Q1. Explain what companies should do to make employees contribute towards the strategic management process in the organization.

Q2. Why do many organizations fail to implement plans successfully?

Q 3&4 : Case: Maestro Pizza

Entering the food industry nowadays became harder than before. The people now pay extra attention to even small details when it comes to food. The variety of food kinds, the way the food being served, the quality of food, the price, and even the place decoration! Furthermore, there are tons of restaurants (competitors) those being in the food industry for decades which makes it even harder to compete with them. Not to mention if a new restaurant will serve one kind of food that already being served by other expert restaurants.

Here we talk about a new restaurant in Saudi Arabia that successfully entered the food industry and managed to compete existed restaurants who are serving the same kind of food for a long time and even considered the best in the world of serving such food! The restaurant's name is Maestro Pizza which is locally founded and operated by Saudi people. This restaurant has successfully dominated the market and stole the throne from underneath of many other pizza restaurants like Pizza Hut and Domino’s Pizza and others.

In the context of the above case analyze and provide solutions to the following questions:

Q3. Bargaining power of consumers.

Q4. Suggest strategies to differentiate Maestro Pizza products and services with its competitors.

You are the manager of a healthcare facility that is considering different payment options for buying supplies for your facility. The annual charges for these supplies is $10,000 and the vendor is offering you three payment options to consider.

option 1: 3% discount if you make the full payment in 30 days.

option 2: quarterly payments at the beginning of each quarter with a service charge of $100 per quarter.

option 3: monthly payments at the beginning of each month with a service charge of 3% for each monthly payment.

Q1: Which of these three options provides the best value for money? Why?

Q2: Payments for these supplies are made from your bank account which has a current balance of $30,000 and earns monthly interest of 0.2%.

a. Which of these three options now provides the best value for money?

b. At what interest rate would you be indifferent between Options 1 and 2?

c. At what interest rate would you be indifferent between Options 2 and 3?

d. Consider the ending balances under each of these three options for interest rate ranging from 0.0% to 2.0%. Develop data tables to compute the ending balances for this range of interest (consider interest increments of 0.2%). Depict your results in a line graph.

Consider the following data for two variables, x and y.

(a) Develop an estimated regression equation for the data of the form  ŷ = b₀ + b₁x.  (Round b₀ to one decimal place and b₁ to three decimal places.)

ŷ =

(b) Use the results from part (a) to test for a significant relationship between x and y. Use α = 0.05. Find the value of the test statistic. (Round your answer to two decimal places.)

F =

Find the p-value. (Round your answer to three decimal places.)

p-value =

(C) Develop an estimated regression equation for the data of the form ŷ = b₀ + b₁x + b₂x².  (Round b₀ to one decimal place and b₁ to two decimal places and b₂ to four decimal places.)

ŷ =

(D) Use the results from part (C) to test for a significant relationship between x, x²,  and y. Use α = 0.05. Is the relationship between x, x²,  and y significant?

Find the value of the test statistic. (Round your answer to two decimal places.)

Find the p-value. (Round your answer to three decimal places.)

p-value =

Use the model from part (c) to predict the value of y when x = 25. (Round your answer to three decimal places.)

Consider the following data for two variables, x and y.

(a) Develop an estimated regression equation for the data of the form

ŷ = b₀ + b₁x. (Round b₀ to two decimal places and b₁ to three decimal places.)

ŷ =

(b) Develop an estimated regression equation for the data of the form

ŷ = b₀ + b₁x + b₂x².  (Round b₀ to two decimal places and b₁ to three decimal places and b₂ to four decimal places.)

ŷ =

(c) Use the model from part (b) to predict the value of y when x = 20.  (Round your answer to two decimal places.)

Read and study all the material and the Case Study: American Investment Management Services in Week 9 before beginning the final exam. “Exhibits” are found in that Case. Then answer the following questions about the Case Study: American Investment Management Services:

#3. Noting that excess capacity is charged back to active accounts, if AIMS scaled back to 3,000,000 active households and planned only a 10% excess capacity reserve for future growth, a large proportion of cost could be eliminated. Estimate how much of total cost for 1999 could be eliminated, based on facts presented in the case.

American Investment Management Services (AIMS)

Kim Davis, Executive Vice President ofAIMS, sat in her 43rdfloor corner office overlooking the Manhattan skyline, reflecting on the challenges facing the investment services business in 2000. Profits had come easily during the longest economic expansion ofthe century. However, signs ofweakness in the economy,

financial market volatility, intense competition for high net worth customers, and the proliferationofcomplex technology-dependent products were all making her life much more complicated AIMS had recently invested in new analytic tools to help think more strategically about its operations and customers. Kim wondered how much the new analytic approach would really impact business decision-making. Was intensive customer segment analysis a real opportunity orjust another "shot in the dark?"

AIMS is one of the larger investment services providers in the U.S., approaching $500 billion in assets in 2000. Ofthis total, a little more than halfwas in mutual funds and the balance in brokerage accounts. This case deals with customer profitability assessment for AIMS' 3.9 million households, up from 1.8 million in just four years. Until I999, AIMS had no system for measuring the profitability of any specific customer.

SEGMENT A TION

AIMS spanned two separate and very different product lines (mutual funds and full-line brokerage services), but that was only one element of the complexity it faced. In addition to this product complexity, it also spanned three distinct "distribution channels" (Call Centers, Full Service Branches, and E-business), and a complex array of customers with diverse asset holdings, trading patterns, investment objectives and service requirements. There was no particularly sharp focus on what kind of households to add. The basic idea was high wealth, but that was not pushed exclusively at all. Basically, AIMS wanted to do business with the same 2 million American households (over $1 million in invested assets) that 2 I other major financial services firms were pursuing.

In I999, AIMS introduced segment analysis, starting with a four-way segmentation that mixed three different dimensions: asset holdings, trading activity and age (as a proxy for investment objectives). The first segment was any household with more than $500,000 in assets under management at AIMS ("High Net Worth," or "HNW''). Failing this test, the second segment was households trading more than 36 times in I998 ("Active Traders," or "AT"). Failing this test as well, the third segment was households where the principal customer was already retirement age (60 years old). Finally, customers failing all three of these tests comprised the fourth segment-all other, termed "Core" customers. "Core," with more than 70% of all households, was the largest segment.

The primary role of any segmentation is to facilitate analysis leading to management actions tailored to the specific needs of defined customer subgroups. No particular segmentation is ever beyond dispute. Whatever approach is chosen necessarily emphasizes some distinctions and de­ emphasizes others. But, the AIMS segmentation was particularly contentious on two grounds: I) it segmented current customers rather than a market. It is as if Procter & Gamble were to segment the detergent market based on how many pounds of Tide are purchased; 2) the sequence specific classification scheme meant that labels could be misleading: for example, the segment Active Trader applies only to households which are not each HNW. And, "Retiree" applied only to households which were not each HNW or AT.

2

AIMS

FINANCIAL RESULTS

As shown in Exhibit I, AIMS did quite well in 1999. Net margin afteJ tax was about $156 million on an underlying equity investment of about $625 million. But, 1999 represented the height of the prolonged bull market. The year 2000 was projected to be much less bullish, and most Wall Street observers envisioned the next few years to be much less rosy than the previous ten.

Even in 1999, performance was not consistent across all the customer segments. Pre-tax margin ranged from a high of48% for HNW, to only 6% for Retirees and minus 4% for Core.

The revenue breakdown across segments in Exhibit I is based on actual identification with individual customers. The expense breakdown starts with an annual "unit cost" study that uses "Activity-Based Costing" (ABC) principles. The study first assigned all operating costs from the General Ledger to specific processes or "activities." Then, the activity costs were divided by throughput measures for each activity, to create "cost per unit of activity" for each sub-stage of each process. This process is illustrated in Exhibit 2 for estimated costs for 2000. Individual unit costs were then multiplied by throughput totals for each segment and aggregated to provide total expenses per segment as shown in Exhibit I, a report format which was new at AIMS in 1999.

THE, CUSTOMER/PRODUCT PROFITABILITY INITIA TIVE

As a management report, Exhibit I was too aggregated to identify actionable issues. In 2000, AIMS undertook a project to take customer/product profitability reporting down to the individual household level to provide more useable, timely, and integrated information for decision­ making. The new system combined unit costs from the annual ABC study with current actual household activity and attributes (e.g., products held, services used, number of trades, number of rep-assisted phone calls) extracted from the Marketing Database to generate profitability by household. The data then were exported into easily queried online analytical processing (OLAP) "cubes." OLAP cubes allow profitability analysis of the intersections among customer attributes, product/service attributes, and channels ofdistribution.

Exhibit 2, which illustrates the first step in this n.ew .system (unit costs across processes), is highly s1mpltfied for purposes of the case. As shown, a "driver" was chosen to proxy the activity in each process­ telephone calls as the driver of activity in the Call Center, for example. Next, a count was made of the total estimated units of the activity for 2000 for each driver­ 7~.l million calls for the Call Center, for example. Fmally, the total cost for the process was divided by the total activity count to calculate cost per unit of activity for that process.

Some ofthe assignments ofcosts to activities and some of the activity measures are "soft," but the activity costs tagged to individual households based on actual household activity are conceptually plausible and at least directionally correct. Similarly, product-specific and service-specific revenues are driven down to a household level. Household profitability calculations are thus based on actual asset holdings, fee-based services consumed and activity usage. The actual system in use allows for 11 categories o f customer revenue and 70 categories o f process cost.

Conceptually, Exhibit 2 represents "long-run average cost" for each activity. It does not attempt to portray marginal or incremental cost because it is not intended for use in short-run cost-volume-profit (CVP) analyses. Since very little cost at AIMS is variable with short-run volume fluctuations anyway, short-run CVP analysis is really just based on revenue changes.

Almost all costs are "step costs" which go up (or down), in chunks as capacity is added to (or deleted from) the system. In a business as fast-growing as AIMS has been in recent years, capacity is typically being added every year in many places across the process value chain ahead o f usage requirements. Thus, there is almost always excess capacity in the system. And, the extent of excess capacity varies across processes, depending on where growth has been fastest and where recent expansions have been made. The analysis in Exhibit 2 divides current cost by current throughput to calculate unit cost. The analysis thus charges any excess capacity to the current users of the process. This is debatable, conceptually, but is not recognized as a practical problem at AIMS.

The expense base grew substantially faster than throughput volume between 1995 and 1999 in anticipation of even greater future growth. In 1995, ~here was about 10% excess capacity (on average) in the operating expense base. Capacity grew at a compound rate of about 26% from 1995 to 1999, versus households growth at about 21%. As a result, excess capacity in 1999 was a much larger percentage of the expense base, across branches, the call center, on-line activity, transactions processing and account maintenance activity. Kim wondered how much of operating capacity was devoted to unprofitable customers.

THE SEGMENTATION REFINEMENT

INITIATIVE

Another new initiative in 2000 to enhance customer profitability analysis involved further refining the segmentation. The goal was to better identify customer clusters that would be responsive to specific managerial actions. Kim Davis was chairing the task force coordinati~g this effort. The primary four-way segmentation was expanded to 11 categories as shown below.

AIMS

3

High Net Worth(> $500,000 ofassets under management) I. (16,000 Households)> $2,000,000 in assets under

management
2. (141,000 Households) - $500,000 to $2,000,000

Active Traders(> 36 trades per year)
3. ( 9,000 Households) - more than 200 trades 4. (12,000 Households) - 60 to 200 trades
5. (19,000 Households)- 36 to 60 trades

Retirees
6. (262,000 Households)- $100,000 to $500,000 in

assets under management
7. (607,000 Households)< $100,000

Core
8. (426,000 Households)- $100,000 to $500,000 in

assets under management
9. (1,762,000 Households) - "Boomers" (40 to 59 years

o f age)
10. (434,000 Households)- "Young Professionals"

(under 40 years o f age)
11. (192,000 Households) - All Other, including

employees

CUSTOMER PROFITABILITY ANAL YSIS

As noted earlier, although the company was very profitable in 1999 as the ten-year bull market continued, the senior management group was concerned about the tremendous range o f profitability across customer segments and about the potential for substantial profit erosion when overall markets slowed down, as was widely anticipated over the next few years. Kim challenged the management team to analyze customer mix carefully to identify problem areas and potential corrective actions.

One new management report now being produced each quarter showed income statements for each of he eleven segments broken down by deciles, starting with the most profitable 10% of households and ending with the least profitable 10%. Not surprisingly, the tenth decile in all eleven segments was unprofitable, even before considering any allocation of marketing expenses directed at acquisition of new customers. It was generally agreed that profitability analysis of current households should exclude all expenditures directly related to new households-either "prospecting" expenses in marketing

or new account set-up expenses in the back office. When the segmentation was ignored, 75% of the bottom decile customers were in the Core segment and 80% had less than $100,000 in assets under management.

The wide range ofprofitability across deciles and segments is summarized in Exhibit 3 for 1999. The aggregate loss on all unprofitable households in 1999 was $248 million. Obviously, unprofitable households are an important concern for AIMS. Kim Davis wanted to identify the roots ofthe problem as clearly as possible.

At a casual level of analysis, an unprofitable household suggests one oftwo responses:

• "Fire" them, because AIMS does not want customers on whom it loses money.

• "Do nothing," because there is usually some compensating business reason for keeping .them-the "loss leader" concept. It is possible to construct a long list of reasons to choose to

keep any one currently unprofitable household. At a deeper level of analysis, an unprofitable household suggests that AIMS change its behavior (or the household's behavior) to convert the household to profitable status. In general, there are three ways to convert unprofitable households into profitable ones:

• Raise prices.
• Substitute less expensive for more expensive

services.
• Reduce the cost of delivering some (or all)

services.
Exhibit 4 presents activity profiles o f six

individual tenth decile households chosen to highlight management problems across different segments. Each household presented in Exhibit 4 proxies for thousands of households with the same general profile. The activity profile of the "average" account is also shown for comparison.

Preliminary discussions about "improving customer profitability" focused on the 2000 forecast for representative "problem households" such as those depicted in Exhibit 4. Management wanted to consider both revenue enhancement proposals and service containment proposals.

Potential Account Profitability Enhancement Programs

l)

2) 3)

4)

5) 6) 7)

Charge $15. per rep-assisted call, over 50 calls per year (22,000 l0th Decile Households generate more than 50 calls/year)
Charge $.02 per quote over 100 per transaction Charge a minimum annual fee on brokerage assets or mutual fund assets of $200 or 20 BP, whichever is greater (a fee for the right to trade, even when trading is very inactive)

For customers who generate less than $560. revenue per year (the average), limit access to branches and customer representatives:

charge $100. for branch consultations
- route all incoming calls to the automated

answering service, bypassing account reps Charge $.75 for automated calls over 300 per year.

Charge $1.25 for on-line visits over 10 per transaction.
Set a minimum balance for all new accounts of $50,000 of assets invested (perhaps exempt persons under 35 years old), and a minimum balance of $75,000 of assets invested for persons over 45 years old.

4 AIMS

(Research indicated that AIMS only had about 40% of the invested assets of its custo)llers, on average. The other 60% was invested elsewhere.)

Each ofthese proposals was modeled on charges levied by one or another of AIMS' major competitors, including Charles Squibb, Morton Staley Dan Withers, Merry Lurch, or United Express. Other competitors such as Towncorp Bank or County Road Financial Services approached this problem by limiting their offer of investment advisory services to customers with more than $1 million in invested assets. A good question was why AIMS bothered at all with low net worth customers when so many of them were unprofitable now and likely to remain so.

Questions: Please answer in depth

1. What managerial insights about profitability per household can you extract from Exhibit 3?

2. a) Using ABC analysis, and the information in Exhibits 2 and 4, calculate the loss per household for the six customer profiles per Exhibit 4. Round your calculations to the nearest dollar. b) What are two specific management actions for each of the six customer profiles that would substantially improve the profitability? Calculate the impact of these actions to the nearest dollar.

3. Noting that excess capacity is charged back to active accounts, if AIMS scaled back to 3,000,000 active households and planned only a 10% excess capacity reserve for future growth, a large proportion of cost could be eliminated. Estimate how much of total cost for 1999 could be eliminated, based on facts presented in the case.

4. What are your overall recommendations to top management based on the customer profitability information?

Hi! so for this question the things that need to be completed are: General Journal, Income statement, statement of changes in retained earnings.

For the general journal i only need the adjusting and closing entries done i understand the rest

Prepare Journal Entries for the following transactions:

Australia’s east coast drought will cut next season’s Canola production. But if rain returns, the crop could bounce back the following season. The global price of Canola is forecast to rise as a result of the fall in production.

1. The market for Canola, it could be argued, follows the required features of a perfectly competitive market. List three features of an “idealized” perfectly competitive market that apply to the market for Canola.

2.Describe the canola market as a whole and the cost and revenue of one farm in 2020, assuming that all firms are making zero economic profit. Use well labelled graphs to assist your explanation.

• Briefly explain the three types of financial statements used by businesses and explain the balance sheet in more details (200 words)
• For the following corporation ABC, prepare Income statement, Retained Earning statement, and Balance sheet statement from the following information data for the year ended Dec,31, 2018

Service revenue   $51,000
Accounts receivable   $12,000
Accounts payable   $6,000
Building rental expense   $27,000
Notes payable   $15,000
Common stock   $30,000
Retained earnings   ?
Equipment   $48,000
Insurance expense   $3,000
Supplies   $3,600
Supplies expense   $600
Cash   $6,000
Dividends   $1,800

When the government of Tradeland decides to impose arn import quota on foreign cars, three proposals are sug gested: (1) Sell the import licences in an auction. (2) Distribute the licences randomly in a lottery. (3) Let peo- ple wait in line and distribute the licences on a first- come, first-served basis. Compare the effects of these policies. Which policy do you think has the largest deadweight losses? Which policy has the smallest deadweight losses? Why? (Hint: the government's other ways of raising tax revenue themselves all cause dead- weight losses.)

1. What is the accounting equation?

2. Who are the internal users of a company’s financial information? What kind of

decisions do they need to make using financial information?

3. What are the four major financial statements of a corporation?

4. GAAP principles and concepts

5. What are the requirements of the Sarbanes-Oxley Act?

6. What is IASB?

7. What are assets? What are prepaid expenses? Examples?

8. What is a liability? What is an unearned revenue? Examples?

9. What are the three basic elements of the balance sheet?

10. Which financial statement reveals the results of a company’s operations?