Subject: innovation and technology mangement

Case 2 – Mobile Ads

According to eMarketer, mobile ads will top 100 and it accounts for about 16.5 percent of total advertising spending in 2016. The top five spenders of mobile ads are the United States, China, the United Kingdom, Japan and Germany. This number is expected to increase as the worldwide adoption of smartphones continue to grow. In 2015, there were about 2.6 billion smartphone users. This number is expected to top 6.1 billion globally by 2020.

Businesses are increasingly using mobile ads. Location data from mobile devices is the key element for a successful mobile ad campaign. Facebook and Google are two biggest players that generate the highest revenue from mobile ads. PlaceIQ, a technology form headquartered in New York city collects billions of data points from mobile devices and other sources and is able tract potential customers as they move from one retail location to another retail location – such as from one car dealership to another. PlaceIQ is also able to help businesses find out if the ads can translate to an actual visit by a customer. In addition to its huge data set for business, PlaceIQ also offers location data and analytics tools to businesses and allows them to do their own advertising.

Audi is using the Place IQ data to measure how many potential customers will visit its dealerships before and after they have seen ads. They also want to target potential customers who are visiting their competitors’ showrooms. Stacom Media Group is using PlaceIQ in order to find out how mobile location data can be helpful and eventually attract more customers to a business.

Questions:

a)     By 2020 how many smartphones will be existing globally?

b)    Who are the two leading companies that generate the biggest revenue from mobile ads?

c)     How PlaceIQ impact businesses?

d)    Why is Audi using the services offered by PlaceIQ?

e)    Your overall observation and learning from the above case study.

External Linkages, Customer Costing, Customer Profitability

Emery Company sells small machine parts to heavy equipment manufacturers for an average price of $1.70 per part. There are two types of customers: those who place small, frequent orders and those who place larger, less frequent orders. Each time an order is placed and processed, a setup is required. Scheduling is also needed to coordinate the many different orders that come in and place demands on the plant’s manufacturing resources. Emery also inspects a sample of the products each time a batch is produced to ensure that the customer’s specifications have been met. Inspection takes essentially the same time regardless of the type of part being produced. Emery’s Cost Accounting Department has provided the following budgeted data for customer-related activities and costs (the amounts expected for the coming year):

^*This cost does not include the cost of the following "customer-related" activites:

Required:

1. Assign the customer-related activity costs to each category of customers in proportion to the sales revenue earned by each customer type.

Calculate the profitability of each customer type. (Because sales revenues for each customer type are equal, the profitability will be the same for each customer type.)
_________________

2. Assign the customer-related activity costs to each customer type using activity rates. Enter the appropriate activity rates below.

Calculate the profitability of each customer category.

Consumer Reports (January 2005) indicates that profit margins on extended warranties are much greater than on the purchase of most products. In this exercise we consider a major electronics retailer that wishes to increase the proportion of customers who buy extended warranties on digital cameras. Historically, 20 percent of digital camera customers have purchased the retailer’s extended warranty. To increase this percentage, the retailer has decided to offer a new warranty that is less expensive and more comprehensive. Suppose that three months after starting to offer the new warranty, a random sample of 527 customer sales invoices shows that 167 out of 527 digital camera customers purchased the new warranty. Find a 95 percent confidence interval for the proportion of all digital camera customers who have purchased the new warranty. Are we 95 percent confident that this proportion exceeds .20? (Round your answers to 3 decimal places.)

The 95 percent confidence interval is [   , ].

(Click to select)Yes or No , the entire interval (Click to select)is not or is above .20.

In a study of the domestic market share of the three major automobile manufacturers A, B, and C in a certain country, it was found that their current market shares were 50%, 35%, and 15%, respectively. Furthermore, it was found that of the customers who bought a car manufactured by A, 75% would again buy a car manufactured by A, 15% would buy a car manufactured by B, and 10% would buy a car manufactured by C. Of the customers who bought a car manufactured by B, 90% would again buy a car manufactured by B, whereas 5% each would buy cars manufactured by A and C. Finally, of the customers who bought a car manufactured by C, 85% would again buy a car manufactured by C, 5% would buy a car manufactured by A, and 10% would buy a car manufactured by B. Assuming that these sentiments reflect the buying habits of customers in the future, determine the market share that will be held by each manufacturer after the next two model years. (Round your answers to the nearest percent.)

A _____%

B _______%

C _________%

In a study of the domestic market share of the three major automobile manufacturers A, B, and C in a certain country, it was found that their current market shares were 60%, 20%, and 20%, respectively. Furthermore, it was found that of the customers who bought a car manufactured by A, 75% would again buy a car manufactured by A, 15% would buy a car manufactured by B, and 10% would buy a car manufactured by C. Of the customers who bought a car manufactured by B, 90% would again buy a car manufactured by B, whereas 5% each would buy cars manufactured by A and C. Finally, of the customers who bought a car manufactured by C, 85% would again buy a car manufactured by C, 5% would buy a car manufactured by A, and 10% would buy a car manufactured by B. Assuming that these sentiments reflect the buying habits of customers in the future, determine the market share that will be held by each manufacturer after the next two model years. (Round your answers to the nearest percent.)

Between about December 2007 and June 2009, the United States was considered to be in a recession. The U.S. Gross Domestic Product fell approximately 3% from the third quarter of 2008 to the third quarter of 2009. Also, during December 2007 and June 2009, the Standard and Poor’s 500 index dropped by 38% and the unemployment rate climbed from 5% to 9.5%.

The macroeconomic situation affected almost all companies since higher unemployment affected personal consumption, which dropped from 10,140.3 Billion Dollars in Aug 2008 to 9,807 Billion Dollars in June 2009, a drop of 3.8 percent.

Starbucks is one of the companies affected by the December 2007 recession. The following table shows several ratios for Starbucks corresponding to the years 2006, 2007, and 2008. Use a stock price of 10.9 dollars per share for the year 2009.

By using the financial statements provided, calculate the ratios presented in the table for the year 2009 and answer the following questions:

a-       Were sales per dollar of assets impacted by the recession?

a.       Yes

b.       no

b-      , which ratio shows the impact of the recession on sales per dollar of assets?

a.       ROA

b.       Asset turnover ratio

c.       Quick ratio

d.       ROE

c-       Did the company operating profit margin increased, decreased, or was the same, between the years 2007 and 2009?

a.       Increase

b.       Decrease

c.       Did Not change

d-      Did the mix of debt and equity changed for Starbucks between the years 2007 and 2009?,

a.       Yes

b.       no

e-       In what ratio can you see the change in the mix of debt and equity reflected?

a.       Current ratio

b.       Quick ratio

c.       Debt to equity ratio

d.       Payout ratio

f-        Did the value added by management, reflected in market to book ratio, increased or decreased between the years 2007 and 2009?

a.       Increased

b.       decreased

g-       Did the quick ratio increase or decrease between the years 2007 and 2009?

a.       Increase

b.       decrease

h-      Explain why you expect the quick ratio to increase or decrease during a recession?

i-        Use the ratios for the years 2007 and 2009 to explain if, in your view, Starbucks is in a better or worse situation in the year 2009 due to the recession.

j-        What areas should Starbucks improve for the years 2010 onwards, if any?

1 Please briefly discuss: a. methods of dealing with the allocation problem. b. the general rules related to revenue recognition. c. the general rules for allocating tax expenses between periods.

1 Please briefly discuss:

a. methods of dealing with the allocation problem.

b. the general rules related to revenue recognition.

c. the general rules for allocating tax expenses between periods.

General, Inc. leases equipment to different types of businesses. The company generally acquires the equipment and leases the equipment to its customers under long-term sales-type leases. General’s implicit interest in the lease arrangements is 10% annual rate.

General leased its machine that it purchased for $30,900 to a lessee, Oscar Company on January 1, 2018. The lease contract specified annual payments of $8,000 beginning January 1, 2018, the beginning of the lease, and each January 1 through 2020 (three-year lease term). Oscar Company has the option to purchase the machine at the end of the lease term, December 31, 2020, for $12,000 when it is expected to have a residual value of $16,000, considered a bargain purchase amount. The Company’s year-end is 12/31.

Required:

1. Show how General calculated the $8,000 annual lease payments for this sales-type lease.

2. Prepare an amortization schedule that describes the pattern of interest revenue for General, Inc. over the lease term.

3. Prepare the appropriate entries for General, Inc. from the beginning of the lease through the end of the lease term.

2. Consider the following demand schedule for widgets:

What is the price elasticity of demand for widgets between $8 and $10?______ What is the elasticity of demand between $2 and $4? ______ As price decreases, demand becomes more / less elastic. What is total revenue per month at a price of $4?______ A reduction in price from $4 to $2 causes total revenue to rise / fall because demand is elastic / inelastic. If price is currently $2, then a 1% increase in price will cause a______ percent increase / decrease in quantity demanded.