Identifying a Contract

Consider each of the following scenarios:

Required:

1. Determine if a contract exists for each of the scenarios.

2. If it is determined that a contract exists but the seller believes it is probable that it will not collect the expected consideration, how does this affect the seller's ability to recognize revenue?

If it is probable that the seller will not collect the expected consideration in exchange for goods or services that it has promised to transfer to the customer, any amounts that the seller does not expect to collect will the transaction price. This adjusted transaction price will be the starting point to apply the remaining steps of the revenue recognition model.

Check My Work1 more Check My Work uses remaining.

The RMSE on the test set is 51.279 and the RMSE on the Validation Set is 56.455. Compare the two and please comment.

The average error on the test set is 1.017. What does it suggest?

Describe target market for product/service for Starbucks

IN THE DECADE between 2005 and 2015, LEGO—the famous Danish toy company—grew fivefold from some $1 billion in revenues to $5 billion (see Exhibit MC12.1). Rediscovering, leveraging, and extending its core competence allowed a successful revival for a company that was floundering in the early 2000s. How did LEGO construct a successful turnaround? To answer this question, we first need to understand a bit of the history of this Danish wonder company.

The LEGO company was founded in 1932 by Ole Kirk Kristiansen. The name is a contraction of the Danish words Leg godt, which means “play well.” Only later did LEGO executives realize that le go in Latin also means “I assemble.” Throughout its history, LEGO has had numerous formidable competitors, but it has outperformed all of them. Tinkertoys were more complex, Lincoln Logs were limited in what could be constructed, traditional blocks had nothing to hold them together and were too large to show much detail. LEGO bricks were the right balance of simplicity, versatility, and durability.

LEGO competes for the attention of children and their parents who buy the product. Moreover, there is also a sizable group of adult LEGO fans. In the wake of the personal computer revolution in the 1990s, however, the popularity of LEGO began to wane because of attractive alternatives for children such as gaming consoles and computer games. By 1998, LEGO was in trouble. The Danish toymaker hired a highly touted turnaround expert to change its fortune. Unfortunately, he had no background in the toy industry. To make matters worse, the new executive decided that LEGO’s hometown of Billund, Denmark, (with 6,000 people) was too provincial. He continued to live in Paris and either commute or run the company remotely.

Things at LEGO went from bad too worse. It started hyperinnovating and diversified into too many areas, too quickly, and too far away from its core. Among a whole slew of other innovation failures, the company created a Saturday morning cartoon called “Galidor,” which flopped. During this time period, it also decided to become a lifestyle company and to offer LEGO-branded clothing and accessories.

LEGO’s Turnaround

By 2003, LEGO was on the verge of bankruptcy. To avoid this fate, the closely held private company, owned by the Kristiansen family since its inception, needed to do something drastic and quickly. Almost out of desperation, it hired Jørgen Vig Knudstorp as CEO. His résumé was quite unusual to say the least: He was only 35 years old (in comparison, the average age for a Fortune 500 CEO is 55 years), held a doctorate in economics, and was a former academic. Knudstorp had transitioned to McKinsey, one of the world’s premier strategy consulting firms.

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Knudstorp decreed that LEGO must “go back to the brick” and focus on core products. As a result of the strategic refocusing, LEGO divested a number of assets including its theme parks. It also drastically culled its product portfolio by almost 50 percent, from some 13,000 pieces to 7,000. At the same time as Knudstorp focused LEGO again on its fundamental strengths, he was also careful to balance exploitation—applying current knowledge to enhance firm performance in the short term—with exploration—searching for new knowledge that may enhance a firm’s future performance. This allowed LEGO to improve the performance of traditional product lines, while at the same time to innovate, but this time in a much more disciplined manner.

In particular, LEGO increased sales of its well-known existing products by strengthening the interoperability of various LEGO pieces with other sets to encourage user innovation and creativity. To drive innovation, LEGO has brought its adult fans into the new product development process to leverage crowd-sourcing—obtaining ideas from a large fan base using online forums and other Internet-based technologies. To drive future growth, LEGO under Knudstorp has been much more careful with its product extensions. In the past LEGO had licensed its brand freely to other brands, including Star Wars, Indiana Jones, Harry Potter, the Lord of the Rings, Batman, the Simpsons, and Iron Man. The problem was that the benefits from these licensing agreements accrued mainly to the existing brands, because LEGO did not own the more critical intellectual property. Knudstorp focused on owning and leveraging the core intellectual property. As a case in point, The LEGO Movie in 2014 was a particular high for the company, grossing $500 million on a $60 million budget in the first year alone. Unlike in previous movie tie-ins, LEGO owned the intellectual property, which meant that LEGO did not need to split profits with existing brands.

Challenges

Although LEGO has grown fivefold since Knudstorp took over, it faces a number of challenges. LEGO needs to strengthen its triple-bottom-line performance (along economic, social, and ecological dimensions) and address globalization challenges.

LEGO must address ecological concerns in the face of growing consumer criticism: Its signature bricks are made from petroleum-based plastic. The company is searching for an environmentally friendly material to replace its bricks that date back to 1963. To overcome its relatively large carbon footprint, the company is spending millions on a 15-year R&D project in hope of finding an eco-friendly alternative. The goal is to invent and then be able to manufacture bricks cost-effectively from a new bio-friendly material that will be virtually indistinguishable from the current blocks. It is a difficult problem to solve because LEGObricks are precisely engineered to Page 459four-thousandths of a millimeter, hold a large range of colors well, and even have a particular sound when two pieces are snapped together.

To continue to grow, LEGO must become stronger in emerging growth markets such as China. LEGO is a comparatively new entry into China because of the fear that knockoff bricks have sufficiently damaged its brand. Knockoffs, which are rampant in China, are of inferior quality and even have injured some consumers. Yet, with growth in Western markets plateauing and a larger number of Chinese entering the middle class, this market opportunity is critical to LEGO’s future success. Moreover, Chinese government officials endorse LEGO as a “mind toy,” which helps children to develop creativity. The hope is that creative children will grow up to drive innovation in firms, something many critics say Chinese companies lack. In addition, Chinese parents and grandparents are eager to spend money on things that are perceived to help their offspring to excel academically. In general, parents around the globe are more than happy to spend money on games that get their children away from mobile devices, computers, and game consoles.

To take advantage of the growth opportunity in China and other Asian countries such as India and Indonesia, LEGO opened offices in Shanghai and Singapore as well as a factory in Jiaxing, China. To address the globalization challenge more generally, LEGO also needs to internationalize its management. At this point, it is a local, small-town company that happened to be successful globally, especially in the West. LEGO hopes to become a global company that happens to have its headquarters in the 6,000-people town of Billund, Denmark.

DISCUSSION QUESTIONS

1.  Why did LEGO face bankruptcy in the early 2000s? In your reasoning, focus on both external and internal factors.

2.  What is LEGO’s core competence? Explain.

3.  Apply the core competence–market matrix to show how LEGO leveraged its core competence into existing and new markets under Jørgen Vig Knudstorp, who was appointed CEO in late 2004.

4.  In terms of revenue growth, LEGO experienced a competitive advantage over both Hasbro and Mattel since 2007 because it grew much faster. What explains LEGO’s competitive advantage?

5.  What must LEGO do to sustain its competitive advantage in the future? One avenue to tackle this question is to think about diversification, both along products but also geography. Another avenue is partnerships such as strategic alliances or even acquisitions. What lessons from LEGO’s past should guide its future diversification?

Consider a hypothetical company who is considering itex expansion in India (soft drink company)

Need the below information

Working Condition

a)Employee-employer relation

b)Employee participation

c)Salaries,Wages and benefit

:250 words

No copy please.Use your own words.

Last week you ordered design software for your boss, Martin Soderburgh, at ArtAlive, the small art consulting business where you work. As he requested, you used his Visa card to order Adobe Design and Adobe Photoshop from an Internet vendor, PurelySoftware.com.

When you didn’t receive the usual e-mail order confirmation, you called the company’s toll-free number. The operator said the company’s website was having problems, and he took a second order over the phone: $649 for Adobe Design, $564 for Adobe Photoshop, including tax and shipping. Four days later, ArtAlive received two shipments of the software, and your boss’s credit card was charged $1,213 twice, for a total of $2,426.

Your task: Strictly speaking, you did authorize both orders. But you understood during the phone call that the first order was canceled, although you have no written proof. Send a persuasive letter to PurelySoftware (create a plausible address for both your company and PurelySoftware’s) requesting (1) an immediate credit to your boss’s Visa account and (2) a postage-paid return label for the duplicate order.

CASE STUDY

Naperville Hardware Distribution

Matt Weber and Quinn Domyancic, CEO and COO respectively of Naperville Hardware Distributors (NHD), were frustrated with their fourth quarter financial results. At the beginning of the quarter they had been enthusiastic about the profit picture for the company. The economy had been in an economic slump for several years, but the first quarter results of this year had shown a positive upturn in sales. The second and third quarter results were even better. Matt and Quinn had been almost exuberant even though profits had not shown much improvement. They both felt the profits in the fourth quarter would improve significantly because they had carryover expenses from the previous period, which they covered with revenue generated during the second and third quarters. While their net profits had again improved in the fourth quarter, the results were not what they expected.

NHD purchased the various hardware and plumbing products that they distributed from several manufactures located in Indiana, Illinois, and Wisconsin. They purchased in truckload quantities and had the items moved to a warehouse facility that they maintained in Naperville. They also operated a store that was contiguous to the warehouse plumbing contractors as well as some retail customers who did their own remodeling and repairs. NHD would make deliveries to customers in the greater Chicago area, especially builders and plumbing contractors.

Matt and Quinn asked their CFO, Carl Weber, do a “deep dive” on their costs for the last three years. Carl also did some benchmarking for them. Carl came to the conclusion that NHD was spending too much money on transportation and related distribution service. NHD was currently utilizing a third party logistics services company, LMZ for transportation (inbound and outbound). Carl recommended that they “in-source” all the transportation services.

Matt and Zach were surprised by Carl’s conclusion about the outsourcing of their transportation services because they had been dealing with LMZ for about 10 years. Private transportation service and order fulfillment were not among their core competencies. They had some reservations. Carl pointed out that they had options that they could consider including leasing equipment and drivers.

CASE QUESTION

1. Matt and Quinn have hired you as a summer intern to evaluate their options and requested you to write a short report presenting the opportunities and challenges they would face in pursing Carl’s recommendation. They also asked you to make your own recommendation based upon your analysis

Show all work in Excel With formulas used in cells

Question Set 2.

A manufacturing operation must periodically purchase bulk quantities of washers. The washers are purchased in boxes of 1000 and are consumed at a constant rate. The operation expects to purchase 20,000 boxes over the coming year. Each box costs $120, the annual holding cost per box is $15, and the cost of placing an order is $120 (regardless of the quantity ordered). For the following questions, use the basic economic order quantity model (without quantity discounts).

1. What is the economic order quantity (in boxes)? (2pts)

2. Calculate the annual inventory holding costs based on the average inventory level and annual holding cost per box. (2pts)

3. Calculate the annual inventory ordering costs based on the number of orders expected to be placed during the coming year. (2pts)

4. Create a data table showing the total inventory costs (only) for order quantities varying from 100 to 1200 (use a step size of 50). You must use a data table structure to receive full credit for this problem. If you have any doubt as to what a data table is, please ask your lab TA. (8pts)

5. Create a scatter chart (use the one with markers and smooth lines) showing how total inventory costs are a function of the order quantity. Be sure to label your axes appropriately. (6pts)

1) Give an example of the following types of decisions that you have had to make (personal or work-related):

Low consequence work-oriented

High consequence work-oriented

2) Give an example (personal or work-related) for each of the following types of problems that you have experienced.

Low consequence people problem

High consequence people problem

3) Give two specific examples on what the supervisor at your workplace could do to develop the potential in his or her subordinates.

4) List 10 tasks that you have to do right now (home, work, school, etc). Use the ABC system to label the priority of the tasks. Then use the Urgent/Important matrix to prioritize.

Lane and Louis were limited partners in a real estate venture. After the business was in financial difficulty, these limited partners had two meetings with the general partners to discuss the problems of the venture. In addition, Lane visited the construction site and “obnoxiously” complained about the work that was being conducted. Do these actions constitute taking part in the control of the business so that the limited partners become liable as general partners? Explain.

The United States Department of Agriculture (USDA), in conjunction with the Forest Service, publishes information to assist companies in estimating the cost of building a temporary road for such activities as a timber sale. Such roads are generally built for one or two seasons of use for limited traffic and are designed with the goal of reestablishing vegetative cover on the roadway and adjacent disturbed area within ten years after the termination of the contract, permit, or lease. The timber sale contract requires out sloping, removal of culverts and ditches, and building water bars or cross ditches after the road is no longer needed. As part of this estimation process, the company needs to estimate haul costs. The USDA publishes variable costs in dollars per cubic-yard-mile of hauling dirt according to the speed with which the vehicle can drive. Speeds are mainly determined by the road width, the sight distance, the grade, the curves and the turnouts. Thus, on a steep, narrow, winding road, the speed is slow; and on a flat, straight, wide road, the speed is faster. Shown below are data on speed, cost per cubic yard for a 12 cubic yard end-dump vehicle, and cost per cubic yard for a 20 cubic yard bottom-dump vehicle. Use these data and simple regression analysis to develop models for predicting the haul cost by speed for each of these two vehicles. Discuss the strength of the models. Based on the models, predict the haul cost for 35 mph and for 45 mph for each of these vehicles.

How does social behavior vary in different cultures? Explain with two examples

Business Case Sawchyn Guitars: Can an old business learn new tricks. Case study questions 1. Who are the main players within the organization affected by the challenges? 2. In what business and industry is the company operating? Describe the characteristics of the industry. 3. Briefly describe the history of the organization and milestones   4. What are the strengths and problems facing the organization? What do they do well? What do they need to improve upon? (Use the Internal Perspective from the SWOT as a foundation).     5. What internal circumstances caused or influenced the emergence of the identified problems? (Use the Internal Perspective from the SWOT as a foundation) 6. What external circumstances caused or influenced the emergence of the identified problems? (Use the External Perspective from the SWOT as a foundation) 7. What external influences potentially provide a competitive advantage to create a strategy for differentiation enabling them to compete within the context of their industry? (Use the External Perspective from the SWOT as a foundation, and refer to strategic management chapter in textbook and the YouTube SWOT video) 8. What are the possible solutions to the identified problems? 9. What are the advantages and disadvantages of the possible solutions? 10. If you were the key decision maker in this organization, which solution would you choose, and why?

Sweet leaf tea

In March 2010, Clayton Christopher announced to his employees and all of the fans of sweet Leaf tea that he was leaving the company and handing leadership to an outsider, Dan Costello. Clayton’s final act was to send an email to his employees praising their performance and integrity, which helped grow sweet leaf tea to the number one ready to drink tea at whole foods. In his email, he wrote that after his departure he hoped: We will not sacrifice the magic of this brand and thus jeopardize the love affair we have created with our consumers in order to save a few dollars on our path up the mountain.

Tea Drinkers Heaven

The ready to drink tea market was consistently ranked as one of the fastest growing new product entries in the early twenty- first century. In 2007 total sales if tea equaled $6.85 billion, almost a third od which were ready to drink ( RTD) or bottled tea. Tea is high in antioxidants, has health boosting properties and is either all natural or organic which might be the reason more people were move from traditional carbonate drinks to healthy options like Sweet Leaf Tea . between 2003-and 2008 the RTD category grew by 65 %. In the southern United States, tea has long been a popular beverage choice. It is usually served cold and sweetened. It can be found in any restaurant, mom and pop store or at a road- side stop. From moonshine to big time Clayton Christopher and David Smith were always fans of sweet tea and loved their Grandma’s recipe. But they couldn’t find any good bottled tea that tasted as good as what Grandma made. Their grandma made sweet tea by brewing teabags for3-4 minutes. Then she would pour that freshly brewed tea over ice and add natural sugarcane to make it sweet. In 1997 they founded Sweet Leaf Tea ( SLT) to fill this void, and hoped that others would enjoy their Grandma’s recipe as much as they did. Initially their production and marketing more closely resembled that of a moonshine producer than that of the multi Million- dollar brand it today. They used giant crawfish pans to boil the water and pillowcase as giant tea bags to brew the tea. To distribution the bottled beverages they had an old fun down van. Clayton and David moved Sweet leaf Tea from Beaumont to Austin, Texas after a couple of years and started using an automated system to make the tea. But, they always remained true to their grandma’s recipe. Sweet Leaf Tea’s only competitive advantage was its superior flavor compared to other ready to drink teas like Arizona, Snapple, Lipton, and Nestea. In 2008 SLT had $12 million in revenue and was available in 30 percent of the US market. In March 2009, Nestle Waters purchase as third of Sweet Leaf Tea for $16.5 Million. With large investment from Nestle waters also came a new president, Dan Costello a former executive at Nestle Waters North America. Growing their brand Beverages tend to be low-involvement products, but also a unique in that everyone has a favorite drink, which make it very personal Sweet Leaf Tea had to find ways to develop a following of customers
without a big advertising budget. They focused on sampling at music Festivals, products placement on shows like MTV’s Real World and CBS’s big Brother as well as Making sure they had a clear brand personality. Clayton and David worked with Lyon Advertising to create a brand personality that would represent who they were, laid back and fun, but did not forget Clayton’s Grandma Mimi. SLT could build a large fun base they needed people to try their product. In an interview conducted by Inc. Magazine Clayton stated “ Sampling is the best form of marketing You’ve got to get the product past people’s lips. In 2002 they started partnering with music festivals like Austin City Limit ( ACL ) lollapalooza, South by south West (SXSW) and country Thunder. The folks attending the festivals were thirsty and willing to try new drinks. This also allowed then to target their core target audience – young (25-45) laid back hip, and health conscious beverage drinkers. Initially, ninety percent of their advertising budget went to sampling (Inc). Focusing their sampling program during music festivals allowed them to target masses of people at a time when they were thirsty such as the dead of summer in Texas, Chicago and Arizona. SLT realized very early, however , that they needed to be on store shelves if they wanted their customers to find and buy the product. Selling their product at a few music festivals a year wouldn’t be enough to keep them in business. Their first major store partnership was with whole foods (WF) in 2002, which launched them on store shelves in the greater Texas market. Adi Wilk, the former marketing manager at SLT stated that the Whole Food Partnership “lifted the brand” in 2006 whole food expanded the SLT market to all of their stores in the US. Along with the Whole Foods partnership they also found distribution through partnerships with 7-11 stores, placement in Texas school vending machines, and at army bases. This allowed fans that may have tried SLT at lollapalooza to find it in Chicago, or people that traveled to Austin for ACL or SXSW to find it in New York at their local whole Foods stores. SLT’s communication strategy had traditionally focused on connecting to their customers their partnership with WF, however, helped them grow the brand by being on the shelves of national chain store and also helped them connect to other distributors. But more importantly was that SLT the built a strong connection with their customers, with most of them willing to search far and wide for a bottle for SLT. This truly helped them become a successful company. In 2008, with an infusion of money from Catterton partner, a Connecticut - based private equity firm, and Nestle Waters North America Inc, SLT had expanded their marketing beyond sampling and store partnerships. In 2009 they had three major advertising updates- 1) they launched a new website (2) hired a dedicated Twitter Write (3) and added a team of Facebook managers for the fan page. SLT empowered every employee to be a spokesperson for the brand- with even their receptionist talking a core part in their Twitter and Facebook posts.
Communications Role

Initially the core communication for Sweet Leaf Tea, was through direct to customer marketing at music festivals. The owners, Clayton and David, were at the Music Festivals handing out their product. This allowed customers to meet the people behind the beverage and link friendly faces to a good beverage. Also the association with music festivals may have helped the brand develop the Cool and Fun image they were pushing. Once SLT had expanded beyond the central Texas market they needed to find a way to stay connected to their customers and keep that direct to customer communication active. The infusion of money from
both Catterton partners and Nestle waters allowed them to expand their communication strategy beyond music festivals and their core website. Their Facebook fans matched the same target audience they first had a t music festivals. Their blog, Facebook, and Twitter pages allowed them to continue that face to face communication Clayton and David started at the music festivals, but in the digital world. Their Facebook and Twitter communication reflected the brand and the Culture of the Company. At the time, these two sites were used for announcement about the brand or to communicate special evet taking place during music festivals. As an example during 2009 SXSW they also used Twitter to announce a free concert and used Facebook to get people to RSVP to the event. In one week they had 4,500 people registered on Facebook for the free concert. Another advertising advance SLT made in 2009 was using mobile technology to get consumers to search for their product and receive free sample. SLT was one of the first companies to give away real samples using Gowalla Gowalla was a location game that encouraged people to find a virtual item in a real-world place. Gowalla allowed then to use virtual sampling of a product and connect it to real world sampling.

Questions :

1- What are the strength and weakness of SLT’s corporate Culture in the terms id communications, as described in the case ? 2- Considering the relationship the brand had with its audience, should Clayton have reached out to customers to announce he was leaving ? 3- What challenges do you see for SLT’s new management ? 4- What role should corporate communication paly at SLT to help the company advance its strategic goals? 5- As clayton’s replacement would you change the way SLT communicated with its customers, or who was allowed to ? why or why not ?

1) The widespread success of chains such as Buffalo Wild Wings and Wingstop indicates consumer demand for Buffalo wings is substantial and growing. Buffalo wings, of course, have nothing to do with buffalos—they are fried chicken wings coated in various types of generally hot sauces. How does the increase in demand for Buffalo wings affect the costs of a restaurant like Chick-fil-A, which does not sell them but sells sandwiches made from chicken breasts?

3) The managers of the Glenmorangie Distillery in Scotland advertise their single malt whiskey as “unnecessarily well made.”

a. What do you think this advertising slogan means?

b. If the slogan is literally true, have the managers maximized Glenmorangie’s profit? Why or why not?