Financial Statement Disclosure:

International Clothiers Ltd. has offices in Canada, Bermuda, Europe and the United States. Each of the following events have occurred after the company’s 31 December 2017 year-end, but before their financial statements had been finalized:

a. On 27 January, International Clothiers Ltd entered into a long-term lease for a private airplane for the company president and CEO. The lease requires payments of US$75,000 per month for 60 months.

b. The board of directors met on 15 February 2018 and decided to discontinue its shoe division due to continuing losses and a change in business strategy.

c. One of the company’s major retail customers declared bankruptcy on 22 March. The retail customer accounted for 20% of International Clothier’s year-end receivables and 35% of International Clothier’s revenue in 20x7.

Do not offer solutions! Write about how you might approach the intervention.

1. Research and identify appropriate interventions, strategies for implementation, and methods for evaluation to resolve organizational problems and take advantage of opportunities.

2. Apply management principles to support organizational transformation and change.

Pigs R Us is a second generation, family-owned Richmond-based company with about 400 employees. It slaughters, manufactures, and sells pork food products. Pigs R Us (PRU) is a low-tech, hands-on, “bricks and mortar” type of company with solid brand recognition, an impeccable reputation for high quality and ethical standards. The processes used in manufacturing are with the highest ISO20002 standards, and the plant is maintained immaculately. The personnel are comprised of an older work force (average employee age is late 40s). There is little staff turnover, though lately there have been a diverse group of younger workers joining the company. There has been an impressive record of speedy state and federal new-product approvals, and solid working relationships with their large and small customers.

The company prides itself on the close "southern family," culture of the business. The company logo features a pig with a smile on its face surrounded by small pictures of some of its oldest serving employees. The organization's structure is “old-fashioned”. It is hierarchical with rigid management divisions and reporting policies. Research, manufacturing, and sales and marketing operate in traditional fashion, with employees reporting to supervisors or mid-level managers. By the 1990s, sales and distribution grew from Richmond into a regional market, establishing a competitive advantage throughout the US South. Despite downward economic times in the US and the South, the pork business does well. This is due largely to the fact that Pork is one of the cheaper meat products and there is a variety of ways it can be prepared.

Owned by the Morris family for the last 60 years, Pigs R Us is a key player in the Richmond based food industry. Various Morris family members sit on the board of charities throughout the city and it is not unusual to see the name at society events. Further, the Company sponsors its own Little League Team and has built a recreation center and assisted living facility for the elderly, guaranteeing space for all former 20+ year veteran workers of the company for free. So, it was no surprise, that the whole community was devastated when it was announced by the Morris family that Vance Morris the CEO of Pigs R Us was killed while driving back from a Pigs R US board meeting. The plant closed for a week to show respect and to determine how it would function until the family could make its succession decisions.

Vance Morris was the only son of James and Kathleen Morris. Vance took over the business 10 years before when his father had a heart attack and died. Fresh out of graduate school when his father died. He took over the business that he had known well much to the pleasure and keen eye of the workers. Vance made some marketing changes that allowed for the growth of the company and with the help of the employees brought the plant into its current state. Vance had just gotten married the year before to a young Richmond artist he had met at one of his charity benefits. He had no heirs and no plans for succession as he was in his mid-thirties and had just gotten married. While Vance had cousins in the area they were all professional people who knew nothing about business or pork. The workers could only surmise that the company would be sold, but speculation as to whom it might be did not include someone from out of the city.

Before the deal was announced publicly, John’s widow, Arleen, reported to the workers that a Chinese company, Shanghou (SHU), would be buying Pigs R US. Mrs. Morris assured the workers that the SHU promised not to cut workers' wages and benefits, and to keep the current management team in place. She said that SHU also promised to keep Pork R US headquarters in Richmond. Arleen assured the workers that SHU promised that there would be no changes for the first year and that almost everything would remain the same. From her talks with SHU, Arleen is a bit worried about future changes that SHU may implement.

SHU is a large manufacturer and distributor of food and beverages with, headquarters in Hong Kong. Manufacturing plants operate in mainland China, and the company has additional offices in Europe and Australia. By acquiring the smaller, well-respected Pork R US, SHU aims to diversify and expand its consumer base by including tailor-made pork products globally to meet market projections of a customer upsurge in sustainable, non-beef meats in the next decade. Given SHU’s current availability of telecommunications software and hardware, the deployment of the Pigs R US refrigeration trucks should not be an insurmountable issue.

Many PRU employees, especially the older workers and some of the older managers, are dispirited about the acquisition, and anxious about working for foreigners, downsizing, less face-to-face interaction, language differences, and more electronic systems that are to be put in place. Some of the of the more experienced workers are considering to move or consider an early retirement due to the ongoing rumors about the acquisition. To make matters worse, recent news media have printed stories about tainted food made by other companies in China. Employees fear loss of product quality and damage to PRU’s reputation as well as the loss of the family southern culture that was their pride and joy.

SHU has told PRU workers that for now, most employees will be retained. However, all employees will be evaluated, and reassigned to teams as the new flat structure is put in place. The new CEO is Harvard-educated Daniel Chinn. He supports increasing the company's competitive edge by discovering and developing existing individual potential through group collaboration and team synergy. Ever since his days as a brilliant, hard-driving MBA student; he has been known to be an enthusiastic supporter of job training and career growth. Like many of SHU’s employees, David is in his early thirties. He speaks four languages and is ambitious, self-directed, tech-savvy, accustomed to working remotely, and experienced with a culturally diverse staff. David is eager to make his newest acquisition a success. He wants to move forward on the integration of "Pork R US’ workers into SHU because Chinn believes they are the “greatest asset have a rich knowledge base and experience can be tapped into to bring the company success." Chinn is concerned about the mix of culture and how his ideas of incorporating artificial intelligence and more robotics into the manufacturing processes will be received by management and the workers at the newly acquired plant.

Scenario

The student will use the following situation that has evolved because of the buy out to complete each section of the project. Additional facts will be added to phase two and three of the project to allow students to complete a typical OD process analysis.

Daniel Chinn is anxious to keep the “southern family” culture of Pigs R Us but at the same time wants to use the most modern of manufacturing techniques. He decided that the best way to do this was to start a pilot change operation in the packaging area to demonstrate to the workers the effectiveness of technology. He bought and set up for use 3D printers in the packaging room. The printers were able to create reusable shipping materials and operate in conjunction with the product conveyor for fast and easy. packaging. He brought in two trained 3D printer operators from China to handle the work along with two robots that would move the package material and create shrink-wrapped pallets for loading on to the trucks.

The current packaging department employs 5 workers on day shift and 3 newer workers on the night shift. All day shift workers are in their early fifties and have been working for Pigs R Us all their lives. John Mellon, the lead line man, exemplifies the group. He is 53 years old. He has a family of three children most all are grown. One works in the business with him as the manager of accounting department having gotten a college degree unlike his father. John rarely travels out of state and has never been abroad. He is not terribly familiar with technology. He has a Smart TV but his children have set it up for him to use Netflix.

When the new employees arrived, the packaging staff tried to get to know them but had little in common and found it hard to communicate with them. The new workers ate together at lunch and always with food they brought with them despite offers of food brought in by the older employees to show their “southern roots”. Things are strained between the groups because the older employees thought they were being snubbed and many are uncertain as to the customs and language unable to communicate their real feelings. This all operated to create a schism among the workers which escalated into job performance and employment commitment issues when the six-month results from the 3D/Robot pilot showed the following success in favor of new technology.

The results showed such a marked process improvement with the added benefit of creating materials that were sustainable. The immediate reaction among the older workers was fear for their jobs. The new workers suddenly were the enemy. Chinn was pleased with the new process and indicated that the 3D printing approach would be continued. The word of the decision spread among the families in the company and the “southern family” culture was now closing ranks on the newcomers both in the packaging room and in the other departments thus confirming their fears when news of the buyout surfaced.

The Automobile Film Club of America

Ralph Lucci, owner of The Automobile Film Club of America in Stapleton, New York, operated a true niche market business. Lucci’s business rented vintage and specialty cars for use in movies and television shows filmed in the New York City area. The Automobile Film Club of America had been operating since 1993. Although the business suffered in the aftermath of 9/11, it survived that setback, and Lucci was able to rebuild the company as film and television production returned to New York. At its peak, the business grew to 14 full-time employees who helped support the more than 300 cars the company rented for film and television productions. However, over the next few years the business faced more challenges. The company lost the lease on the lot it used to store the cars, and Lucci could not find a lot large enough to keep his entire inventory, forcing him to sell off many of the cars. Revenues declined, and soon the business could support only him and his wife on the payroll. When hurricane Irene hit in 2011, the company took another financial hit due to damage to its property and lost business. However, the worst was yet to come. When hurricane Sandy hit in October 2012, the storm surge flooded his car lot and garage, completely submerging almost all of his cars in salt water. The cars and much of his equipment were a total loss. The building he used for offices and car maintenance also was severely damaged by the flooding. He estimated that the total loss was more than $400,000. The only insurance he carried on the business was for liability, so there was no coverage for his lost property. Lucci, who is 60 years old, must decide whether he is willing to use his personal assets, including his home, as collateral and attempt to secure a business loan to restart his company. Eatwhatever Jacqui Rosshandler, an Australian ex-pat working for an interior design company in New York City, wanted to start a business and leave her corporate career. She had noticed that a popular breath-freshening product sold in Australia was not available in the United States. The product was a gel cap made from meat byproducts, but Rosshandler decided to make her product from organic peppermint oil and parsley seed oil. Much of the source of bad breath is in the stomach, not the mouth, so the gel caps were very effective. However, she knew that American consumers were used to sucking on breath mints. She decided that she would package the gel cap with a breath mint, so consumers could suck on the mint after swallowing the gel cap. She would market her product as Eatwhatever. Rosshandler outsourced product formulation and production to a contract manufacturer. She hired a packaging designer to cre- ate a package that displayed the product in a clear and attractive way. Eatwhatever is marketed as “2 Steps to Kissable Breath.” Although customers loved her product, she had a difficult time getting contracts with large retailers. She had success selling online and in specialty shops, but it was not enough to fund the growth of the company. Cash was tight. In fact, cash was so tight that she did not have enough to pay for marketing or for a new production run. Rosshandler met Arthur T. Shorin, an angel investor and former CEO in the candy industry. Shorin liked the product and offered to invest $250,000, connect Rosshandler with people he knew in the industry, and give her a salary on top of the investment in the company. In return, he would take 75 percent owner- ship in the business. Rosshandler could earn back 15 percent of the company if revenues met certain targets. Although her friends urged her not to accept his terms, she was concerned that her business would not succeed unless it got the cash and connections Shorin offered her.

Which of the funding sources do you recommend that Ralph Lucci and Jacqui Rosshandler consider for financing their businesses?

Which sources do you recommend they not use? Why?

What can entrepreneurs do to increase the probability that bankers will approve their loan requests?

1. A country has $20 million of domestic investment and net capital outflow of $10 million. What is saving? show work

2. If a dollar currently purchases 10 pesos and someone forecasts that in a year it will be 11 pesos, then the forecast is given in nominal terms and implies the dollar will _____appreciate____________(Appreciate/Depreciate).

3. A U.S. purchase of oil from overseas paid for with foreign currency it already owned _________(increases/decreases) U.S. net exports, and ______________(increases/decreases) U.S. net capital outflow

Golden Eagle Mining, a U.S.-based MNC has a foreign subsidiary that earns $1003000 before local taxes, with all the after tax funds to be available to the parent in the form of dividends. The foreign income tax rate is 24 percent, the foreign dividend withholding tax rate is 10 percent, and the firm's U.S. tax rate is 29 percent. What are the funds available to the parent MNC if foreign taxes can be applied as a credit against the MNC's U.S. tax liability?

The following questions concern the supply and demand for Japanese yen. The exchange rate is denoted as E_$/Yen. For each question state whether the supply of yen, demand for yen or both curves will shift, and in which direction.

a. Record Japanese audiences see the American film, Captain Marvel.

b. U.S. tax cuts increase U.S. GDP

c. The Japanese central bank lowers interest rates

d. Toyota introduces a new electric car that sells well in the U.S.

In a recent study, 5 Japanese and 6 U.S. plants that manufacture air conditioners were sampled and their turnover rates determined. The Japanese plants had a mean turnover of 3.12 percent with a standard deviation of 1.23 percent. The U.S. plants had a mean turnover of 6.30 percent with a standard deviation of 1.26 percent. Use this data and test whether there is a population difference in percent turnover between Japanese and U.S. air conditioning manufacturers

1. Find the Critical value, Pooled variance and T-stats