Case in Point: Tim Cook Leads Apple

Tim Cook took the helm of Apple as CEO in 2011 after serving as the company’s Chief Operating Officer. At the time, there were questions regarding how much of Apple’s success was due to its founder, Steve Jobs, and whether anyone could live up to his legacy in terms of financial and innovation success. Since he took over, Cook has had some big successes such as the iPhone 6 which led to record profits in 2014, the Apple Watch, and Apple Pay. In 2018, the company had a market cap of over $920 billion—roughly double that of Exxon Mobile or Microsoft which are both considered major organizations.

It has been written that unlike his predecessor, Steve Jobs, Tim Cook doesn’t crave the spotlight. In fact, he has been described as “one of the nicest and most charitable CEOs out there.” He advises individuals to stay positive and “tune out” the cynics. He argues that if you don’t, “they become a cancer in your mind.” That is not where the differences end, however, between the approaches taken by Tim Cook and Steve Jobs.

Under Cook’s leadership, Apple has taken on more social issues. For example, since Cook took over, Apple began using renewable energy for its operations, stood up to the FBI in defense of user privacy, supported access to education, and advocated for LGBT rights. High school student Rebecca Kahn asked Cook for an interview, and he granted her one. She writes that his “objective in life is to work for some higher purpose.” When asked why she wanted to interview him, Kahn stated, “He is not just in charge of the world's largest tech company, but he personally advocates and stands up for things he believes are right. He travels the world and meets with political and innovative leaders.”

Cook believes in diversity of leadership and leadership approaches. He values transparency, reads customer e-mails (he says they serve to humble you), admits when he’s wrong, and argues that you can only do a few things that rise to the level of “great.” In a speech at the University of Glasgow, Cook had some advice for those in the audience, recommending “You have to find the intersection of doing something you’re passionate about and, at the same time, … is in the service of other people. I would argue that, if you don’t find that intersection, you’re not going to be very happy in life.

Multimedia Extension—Tim Cook Defends Apple’s Encryption Policy

Transcript

Case Discussion Questions

1. What did you know about Tim Cook prior to reading this case? Are you surprised to learn some of these things about his leadership style?

2. Which leadership approaches discussed in this chapter do the best job in explaining his leadership style?

3. Given what you’ve learned about Cook’s leadership style, would you want to work for Apple? Why or why not?

4. Do you think there is a relationship between Cook’s leadership approach and Apple’s success? Explain.

5. What personal characteristics do you think makes Cook an effective leader?

Please help. Thanks

Question 4

With the growing popularity of casual surf print clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “surf lifestyle for the home.” With limited capital, they decided to focus on surf print table and floor lamps to accent people’s homes. They projected unit sales of these lamps to be 7,000 in the first year, with growth of 8 percent each year for the next five years. Production of these lamps will require GH¢35,000 in net working capital to start. Total fixed costs are GH¢ 95,000 per year, variable production costs are GH¢ 20 per unit, and the units are priced at GH¢48 each. The equipment needed to begin production will cost GH¢175,000. The equipment will be depreciated using the straight-line method over a five-year life and is not expected to have a salvage value. The effective tax rate is 34 percent, and the required rate of return is 25 percent. Evaluate the project using NPV.

1. Given the growing popularity of environmentally friendly clothing, two recent MBA graduates decided to broaden this casual surf concept to encompass a “green lifestyle for the home.” With limited capital, they decided to focus on environmentally friendly curtains to accent people’s homes. They projected unit sales of these curtains to be 5,000 per year. Production of these curtains will require $28,000 in net working capital to start. Variable production costs are $20 per unit, and the units are priced at $45 each. The equipment needed to begin production will cost $60,000. The equipment will be depreciated to zero using the straight-line method over a five-year life and is expected to have a salvage value of $5,000. The production will take place in an old warehouse that one of the graduates has inherited. He could have gotten it rented for $100,000 a year. The effective tax rate is 34%, and the required rate of return is 12%. (a) Compute the Payback period, NPV and IRR for this project. (b) How many curtains do you need to sell in order to make this project worthwhile?

MBA 5010 Week 3 Weekly Integrative Assignment

Copper and zinc work equally well as a chemical catalyst to mitigate pollution created in the production of lithium batteries. However, copper is currently 10% more expensive than zinc. And so, zinc is the current preferred material. The following diagrams represent the copper, zinc, and lithium battery markets.

However, some recent advances in pharmaceutical research have substantially increased demand for zinc in pharmaceutical manufacturing.

Using this example, explain how markets see to the most appropriate allocation of resources between competing uses. Limit your response to no more than 500 words. Be sure to include in your response the preceding diagrams, demonstrating the relevant change in each respective market. You may use Word drawing features or draw the diagrams, use your phone to capture them, and then insert them into your response. If you need help, ask. Your answer will be evaluated based on correctness, completeness, and clarity. Be attentive to your writing.

One for the Money…

Does money buy happiness? Several of the 120 employees at Gravity Payments, a credit card processing company based in Seattle, are about to find out.75 The company’s founder, 29-year-old Dan Price, made the news in the spring of 2015 when he decided to bump up the salary of 70 employees to a new “minimum wage” of $70,000. Now, everyone in the company will be making at least $70,000. Some employees at the company, where the average salary was $48,000, doubled their pay, and others got a nice salary increase—probably enough, you’d think, for employees to be pretty happy about! Money = Happiness, or Does It?

Why did Price do it? He said that he had been thinking about employee pay for a while, especially after reading several news reports about the glaring pay disparities between corporate CEOs and employees, which he says struck him as “ridiculous” and “absurd.” Also, Price had read an article on happiness by two Princeton researchers (one a Nobel Prize-winning psychologist) who had surveyed 450,000 U.S. residents on whether money could buy happiness—both as it affected overall happiness but also how it affected day-to-day life. The researchers concluded that people claimed to be happier with each doubling of income but only to a point. But even more interesting was the dollar amount that respondents said would make their daily life more pleasant: about $75,000 a year. Price decided to offer his employees a minimum salary of $70,000. He felt that giving his employees this amount could enable many of them to buy homes and pay for their kids’ educations.

To pay for the salary increase, Price is taking a pay cut from his annual $1 million salary down to $70,000. Also, the company will have to use 75 to 80 percent of its profits to help cover the cost. Some management consultants are questioning the move, wondering if it will affect employee productivity and pay off in the long run. Concerns about what happens to employee motivation include: Will employees be less motivated to work to be promoted to higher levels of responsibility, and would those employees who put in additional effort above and beyond their current tasks lose the incentive to do so (“why should I work harder if we all get the same pay”). And what happens to the CEO’s motivation—would Price himself lose the incentive to want to grow the company? Then, there’s also the question of what happens if the company’s profitability starts to fall. Only time will tell if such issues are even relevant.

Discussion Questions

11-14 Look back at the chapter-opening Management Myth and how it was “debunked.” Evaluate this wage decision in light of that.

11-15 Explain each of the employee productivity/motivation concerns. Which of these do you think is most critical? Why?

11-16 Choose one of the contemporary motivation theories discussed in the chapter and write a description of it for Mr. Price, explaining how and why it would be a good alternative for employee motivation.

11-17 What problem(s) might managers face under this new pay approach and how could they use knowledge about employee motivation to help them deal with those problem(s)?

A marketing company based out of New York City is doing well and is looking to expand internationally. The CEO and VP of Operations decide to enlist the help of a consulting firm that you work for, to help collect data and analyze market trends.

You work for Mercer Human Resources. The Mercer Human Resource Consulting website (www.mercer.com) lists prices of certain items in selected cities around the world. They also report an overall cost-of-living index for each city compared to the costs of hundreds of items in New York City (NYC). For example, London at 88.33 is 11.67% less expensive than NYC.

In the Excel document, you will find the 2018 data for 17 cities in the data set Cost of Living. Included are the 2018 cost of living index, cost of a 3-bedroom apartment (per month), price of monthly transportation pass, price of a mid-range bottle of wine, price of a loaf of bread (1 lb.), the price of a gallon of milk and price for a 12 oz. cup of black coffee. All prices are in U.S. dollars.

You use this information to run a Multiple Linear Regression to predict Cost of living, along with calculating various descriptive statistics. This is given in the Excel output (that is, the MLR has already been calculated. Your task is to interpret the data).

Based on this information, in which city should you open a second office in?

To help you make this decision here are some things to consider:

• Based on the MLR output, what variable(s) is/are significant?
• From the significant predictors, review the mean, median, min, max, Q1 and Q3 values?
  • It might be a good idea to compare these values to what the New York value is for that variable. Remember New York is the baseline as that is where headquarters are located.
• Based on the descriptive statistics, for the significant predictors, what city has the best potential?
  • What city or cities fall are below the median?
  • What city or cities are in the upper 3^rd quartile?

Blossom Corporation provides the following information about its defined benefit pension plan for the year 2020:

Blossom follows IRFS.

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows: 2018 2019 2020 Cost incurred during the year $ 2,400,000 $ 3,600,000 $ 2,200,000 Estimated costs to complete as of year-end 5,600,000 2,000,000 0 Billings during the year 2,000,000 4,000,000 4,000,000 Cash collections during the year 1,800,000 3,600,000 4,600,000 Westgate Construction uses the completed contract method of accounting for long-term construction contracts.

Required: 1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.

2-a.In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred).

2-b.In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred).

2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred).

3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract.

4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. 2018 2019 2020 Cost incurred during the year $ 2,400,000 $ 3,800,000 $ 3,200,000 Estimated costs to complete as of year-end 5,600,000 3,100,000 0 5.

Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information. 2018 2019 2020 Cost incurred during the year $ 2,400,000 $ 3,800,000 $ 3,900,000 Estimated costs to complete as of year-end 5,600,000 4,100,000 0

In 2018, the Westgate Construction Company entered into a contract to construct a road for Santa Clara County for $10,000,000. The road was completed in 2020. Information related to the contract is as follows:

Westgate Construction uses the completed contract method of accounting for long-term construction contracts.

Required:
1. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years.
2-a.In the journal below, complete the necessary journal entries for the year 2018 (credit "Various accounts" for construction costs incurred).
2-b.In the journal below, complete the necessary journal entries for the year 2019 (credit "Various accounts" for construction costs incurred).
2-c. In the journal below, complete the necessary journal entries for the year 2020 (credit "Various accounts" for construction costs incurred).
3. Complete the information required below to prepare a partial balance sheet for 2018 and 2019 showing any items related to the contract.
4. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.

5. Calculate the amount of revenue and gross profit (loss) to be recognized in each of the three years assuming the following costs incurred and costs to complete information.