The original, first generation Apple Watch was released in 2015. Although the original Apple Watch was designed to compete with various activity trackers at the time, the Apple Watch was sufficiently different for us to assume that there were no close substitutes in 2015.
At the launch Tim Cook announced that the Apple Watch would sell for $500 in the United States and Europe. At that price, q was 1,000, where q was number of watches sold in thousands. An industry group determined that the marginal and average cost of producing the Apple Watch was constant at $100.
In the hope of maximizing its profit, Apple commissioned an economist to estimate demand for the Apple Watch across the U.S. and Europe. The economist determined that the inverse demand function was:
p=600-0.1q.
As it turned out, the economist’s estimation actually allowed Apple to distinguish between customers in the United States and customers in Europe, and they were in fact different. These differences were expressed in their different inverse demand functions:
The U.S. market: pA=900-0.25qA
The European market: pE=400-(1/6)qE
Given this (group) price discrimination strategy, how much
profit did Apple make in each of the two markets? What was total
profits earned?
In: Economics
A large, U.S. based supermarket chain wants to purchase a medium-sized European supermarket chain based in London. The U.S. supermarket has reached a point of saturation in the United States and they are looking for ways to grow. The U.S. based supermarket chain pursues a cost-leadership strategy in the United States and offers customers value through low prices and a vast variety of products. The U.S. based supermarket currently has a global market share of 2% and earns approximately 1.78% in operating income. All 32,500 stores are located in the United States. The company has core competencies in supply chain management and store operations. The leadership team is comprised of executives that worked a Walmart and K-Mart. The London based supermarket has grown year-over-year at a steady rate of 9% for the last 10 years. The chain has 11,500 stores in the U.K., France, Spain, Germany, and Italy. Yet, 10,000 of the stores are in the U.K. The company pursues a focused differentiation across its footprint. The London based supermarket has a global market share of 1.5% and earns approximately 6.2% in operating income. The company has strong capabilities and competencies in follow-up services, which allows the company to adjust its product and service offerings based on local preferences and tastes. This allows the company to charge premium prices that customers are happy to pay. The leadership team at the London based supermarket has core competencies in logistics and distribution that has translated well in sourcing items locally.
Utilizing the information in the question, address the following:
a) Why would U.S. based supermarket want to acquire the London based supermarket chain. Provide at least two points of support.
b) given your limited understanding of the potential transaction (the acquisition), what are some potential issues/challenges that may exist? Provide at least two issues/challenges
In: Operations Management
Using the provided case study (“Why Illegal Immigration Is an Intergovernmental Mess and Will Remain So” in Chapter 4 of the textbook), craft a paper analyzing the issues at play through the lens of public-administration theory and ethics. Specifically consider: What are the issues and perspectives related to immigration in the United States? How is immigration policy developed and what factors impact its development? What concepts in public administration would guide the actions of a public agent charged with enforcing the law? Specifically, you must address the critical elements listed below.
I. Overview: In this section, outline the issues related to immigration in the United States by briefly explaining the context and perspectives related to legal and illegal immigration in the United States.
II. Policy Development and Enforcement: In this section, analyze how immigration policy is developed and the variables that impact its enforcement. A. Discuss the political, social, economic, and cultural variables that impact public policy in immigration reform. B. Analyze ethical expectations of public administrators (such as border-patrol agents) charged with enforcing laws or policies that have been developed, especially in light of intense public opinion or scrutiny.
III. Situational Response: In this section, imagine you are a border-patrol agent. How would your role impact your ability to defend and advocate for your personal opinion on immigration? A. Defend your position on whether public-agency employees give up certain First Amendment rights by virtue of serving in their positions. B. Explain how Miles Law applies in this situation. C. Explain how organizational-culture theory could influence your actions as a border-patrol agent. D. Describe the ways that you could advocate to change the law without breaking it as a border-patrol agent.
In: Operations Management
The MBA decision: Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an inves\tment banker. He feels that an MBA degree would allow him to achieve his goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its student to work while enrolled in its MBA program. Ben currently works at the money management firm of Dewey and Louis. His annual salary at the firm is $70,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 37 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 28 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program. The Ritter College of Business at Wilton University is one of the top MBA programs in the country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $65,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2,000 per year. Ben expected that after graduation from Wilton, he will receive a job offer for about $100,000 per year, with a $10,000 signing bonus. The salary at this job will increase at 4% per year. Because of the higher salary, his average income tax rate will increase to 32 percent. The Bradley School of Business at Mount Perry College began its MBA 16 years ago. The Bradley School is smaller and less well known than the Ritter College. Bradley offers an accelerated, oneyear program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $3,000. Ben thinks that he will receive an offer of $85,000 per year upon graduation, with a $10,000 signing bonus. The salary at this job will increase at 3.5 percent. His average tax rate at this level of income will be 30 percent. Both schools offer a health insurance plan that will cost $2,500 per year, payable at the beginning of the year. Ben also estimates that room and board expenses will cost $15,000 per year at either school. The appropriate discount rate is 6 percent.
Assuming all salaries are paid at the end of each year, what is the best option for Ben – from a strictly financial standpoint?
In: Finance
Ben Bates graduated from college six years ago with a finance undergraduate degree. Although he is satisfied with his current job, his goal is to become an investment banker. He feels that an MBA degree would allow him to achieve this goal. After examining schools, he has narrowed his choice to either Wilton University or Mount Perry College. Although Internships are encouraged by both schools, to get class credit for the internship, no salary can be paid. Other than internships, neither school will allow its students to work while enrolled in its MBA program.
Ben Currently works at the money management firm of Dewey and Louis. His Annual salary at the firm is $53,000 per year, and his salary is expected to increase at 3 percent per year until retirement. He is currently 28 years old and expects to work for 38 more years. His current job includes a fully paid health insurance plan, and his current average tax rate is 26 percent. Ben has a savings account with enough money to cover the entire cost of his MBA program.
The Ritter College of Business at Wilton University is one of the top MBA programs in the Country. The MBA degree requires two years of full-time enrollment at the university. The annual tuition is $58,000, payable at the beginning of each school year. Books and other supplies are estimated to cost $2000 per year. Ben expects that after graduation from Wilton, he will receive a job offer for about $87,000 per year, with a $10,000 signing bonus. The salary at this job will increase at 4 percent per year. Because of the higher salary, his average income tax rate will increase to 31 percent.
The Bradley School of Business at Mount Perry College began its MBA program 16 years ago. The Bradley School is smaller and less well known than Ritter College. Bradley offers an accelerated one-year program, with a tuition cost of $75,000 to be paid upon matriculation. Books and other supplies for the program are expected to cost $4200. Ben thinks that he will receive an offer of $78,000 per year upon graduation, with an $8,000 signing bonus. The salary at this job will increase at 3.5 percent per year. His average tax rate at this level of income will be at 29%.
Both Schools offer a health insurance plan that will cost $3,000 per year, payable at the beginning of the year. Ben has also found that both schools offer graduate housing. His room and board expenses will decrease by $4,000 per year at either school he attends. The appropriate discount rate is 6.5 percent.
Assume that Ben decides to work on the MBA program at Wilton University, what is the present value of direct cost?
| A. |
114,399.06 |
|
| B. |
114,924.17 |
|
| C. |
114,939.06 |
|
| D. |
141,399.06 |
In: Finance
In June 2014, Medtronic, a Minneapolis-based medical device manufacturer, announced that it would join the tax-inversion acquisition parade. A tax-inversion acquisition occurs when a corporation acquires a target firm based in a lower-tax country and, as part of the transaction, moves its legal headquarters to the target firm's nation. After making this move, the combined corporation's taxes are based on the lower rate of its new home country. This move is perfectly legal according to U.S. law as long as the target firm's shareholders own at least 20 percent of the combined firm. About 50 U.S. corporations have undertaken tax inversions over the last 10 years, but the rate of occurrence appears to be increasing.
Medtronic acquired Covidien, an Irish-based medical equipment manufacturer, in January 2015 for S49.9 billion, and moved its legal home to Ireland. Not much else changed. Medtronic kept its corporate headquarters in Minneapolis. But Medtronic benefits from the move in two primary ways. First, while the tax rate on profits of U.S_ corporations is 35 percent, the tax rate on Ireland-based corporate profits is only 12.5 percent. Additionally, the United States is one of only six developed economies that tax the global profits of corporations. If a multinational corporation makes profits in a foreign country, the firm pays taxes on those profits to the foreign government at the rate the foreign country charges. For corporations based in most countries, that is the end of their tax obligations. However, if a U.S. -based firm wants to bring those profits back to its home country either to invest in new facilities or to distribute dividends to its stockholders, it has to pay income tax on the profits earned in foreign markets. The rate the firm pays is the difference in the tax rate in the foreign country and the U S. rate. For example. if Medtronic earned income in Ireland and then repatriated the profits to the United States, it would face a 22.5 percent additional tax rate, the difference between the U.S. and Irish corporate tax rates. Since Medtronic has accumulated S13 billion in earned profits abroad, it could face S-3_5 billion to S4 billion in taxes if it brought those profits home. Thus, corporations, such as Medtronic, undertake tax inversions to save on taxes and, by extension, benefit their shareholders by being able to invest more in the firm to help it grow and/or return higher levels of dividends to shareholders.
Critics, however, point out that these firms are choosing not to pay taxes at the U.S. rates even though they have benefited and will continue to benefit from being American corporations. While inverters change their legal residence, they typically keep their corporate headquarters in the United States and stay listed on a U.S. stock exchange. As a result, they benefit from America's deep financial markets, military might, intellectual property rights and other legal protections, intellectual and physical infrastructure, substantial human capital base, and national research programs. For example, Medtronic won $484 million in contracts with the US. government in recent years and plans to complete these contracts even though it will no longer be an American company, it hires students from top-notch American universities; and it files patents for all of its new technologies in the United States. Critics see the decision to move to a lower-tax country as unethical and unpatriotic. Jack Lew, the former U.S. Treasury secretary, echoed this perspective when he stated, "We should prevent companies from effectively renouncing their citizenship to get out of paying taxes. What we need is a new sense of economic patriotism, where we all rise and fall together."
Discussion Questions
1. Was Medtronic justified in moving its legal home to Ireland?
2. How should firms balance the desire to limit taxes to maximize cash generation with the need to be a good corporate citizen?
3. How should the US. government respond to the increasing frequency of tax inversions?
In: Economics
CASE STUDY:
Dell Technologies From unconventional PC startup to global
technology leader...
From unconventional PC startup to global technology leader, the
common thread in Dell’s heritage is an unwavering commitment to the
customer. Explore the company timeline below to view how this
guiding principle built Dell Technologies and inspired IT solutions
and services that give customers the power to do more.
1984: At age 19, Michael Dell founded PC's Limited with $1,000 and
a game-changing vision for how technology should be designed,
manufactured and sold. As a pre-med freshman at the University of
Texas at Austin, Michael starts Dell Technologies, then doing
business as PC's Limited. He left his dorm room at the end of his
freshman year to devote all of his time to growing the
business.
1985: We design and build our first computer system, the Turbo PC,
featuring an Intel® 8088 processor running at 8MHz, a 10MB hard
drive and a 5.25" floppy drive. We establish customer experience as
a Dell Technologies differentiator with risk-free returns and
next-day, at-home product assistance, among the first in our
industry.
1986: We unveil the industry's fastest performing PC — a 12MHz,
286-based system — at the Spring Comdex trade show.
1987: We open our first international subsidiary in the United
Kingdom.
HISTORY Michael Dell is chairman and chief executive officer of
Dell Technologies, a unique family of businesses encompassing Dell,
Dell EMC, Pivotal, RSA, Secureworks, Virtustream and VMware. Dell
Technologies is an innovator and technology leader providing the
essential infrastructure for organisations to build their digital
future, transform IT and protect their most important information.
With revenues of $74B and more than 140,000 team members, Dell
Technologies is one of the world’s largest IT companies serving the
needs of global corporations and governments to small businesses
and consumers. The company's unique structure allows innovative,
fast-moving startups to co-exist with, and leverage, the global
reach and trusted reputation of the large enterprise. Michael’s
story started when he founded Dell with $1000 in 1984 at the age of
19. Notably quoted as saying that “technology is about enabling
human potential,” Michael’s vision of how technology should be
designed, manufactured and sold forever changed the IT industry. In
1992, Michael became the youngest CEO ever to earn a ranking on the
Fortune 500. Known and admired for his astute business vision and
bold moves, Michael took Dell private in 2013, setting the stage to
architect the largest technology deal in history with the
combination of Dell, EMC and VMware in 2016.
In 1998, Michael formed MSD Capital, and in 1999, he and his wife
established the Michael & Susan Dell Foundation to provide
philanthropic support to a variety of global causes. Michael is an
honorary member of the Foundation Board of the World Economic Forum
and is an executive committee member of the International Business
Council. He is also a member of the Technology CEO Council, the
U.S. Business Council and the Business Roundtable. He serves on the
advisory board of Tsinghua University's School of Economics and
Management in Beijing, China and on the governing board of the
Indian School of Business in Hyderabad, India. He is a board member
of Catalyst and also served as the United Nations Foundation's
first Global Advocate for Entrepreneurship.
Every day, Dell Technologies is pairing technology with innovation
to make a positive social and environmental impact – building a
Legacy of Good. We are committed to putting our technology and
expertise to work, where it can do the most good for people and the
planet, making possible today what was impossible yesterday. Every
team member at Dell shares this commitment because being a good
company is the right thing to do, but it is also right for our
business. We’re creating real value for our customers, employees,
and partners while driving social and environmental good in the
community.
Our customers expect Dell Technologies to think about environmental
impact – that has always been a part of who we are. More than just
creating eco-friendly products or one-off initiatives, we
incorporate sustainability into everything we do – from design to
recycling and every step in between. Through innovation and a
relentless focus on efficiency, we are minimizing our footprint
while helping customers reduce theirs.
Design for Environment: Innovative thinking and a lifecycle
approach to how we design products and source materials are the
first steps in delivering products that help you do more while
minimizing your impact.
Reducing our Impact: How products are made matters – to our
customers, our communities and the planet. We focus on sustainable
operations – using resources efficiently, managing wastes
effectively and working to improve our local environment
Green packaging and Shipping: Our goal is to create a waste-free
packaging experience, using recycled and renewable source
materials, right-sizing to reduce waste, and making it easy for you
to responsibly dispose of packaging through recycling or composting
Reducing your Footprint. Energy efficiency is a top priority across
all our product lines. It helps you get the most from your energy
use, which saves you money, reduce risk, and meet sustainability
goals or regulations.
Recycling your DELL TECHNOLOGIES: We go beyond green IT —
technology that itself leaves a smaller environmental footprint —
to help you look at IT that enables you to address your
sustainability goals and take control of your resources in a way
that creates value.
Ocean Plastics: There are more than 86 million metric tons of
plastic in our oceans right now. See how Dell Technologies is
removing that pollution from our waters and turning it into
materials for our products
Net Positive:
Our strategy isn't to just reduce the bad we do, but to increase
the good. Creating a balance that puts more into the world and
society than what we take from it is creating a net positive.
(Adapted: www.google.com)
QUESTION:
The business environment is defined as all the factors or
variables, both inside as well as outside the organisation, which
may influence the continued and successful existence of the
organisation. The business environment consists of three distinct
sub environments. Justify these sub-environments as they apply to
Dell Technologies in terms of maintaining a competitive advantage.
In: Operations Management
On January 1, 2020, Sandhill Ltd. had 570,000 common shares
outstanding. During 2020, it had the following transactions that
affected the common share account:
| Feb. 1 | Issued 195,000 shares. | |
| Mar. 1 | Issued a 17% stock dividend. | |
| May 1 | Acquired 222,000 common shares and retired them. | |
| June 1 | Issued a 2-for-1 stock split. | |
| Oct. 1 | Issued 64,000 shares. |
The company’s year end is December 31.
QUESTIONS:
A) Determine the weighted average number of shares outstanding as at December 31, 2020.
B) Assume that Sandhill earned net income of $3,227,000 during
2020. In addition, it had 100,000 of 8%, $100 par, non-convertible,
non–cumulative preferred shares outstanding for the entire year.
Because of liquidity limitations, however, the company did not
declare and pay a preferred dividend in 2020.
Calculate earnings per share for 2020, using the weighted average
number of shares determined above.
C) Assume that Sandhill earned net income of $3,227,000 during
2020. In addition, it had 100,000 of 8%, $100 par, non-convertible,
cumulative preferred shares outstanding for the entire year.
Because of liquidity limitations, however, the company did not
declare and pay a preferred dividend in 2020.
Calculate earnings per share for 2020, using the weighted average
number of shares determined above.
D) Assume that Sandhill earned net income of $3,227,000 during
2020. In addition, it had 100,000 of 8%, $100 par, non-convertible,
non–cumulative preferred shares outstanding for the entire year.
Because of liquidity limitations, however, the company did not
declare and pay a preferred dividend in 2020. Assume that net
income included a loss from discontinued operations of $405,000,
net of applicable income taxes.
Calculate earnings per share for 2020.
|
Income from continuing operations |
$___ |
|---|
|
Loss from discontinued operations |
$____ |
|---|
|
Net income |
$_____ |
|---|
In: Accounting
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.00905, while in the 90-day forward market 1 Japanese yen = $0.00913. In Japan, 90-day risk-free securities yield 1%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.
In: Finance
In 2002, the audit frm Arthur Andersen collapsed following charges brought against it in the United
States relating to the failure of its client, Enron. Some other clients announced that they would be
dismissing Arthur Andersen as their auditor even before it was clear that Arthur Andersen would not
survive.
Required
Using the theories outlined in this chapter on the demand for audits, explain some reasons why these
clients took this action.
In: Accounting