should applicants be selected primarily on the basis of ability or on personality/fit? How can fit
be assessed?
Is the dean's explanation for decreased pay differences by rank and/or seniority justifiable?
Why should management be concerned with helping employees retire from their organization
successfully?
After eight years as a marketing assistant for the New York office of a large French bank, Sarah
Schiffler was told that her job, in a nonrevenue-producing department, was being eliminated. Her
choices: She could either be laid off (with eight months' severance pay) or stay on and train for
the position of credit analy
Might challenging someone who is engaging in unethical behavior have some risk? How can this
risk be minimized?
When would the ROI of training be a useful measure? Explain.
Place yourself in the position of the manager of a small business. Describe situations when
ethical performance appraisal for your employees would be useful.
Would an employer ever want to increase the rate of employee turnover in a company? Why or
why not?
If there are distinct roles to be played on a team, how would you go about recruiting and hiring
for them in a small business?
One observer argues that external equity should always be the primary concern in compensation,
noting that it attracts the best employees and prevents the top performers from leaving.
Assuming you are a top executive at Green Giant and the software developer, would you punish
the employees who engaged in those unethical acts, the managers who devised the incentive
system, or both?
Superficially, it seems preferable to use objective performance data (such as productivity

figures), when available, rather than subjective supervisory ratings to assess employees. Why
might objective data be less effective performance measures than subjective ratings?
A company has come up with a new selection test and decides to try it out on some of its current
workers before giving it to job applicants. A group of its current workers volunteered to take the
test: 84 percent were male and 7 percent were over the age of 40. The scores on the test that each
of the volunteers earned
People who adopt a careerist strategy focus on career advancement through political
machinations rather than excellent performance. Experts have pointed out four ways in which
workers try to influence their superiors' opinions of them: favor doing (doing a favor for a
superior in hopes that the favor will someday be re
Auto-Valve was an example in this chapter of an organization that used a simple spreadsheet to
determine which skills were most critical and should be taught to employees first. Using the
general spreadsheet approach, how could you determine which training topics should be
covered? For the rows on the spreadsheet, list
Workers can learn about policies, procedures, and so on, by reading electronic or hard-copy
documents. What else does mentoring bring to the situation that apparently makes this form of
employee development so effective?
What are some of the pros and cons of linking pay to objective criteria that are important to the
organization such as quality control measures, profitability, and low turnover?
In an age when more and more companies are downsizing, an increasingly important concept is
"the virtual corporation." The idea is that a company should have a core of owners and managers,
but that, to the greatest degree possible, workers should be contingent- temporary, part-time, or
on short-term contracts. This giv
As discussed in this chapter, firms vary widely on the extent to which they emphasize money as
an incentive. Do you think an emphasis on financial incentives is good or bad? Explain.
According to a recent Wall Street Journal article entitled "Pay gap fuels worker woes,". the gap
between top executive and employee compensation has never been greater. That's triggering
lower morale and productivity on some corporate staffs, and making it more difficult to attract
and keep talent, even in a slowing ec
What criteria do you think should be used to measure team performance? What sources should
be used for the appraisal? Should individual performance still be measured? Why or why not?
Do you think that people should be required to serve as mentors? What characteristics should
these mentors possess?
Workers who are illiterate suffer from embarrassment and fear. An HR manager notes, "They
will ask for directions many times, even though the instruction manual is alongside their machine
. . . . Some workers always seem to be having problems with their eyesight or their glasses . . . .
The truth is that they simply ca
Several companies are moving in the direction of compensating employees with nonmonetary
rewards in lieu of higher wages (see the Manager's Notebook, "Rewarding Employees with
Nonmonetary Compensation"). Why do you think this is happening? Do you think this is a good
thing for companies and employees? Explain.
What challenges do nontraditional family units pose to company career development plans? How
can companies meet these challenges?
Reread the Manager's Notebook, "Incentives Come to Medicine." Do you agree that it is a good
idea to offer incentives to doctors for better patient care? What are the drawbacks? Can these
problems be avoided? Explain.
The employee equity model provides value, brand, and retention equity perceptions as important
determinants of whether an employee stays with an organization. Do you think that the three
components are independent, or do they influence each other? Is this a problem for managing
retention with the employee equity model?
What advantage might a role-based appraisal system offer to the organization? To the worker?
Is there a distinction between diversity and cultural competency, or are they the same thing?
Explain.
Which of the three approaches do you think is the most procedurally just basis for selecting
workers to be laid off?
One observer notes that "the problem with using pay as an incentive is that it is such a powerful
motivational weapon that management can easily lose control of the situation." Do you agree?
Why or why not?
How effective do you think training can be in raising employee motivation?
Do you think that SWOT analysis is a useful tool for career development? Why or why not?
How should a small-business owner or manager develope an appraisal system that measures
ethical performance? Identify the steps.
Are team-based incentives appropriate for the type of work done by Johnson's crews?
Interviewing unqualified applicants can be a frustrating experience and a waste of time for
managers, peers, or whoever is responsible for interviewing. How can the HR department
minimize or eliminate this problem?
Innovator, technical expert, and team leader are some possible roles that may be common in the
workplace. What other roles and additional measures do you think would be useful for role-
based appraisal?
Under what set of conditions should a company lay off employees without giving them advance
notice?
Some people believe that most employees will act ethically even though they have a chance to
take advantage of an incentive system through inappropriate behaviors. Do you agree?
The Manager's Notebook, "Job Hopping: Voluntary Is Part of the Business Environment in India
and China," addressed job hopping. Do you think it is becoming more prevalent? If you are a
manger, do you think job hopping is an issue? How would you deal with it?
"Occasionally an employee comes along who needs to be reminded who the boss is, and the
appraisal is an appropriate place for such a reminder." Would the manager quoted here be likely
to use a rational or a political approach to appraisal? Contrast the rational and political
approaches. To what extent is it possible to
How might the increasing diversity of the workforce affect the design of employee benefits
packages in large companies?
What is comparability? How can it be maximized in performance appraisal?

How would you prevent the problems that arose at Green Giant, the software developer, and
Sunbeam and still reward good performance? Explain.
How important is it that the effectiveness of a training program be measured in dollar terms?
Why is it important to measure training effectiveness in the first place?
How can you measure and take into account differences among workers in terms of their
development needs and interests?
Recent economic difficulties, restructurings, and plant closing have left many people without
jobs and looking for new career paths. A hiring employer can now enjoy being able to select
from among far more applicants than typical. Unfortunately, many of these applicants lack
qualifications for the jobs. How can a hirin
Are there disadvantages to a focus on ethics in performance appraisal? Describe.
The United States mandates only four benefits, yet U.S. employers provide many other benefits-
such as health insurance, retirement benefits, and paid vacations-voluntarily. Why do so many
employers provide these benefits even though they are not legally required to do so?
For the past 90 years or so, job evaluation as a compensation tool has been designed to assess the
value of each job rather than to evaluate the person doing the job, prompting a relatively flat pay
schedule for all incumbents in a particular position. Some HR experts believe that the emerging
trend is for pay inequali
At ARCO Transportation, a $1 billion division of Atlantic Richfield, employees are hired,

promoted, and appraised according to how they fulfill the performance dimensions most valued
by the company. One of these performance dimensions is "communication"- specifically, "listens
and observes attentively, allowing an exch
The characteristics needed by individual team members depend on the team and the strengths
and weaknesses of others who are on the team. In other words, the situation is much more
dynamic than assuming that there is one static job with a single set of qualifications. How could
you model or include this dynamic and inte
How would you go about retaining and developing older employees who are part of a dual-career
couple?
Let's suppose that your organization rated most workers as performing above average. In most
cases then, you don't have a reason to use a merit-based layoff selection. What approach would
you recommend in that situation?
According to one survey, trainees list the following as some of the traits of a successful trainer:
knowledge of the subject, adaptability, sincerity, and sense of humor. What other traits do you
think trainers need to be successful in the training situation?
Today's organizations are flatter and offer fewer opportunities for advancement. How do you
think careers should be developed in this type of organizational environment?
Do you think companies provide paid voluntary opportunities for employees for altruistic
reasons? Do you see this as a trend? Explain.
When would measures of training effectiveness other than ROI be useful? Describe.
Small businesses have limited budgets for training. If you were a small-business owner, how
would you address training needs cost effectively?
As noted in the Manager's Notebook, "Compensation Entitlements Are Going out the Window,"
fixed or secure pay is becoming rare. What impact do you think this has on employees' outlook?
What, if any, are the negative and positive aspects of this trend? Explain.
What is the common thread across the widely different examples of "merit pay" and "pay for
performance" given in this case?
Which should drive action planning more, strengths or weaknesses? That is, is it more important
to build on your strengths or to reduce your weaknesses? Explain.
How do managed-care health insurance plans (HMOs and PPOs) differ from traditional fee-for-
service health insurance plans? What are the costs and benefits of each to the employer? To the
employee?
What topics, other than technology, would be appropriate for the reverse mentoring approach?
Opportunities and threats have to do with external factors. What sources could be useful for
obtaining this information?
Do you think work-life programs can improve recruitment and retention? Why or why not? How
could you assess whether such a program were a good investment?
Simuflite, a Texas aviation training company, expected to whip the competition with FasTrak, its
computer-based training (CBT) curriculum for corporate pilots. Instead, the new venture sent
Simuflite into a nose dive. In traditional ground-school training, pilots ask questions and learn
from "war stories" told by class
Do you think offering incentives to teachers motivates them to do a better job in the classroom?
Why or why not? Explain.
The departure of senior workers through retirement can mean that years of experience and
knowledge are walking out an organization's doors. This "brain drain" can cripple an
organization's ability to remain competitive, particularly if it is difficult to regularly hire younger
talent. What approaches would you recommen
How important are rating formats to the quality of performance ratings? What is the most
important influence on rating quality?
Why is cost containment such an important issue in employee benefits programs?
From the perspective of a manager, what advantages might be associated with taking an
electronic approach to reviewing the workers' performance levels? List these advantages into two
categories: rational and political. The rational category is for advantages such as the speed with
which the appraisal task could be comp
Most workers are not covered by explicit or implicit contracts and are at-will employees. Thus,
an employer should be able to terminate these workers at any time and for any reason. A
practical reality, however, is that a charge of discrimination as a basis for a termination needs to
be defended against. How can an emp
Do you think people can be retrained? Why or why not?
Managing survivors in a layoff is important. As a manager, what concerns would you have about
the surviving workforce after a layoff? How can the HR management staff be of assistance in
providing support for the survivors to a layoff?
"The people who actually have the face-to-face contact with the person who is being laid off are
not the ones who made the decision. They often did not have any input into which of their people
would go," says a technician at a firm that experienced large-scale layoffs. What role should
managers-who have the "face-to-f
In a feisty response to critics who accuse Wal-Mart of providing poverty-level wages (around
$9.68 an hour, on average) and few benefits, Wal-Mart chief executive H. Lee Scott, Jr., said
Wal-Mart offered good, stable jobs, noting that when it opens a store, more than 3,000 people
often apply for 300 jobs. "It doesn't m
You're the owner of a 25-employee company that has just had a fantastic year. Everyone pulled
together and worked hard to achieve the boost in company profits. Unfortunately, you need to
sink most of those profits into paying your suppliers. All you can afford to give your workers is a
3 percent pay raise across the bo
Given your answers to the previous questions, would you recommend the use of electronic
performance reviews? Justify your position.
How would you suggest the dean deal with senior faculty who feel underpaid?
What do you see as the main advantages and disadvantages of this proposal? Explain.
This chapter identifies three assumptions underlying pay-for-performance plans. Do you believe
these assumptions are valid?
Companies use various tactics to encourage managers to make employee development a top
priority. What do you think of this policy of tying financial rewards to people development?
What are some other ways companies can hold managers accountable for developing those they
supervise?
Do you think a company should keep pay secret and demand that all employees not disclose their
pay to coworkers? Why or why not?
Go to any of the salary survey sources listed in the Manager's Notebook, "How Much Is a
Position Worth in the Marketplace?" and research the salary ranges of four to five positions of
your choice. Assume that you are planning to recruit five individuals into each of those positions.
How would you use the salary survey
Value, brand, and retention characteristics could be used as criteria, or standards, for assessing
management programs and actions. For example, consider recruitment and/or performance
appraisal. If you were trying to maximize employee retention, how might you go about
recruitment or performance appraisal so that value
Calculating Break-Even A project has the following estimated data: price = $68 per unit; variable
costs = $41 per unit; fixed costs = $8,000; required return = 15 percent; initial investment =
$12,000; life = four years. Ignoring the effect of taxes, what is the accounting break-even
quantity? The cash break-even quant
Do you think a small-business manager should be concerned with employee development? Why
or why not?
Why should younger employees (those in their 20s and 30s) care about retirement benefits?
Mentoring and reverse mentoring can be seen as particular directions of knowledge sharing.
Would peer-to-peer mentoring be possible? What about customer to employee? Could the
traditional concept of mentoring be expanded to something similar to 360Â° feedback? If so,
how would it change the nature and purpose of mentor
If you have a clear code of ethics, do you think training to challenge unethical behavior would
still be needed? Why or why not?
Calculating Returns Suppose you bought a 6 percent coupon bond one year ago for $940. The
bond sells for $920 today. a. Assuming a $1,000 face value, what was your total dollar return on
this investment over the past year? b. What was your total nominal rate of return on this
investment over the past year? c. If the in
Calculating Project Cash Flow from Assets In the previous problem, suppose the project requires
an initial investment in net working capital of $300,000 and the fixed asset will have a market
value of $210,000 at the end of the project. What is the projectâ€™s year 0 net cash flow, year 1
Year 2, Year 3, what is the ne
Break-Even and Taxes This problem concerns the effect of taxes on the various break-even
measures. a. Show that, when we consider taxes, the general relationship between operating cash
flow, OCF, and sales volume, Q, can be written as: b. Use the expression in part (a) to the cash,
accounting, and financial break-eve
Market Efficiency Implications Explain why a characteristic of an efficient market is that

investments in that market have zero NPVs.
Operating Leverage Use the results of problem 26 to find the degree of operating leverage for the
company in problem 27 at the base-case output level of 45,000 units how does this number
compare to the sensitivity figure you found in problem 28? Verify that either approach will given
you the same OCF figure at any new
Break-Even Analysis In an effort to capture the large jet market, Airbus invested $13 billion
developing its A380, which is capable of carrying 800 passengers. The plane has a list price of
$280 million. In discussing the plane, Airbus stated that the company would break even when
249 A380s were sold. a. Assuming the b
Calculating Costs and Break-Even Night Shades inc. (NSI) manufactures biotech sunglasses.
The variable materials cost is $4.68 per unit, and the. Variable labor cost is $2.27 per unit. a.
What is the variable cost per unit? b. Suppose NSI incurs fixed costs of $650,000 during a year
in which total production is 320,000

Leverage In the previous problem, suppose fixed costs are $150,000. What is the operating cash
flow at 48,000 units the degree of operating leverage?
Calculating Investment Returns You bought one of Great White Shark Repellant Co.â€™s 7
percent coupon bonds one year ago for $920. These bonds make annual payments and mature six
years from now. Suppose you decide to self your bonds today, when the required return on the
bonds is 8 percent. If the inflation rate was 4.
Operating Leverage and Taxes shown that if we consider the effect of taxes, the degree of
operating leverage can be written as: DOL = 1 + [FC x (1 â€“ T) â€“ T x D] / OCF. Notice that
this reduces to our previous result if T = 0, can you interpret this in words?
Break-Even Assume a firm is considering a new project that requires an initial investment and
has equal sales and costs over its life. Will the project reach the accounting, cash, or financial
break-even point first? Which will it reach next? Last? Will this ordering always apply?
Comparing Mutually Exclusive Projects suppose in the previous problem that EISC always
needs a conveyor belt system: when one wears out, it must be replaced. Which project should the
firm choose now?
Return Calculations Rework Problems 1 and 2 assuming the ending share price is $79.
Calculating EAC you are evaluating two different silicon wafer milling machines. The Techron I
costs $330,000, has a three-year life, and has pretax operating costs of $41,000 per year. The
Techron II costs $480,000, has a five-year life, and has pretax operating costs of $33,000 per
year for both milling machines, use
Semi strong Efficiency If a market is semi strong form efficient, is it also weak form efficient?
Explain.
Calculating a Bid Price Heer Enterprises heeds someone to supply it with 160.000 cartons of
machine screws per year to support its manufacturing needs over the next five years, and
youâ€™ve decided to bid on the contract. It will cost you $840,000 to install the equipment
necessary to start production: youâ€™ll depreci
Project Evaluation Aguilera Acoustics (AAI), Inc. projects unit sales for a new seven-octave
voice emulation implant as follows: Production of the implants will require $1,500,000 in net
working capital to start and additional net working capital investments each year equal to 15
percent of the projected sales increase

Sensitivity Analysis and Scenario Analysis What is the essential difference between sensitivity
analysis and scenario analysis?
Calculating a Bid Price Your company has been approached to bid on a contract to sell 15,000
voice recognition (VR) computer keyboards a year for four years. Due to technological
improvements, beyond that time they will be outdated and no sales will be possible. The
equipment necessary for the production will cost $2.9
Calculating Project NPV In the previous problem, suppose the required return on the project is
12 percent, what is the projectâ€™s NPV?
Scenario Analysis â€˜In the previous problem, suppose the projections given for price, quantity,
variable costs, and fixed costs are all accurate to within Â±10 percent. Calculate the best-case
and worst-case NPV figures.
Sensitivity Analysis McGilla Golf would like to know the sensitivity of NPV to changes in the
price of the new clubs and the quantity of new clubs sold. What is the sensitivity of the NPV to
each of these variables?
Using Return Distributions suppose the returns on long-term corporate bonds are normally
distributed. Based on the historical record, what is the approximate probability that your return
on these bonds will be less than â€”2.3 percent in a given year? What range of returns would you
expect to see 95 percent of the time
Risk and Return We have seen that over long periods, stock investments have tended to
substantially outperform bond investments. However, it is common to observe investors with
long horizons holding entirely bonds. Are such investors irrational?
Break-Even Analysis Hybrid cars are touted as a â€œgreenâ€ alternative; however, the
financial aspects of hybrid ownership are not as clear. Consider the 2006 Honda Accord Hybrid,
which had a list price of $5,450 (including tax consequences) more than a Honda Accord EX
sedan. Addition ally, the annual ownership costs
Expected Portfolio Returns If a portfolio has a positive investment in every asset; can the
expected return on the portfolio be greater than that on every asset in the portfolio? Can it be less
than that on every asset in the portfolio? If you answer yes to one or both of these questions, give
an example to support you
Cost-Cutting Proposals Chatman Machine Shop is considering a four-year project to improve its
production efficiency. Buying a new machine press for $530,000 is estimated to result in
$205,000 in annual pretax cost savings. The press falls in the MACRS five-year class, and it will
have a salvage value at the end of the
Sensitivity Analysis For the company in the previous problem, suppose management is most
concerned about the impact of its price estimate on the projectâ€™s profitability. How could you
address this concern? Describe how you would calculate your answer. What values would you
use for the other forecast variables?
Financial Break-Even Analysis to solve the bid price problem presented in the text, we set the
project NPV equal to zero and found the required price using the definition of OCF. Thus the bid
price represents a financial break-even level for the project. This type of analysis can be
extended to many other types of prob
Calculating Required Savings a proposed cost-saving device has an installed cost of $540,000.
The device will be used in a five-year project but is classified as three-year MACRSâ€™
property for tax purposes. The required initial net working capital investment is $40,000, the
marginal tax rate is 35 percent, and the pr
Project Evaluation Your firm is contemplating the purchase of a new $840,000 computer- based
order entry system. The system will be depreciated straight-line to zero over its five-year life. It
will be worth $75,000 at the end of that time. You will save $330,000 before taxes per year in
order processing costs, and you
Capital Rationing Going all the way back to Chapter, recall that we saw that partnerships and
proprietorships can face difficulties when it comes to raising capital. In the context of this
chapter, the implication is that small businesses will generally face what problem?
Computing Average Cost Everest Ever wear Corporation can manufacture mountain climbing
shoes for $17.82 per pair in variable raw material Costs and $12.05 per pair in variable labor
expense. The shoes sell for $95 per pair. Last year, production was 150,000 pairs. Fixed costs
were $950,000. What were se total productio
Investment Selection Given that Majesco Entertainment was down by almost 92 percent for
2005, why did some investors hold the stock? Why didnâ€™t they sell out before the price
declined so sharply?
Interpreting a Bid Price In the previous problem, suppose you were going to use a three-year
MACRS depreciation schedule for your manufacturing equipment, and you could keep working
capital investments down to only $25,000 per year. How would this new information affect your
calculated bid price?
Scenario Analysis Rollo Transmissions, Inc., has the following estimates for its new gear
assembly project: price = $1,600 per unit; variable costs = $180 per unit; fixed costs = $5.5
million; quantity = 110,000 units. Suppose the company believes all of its estimates are accurate
only to within Â± 15 percent. What val
Stocks versus Gambling Critically evaluate the following statement: Playing the stock market is
like gambling. Such speculative investing has no social value other than the pleasure people get
from this form of gambling.
Comparing Mutually Exclusive Projects Vanda lay Industries is considering the purchase of a
new machine for the production of latex. Machine a costs $2,600,000 and will last for six years.
Variable costs are 35 percent of sales, and fixed costs are $160,000 per year. Machine B costs
$4,900,000 and will last for nine ye
Calculating Break-Even In each of the following cases, find the unknownvariable:
Calculating Salvage Value Consider an asset that costs $468,000 and is depreciated straight-line
to zero over its eight-year tax life. The asset is to be used in a five-year project; at the end of the
project, the asset can be sold for $72,000. If the relevant tax rate is 35 percent, what is the after
tax cash flow fro
Diversifiable and Non diversifiable Risks In broad terms, why is some risk diversifiable? Why
are some risks non diversifiable? Does it follow that an investor can control the level of
unsystematic risk i a portfolio, but not the level of system4uic risk?
Calculating EAC A five-year project has an initial fixed asset investment of $240,000, an initial
NWC investment of $20000, and an annual OCF of â€”$32,000. The fixed asset is fully
depreciated over the life of the project and has no salvage value. If the required return is 11
percent, what is this projectâ€™s equivale
Leverage In the previous problem, what will be the new degree of operating leverage in each
case?
Operating Leverage In the previous problem, what is the degree of operating leverage at the
given level of output? What is the degree of operating leverage at the accounting break-even
level of output?
Nominal versus Real Returns what was the average annual return on large-company stock from
1926 through 2005: a. In nominal terms? b In real terms?
Operating Cash Flow and Leverage A proposed project has fixed costs of $43,000 per year. The
operating cash flow at 8,000 units is $79,000. Ignoring the effect of taxes, what is the degree of

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What are the key concepts related to net present value?

What are the key concepts related to net present value?

What factors are considered when evaluating cash flows from a project?

What factors are considered when evaluating cash flows from a project?

Net Present Value Concerning NPV: a.

Describe how NPV is calculated, and describe the

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International Investment Projects In November 2004, automobile manufacturer Honda

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What are the reasons that compensation plans fail?

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What are the ethical considerations, if any, in this case?

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What can firms do to increase salesperson status?

How does role-playing into ergonomic teams?

Compare and contrast intrinsic and extrinsic motivators.

Why is training necessary for the operators?

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What is an ulterior transaction?

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Can You Fix a Failed Sales Compensation Plan?

What would you do if you were Rob?

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What are the ethical considerations, if any, in this case?

What would you do if you were Bill?

What is meant by just-in-time production?

What ego states exist in transactional analysis?

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What would you do if you were Scott Patterson?

What is remission and how does it affect learning?

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What would you do if you were Rob?

What are the seven types of waste?

What is a crossed transaction?

Is the compensation plan causing a problem? How?

What would you do to correct the situation, if anything?

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Define lean manufacturing.

Formulate and implement new sales roles.

What would you do if you were Kara?

What does SMED mean how does it relate to JIT?

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Should Rick Lester "turn in his keys?"

How should the standards analyst utilize learning curves?

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How is learning quantified?

How does job enrichment differ from job enlargement?

Why Is Motivation A Problem?

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What is the 5S system?

What is the difference between a push and a pull system?

What is a quality circle?

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What would you do if you were Larry Ingram?

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Why do unions often train their own time study analysts?

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Have â€œImagination at Work,â€ â€œEcomagination,â€ and â€œHealthymaginationâ€