Famous Failures in Finance: Shady Trading at Enron Before it was known for its financial problems, Enron, a utility firm operating pipelines and shipping natural gas, had become famous as a business pioneer, blazing new trails in the market for trading risk. In the 1980s the price of natural gas was deregulated, which meant that its price could go down and up, exposing producers and consumers to risks. Enron decided to exploit new opportunities in the commodities business by trading natural gas futures. The natural gas futures that traded on the New York Mercantile Exchange did not take into account regional discrepancies in gas prices. Enron filled this void by agreeing to deliver natural gas to any location in the United States at any time. In addition to trading natural gas and other energy contracts, in the late 1990s Enron began trading weather derivatives for which no underlying commodities existed. These were just bets on the weather. Its weather-derivatives transactions were worth an estimated $3.5 billion in the United States alone. Thanks to its near-monopoly position in derivatives products, Enron’s trading business was initially highly profitable. At one point, the company offered more than 1,800 different contracts for 16 product categories, ranging from oil and natural gas to weather derivatives, broadband services, and emissions rights, and it earned 90% of its revenues from trading derivatives. And unlike traditional commodity and futures exchanges and brokers, Enron’s online commodity and derivative business was not subject to federal regulations. However, Enron eventually lost its unique position as the energy business started to mature. When other firms entered the online derivatives-trading business, they competed by charging lower commissions and exploiting the same regional price discrepancies that had been Enron’s bread and butter. Enron’s trading operations became less profitable. To find new markets and products, the company expanded into areas such as water, foreign power sources, telecommunications, and broadband services. The farther it moved from its core businesses of supplying gas, the more money Enron lost. The company sought to hide those losses by entering into more risky and bizarre financial contracts. When financial institutions began to realize that Enron was essentially a shell game, they withdrew their credit. At that point, despite rosy assurances from its founder and CEO Ken Lay, Enron went into a death spiral that ended in bankruptcy on December 2, 2001. In July 2004 Lay was indicted on 11 counts of securities fraud and related charges. He was found guilty on May 25, 2006, of all but one of the counts. Each count carried a maximum 5- to 10-year sentence and legal experts said Lay could face 20 to 30 years in prison. However, about three and a half months before his scheduled sentencing, Ken Lay died on July 5, 2006, while vacationing in Snowmass, Colorado. On October 17, 2006, as a result of his death, the federal district court judge who presided over the case vacated Lay’s conviction.

Please answer the questions.

Critical Thinking Questions: Could the Enron debacle have been prevented? If so, what actions should have been taken by auditors, regulators, and lawmakers? Please respond to the above questions.

Businesses cost money.   This is especially an issue during the startup phase when little income may be on the horizon, and expenses are mounting.   Discuss, using external sources to back up your assertions, what legal issues are important to consider when an entrepreneur is seeking bank funding, or an Angel Investor, or family funds, or personal funds in order to get the business to the next level.

Give a quick introduction of the Business idea that you will be proceeding with and prepare a staffing plan for the same.

Organization Chart: A pictorial representation on flow of authority and responsibility at various levels of Management. Top-Middle and Lower level management

Since you are a Startup, the staff requirement will me minimal and you are also very cautious on hiring talents!

Word size- not less than 1500 words

Mechanical systems must usually operate over a range of conditions. Unfortu- nately, one or more resonance points may have to be passed through during sys- tem startup to operating state or during system shutdown. How can this type of transitory resonance problem be addressed? What analytical tools could you use to convince someone of your approach?

Think like an Original and/or traveler for a day in your everyday life and pretend that you are Seth Godin preparing your own "This is Broken" speech. Pick one of his categories, and describe one or two things that might seem out of place, ought to be done differently, or begs the question "why?" that might be the trigger for a startup opportunity. Include a picture if you have one.

Colorectal cancer (CRC) is the second most common cancer diagnosed in industrialized nations (Benson et al. 2008). Worldwide, colon cancer is the fourth leading cause of cancer deaths, and it is the second leading cause of cancer deaths in the United States (Janout & Kollarova 2001). Risk of developing colon cancer increases with age; more than 90 percent of cases occur after age 50 (American Cancer Society 2005). A family history of colon cancer is another major risk factor. Individuals with one first-degree relative diagnosed after age 50 have a relative risk of 1.6. That increases to 2.6 if the relative was diagnosed before age 50. The presence of two first-degree relatives diagnosed with colon cancer increases risk further. Relative risk is 3.5 if both relatives were diagnosed after age 50, 5.6 if either or both were diagnosed before age 50 (Wilschut et al. 2011). You are a primary care provider and one of your patients, Mr. Jones, is a 50-year-old male with no history of colon cancer. He has heard about the recommendations for colon cancer screening and has some questions for you. How commonly is colon cancer diagnosed in the United States? Is Mr. Jones at increased risk? The latest statistics from the Centers for Disease Control and Prevention (CDC 2013) report that 136,717 cases of colon cancer are diagnosed annually. Mr. Jones is curious as to whether his gender places him at increased risk. Of those 136,717 cases of CRC, 70,223 were male and 66,494 were female. Of the US population, 148,640,424 are male and 152,711,352 are female. Mr. Jones is also curious about whether his older age places him at increased risk for CRC. Exhibit C.1 reports the cases and population size among males for various age categories (CDC 2013).

Questions

1. Assume a total US population of 301,351,776; calculate the overall incidence rate per 100,000 of colon cancer in the United States.

2. By calculating the ratio of incidence rates we can derive the relative risk of getting CRC (males compared to females), or the number of times more likely males are to get CRC than females. Calculate the incidence rate for males and females and the relative risk (males versus females)

Mini Case: Nike and Sweatshop Labor

Nike, a company headquartered in Beaverton, Oregon, is a major force in the sports footwear and fashion industry, with annual sales exceeding $ 30 billions, more than half of which now come from outside the United States. The company was co-founded in 1964 by Phil Knight, a CPA at Price Waterhouse, and Bill Bowerman, college track coach, each investing $ 500 to start. The company, initially called Blue Ribbon Sports, changed its name to Nike in 1971 and adopted the “Swoosh” logo—recognizable around the world—originally designed by a college student for $35. Nike became highly successful in designing and marketing mass-appealing products such as the Air Jordan, the best selling athletic shoe of all time.

Nike has no production facilities in the United States. Rather, the company manufactures athletic shoes and garments in such Asian countries as China, Indonesia, and Vietnam using subcontractors, and sells the products in the U.S. and international markets. In each of those Asian countries where Nike has production facilities, the rates of unemployment and under-employment are relatively high. The wage rate is very low in those countries by U.S. standards—the hourly wage rate in the manufacturing sector is less than $ 2 in each of those countries, compared with about $ 35 in the United States. In addition, workers in those countries often operate in poor and unhealthy environments and their rights are not particularly well protected. Understandably, host countries are eager to attract foreign investments like Nike’s to develop their economies and raise the living standards of their citizens. Recently, however, Nike came under worldwide criticism for its practice of hiring workers for such a low rate of pay—“next to nothing” in the words of critics—and overlooking poor working conditions in host countries.

Initially, Nike denied the sweatshop charges and lashed out at critics. But later, the company began monitoring the labor practice at its overseas factories and grading the factories in order to improve labor standards. Nike also agreed to random factory inspections by disinterested parties.

Discussion questions:

1. Do you think the criticism of Nike is fair, considering that the host countries are in dire needs of creating jobs?
2. What do you think Nike’s executives might have done differently to prevent the sensitive charges of sweatshop labor in overseas factories?
3. Do firms need to consider the so-called corporate social responsibilities in making investment decisions?

I need an answer to all three questions, please.

Q1: Which of the following was not a policy response to the Economic crisis associated with the COVID-19 Crisis?

Select one:

a. The Fed lowered the policy rate by roughly 1.5 percentage points to nearly zero.

b. The U.S. Congress passed a roughly $3 Trillion economic stimulus package.

c. The Commonwealth of Massachusetts relaxed the balanced budget rule in the State Constitution.

d. The Fed introduced facilities to keep markets liquid by buying assets other than US Treasury Bills.

e. The U.S. Congress increased the amount and the availability of unemployment insurance benefits.

Q2: Consider a typical Mexican corn farmer. In 1993, she farms a small 4-acre plot and sells corn mostly to people in her home state of Oaxaca and across Mexico. After the signing of NAFTA in 1994, which statement most accurately reflects her situation:

Select one:

a. Business boomed, as she began to sell corn not only to customers in Mexico but to customers from the United States and Canada. She expanded her acreage.

b. Although she sold corn to more people after 1994, the business stayed largely the same as United States farmers also sold their corn to Mexico.

c. Cheaper corn flooded into Oaxaca from the United States’ Midwest, and Oaxacans and other Mexicans now purchased lots of corn from the US. No longer able to compete, she had to stop farming corn.

d. It became more profitable to rent her land out to people on AirBnB who wanted to engage in maize-based agritourism.

Q3: During a recessionary crisis, one tool in the Keynesian toolbox is fiscal policy. Some economists advocate for targeting stimulus (either increasing government spending [G] and/or decreasing taxes [T]) towards individuals with incomes on the lower half of the income distribution. They argue that:

Select one:

a. Poorer people have a higher marginal propensity to consume (MPC), and thus increase the overall multiplier and the effectiveness of fiscal policy.  

b. Poorer people will engage in stock buybacks, and increase the value of domestic companies.

c. People will work harder if they are the recipients of government stimulus.

d. No economists actually argue for targeting stimulus towards individuals on the lower half of the income distribution

Your task is to create a Java application that converts a specified amount of one currency into another currency for a user. The application must meet the following requirements:

1. Upon execution, the application shall display a brief welcome message to the user to let her know she is running the currency converter application.

2. The application shall allow a user to convert amounts between any two of the following currencies: United States Dollars (USD), British Pounds (GBP), Swiss Francs (CHF), and Indian Rupees (INR).

3. The application shall prompt the user for the following input: the currency she wishes to convert from (“source currency”); the amount of currency to be converted (“requested amount”) as either a decimal or a whole number (e.g., 21.45, 1.748484, or 34); and the currency she wishes to convert to (“result currency”).

4. The application shall limit the amount of the currency to be converted to no more than 1,000,000 (one million) units of that currency; if the user attempts to enter an amount larger than this number, the application should return a message alerting the user that she has exceeded the maximum amount, and prompt her to enter another amount.

5. The application shall handle incorrect user input (e.g., if the user inputs a character or string for the “requested amount” value) and prompt the user for correct input.

6. The application shall prevent the user from attempting to convert to a “result currency” that is the same as the “source currency” (e.g., the user should be prevented from converting United States Dollars to United States Dollars).

7. The application shall output the following information: the amount of the “result currency” that is equivalent to the “requested amount” in the “source currency”; this amount shall be returned as a decimal figure rounded to two decimal places (e.g., 67.49).

8. The application shall allow the user to exit the program at any time by accepting input of an exit character (for example “Q” for quit) to terminate the program.

9. After the user has successfully converted a currency, the application shall prompt the user to either perform another conversion or terminate the program.

10. Upon program termination, the application shall display an exit message to the user.

Program Data Your program should use the following data for currency conversions.

USD GBP CHF INR

USD 1.000000    1.227902 1.012514 0.013950

GBP 0.814349    1.000000 0.824820 0.011365

CHF 0.987370 1.212602 1.000000 0.013777

INR 71.687245 88.022221  72.582298  1.000000

Thirty years ago, Starbucks was a single store in Seattle’s Pike Place Market selling premium roasted coffee. Today it is a global roaster and retailer of coffee with some 13,000 stores, more than 3,750 of which are to be found in 38 foreign countries. The strategy of its owner was to sell to the company’s own premium roasted coffee and freshly brewed espresso-style coffee beverages, along with a variety of pastries, coffee accessories, teas and other products, in a tastefully designed coffeehouse setting.

In 1995, with 700 stores the United States, Starbucks began exploring foreign opportunities. Its first target market was Japan. Although Starbucks had resisted a franchising strategy in North America, where its stores are company owned, Starbucks initially decided to license its format in Japan. However, the company also realized that a pure licensing agreement would not give it the control needed to ensure that the Japanese licenses’ closely followed Starbucks’ successful formula.

So the company established a joint venture with a local retailer, Sazaby Inc. Each company held a 50% stake in the venture, Starbucks Coffee of Japan. Starbucks initially invested $10 million in this venture, its first foreign direct investment. The Starbucks format was then licensed to the venture, which was charged with taking over responsibility for growing Starbucks’ presence in Japan.

After Japan, the company embarked on an aggressive foreign investment program. In 1998, it purchased Seattle Coffee, a British coffee chain with 60 retail stores, for $84 million. In Asia, Starbucks’ most common strategy was to license its format to a local operator in return for initial licensing fees and royalties on store revenues.

In 2006, Starbucks announced that it believed there was the potential for up to 15, 000 stores outside of the United States, with major opportunities in China, which the company now views as the largest single market opportunity outside of the United States. Currently the company only has 350 stores in China.

1. What could be the main reason that triggered Starbucks to pursue FDI in Britain? .

2. Starbucks decided to pursue international investment through licensing, what would be the cause of that? .

3. Assess the reasons why Starbucks chose to embark on a foreign market expansion strategy outside of the USA.

4. In your opinion what type of international business activity should have Starbucks used? Explain your answer.