Sales plays an important role in allowing a business to maintain long-term relationships with customers. Sales force structures can be critical in allowing companies to distribute their products to their customers effectively. Typical sales force structures include territorial, customer, or product structures. Each structure has pros and cons. In addition, a sales force should be routinely evaluated to determine how effective it is in reaching company sales goals. The choice of how to compensate a sales force, whether through incentives, bonuses, or even contests, may also impact how effective a sales force is.

Imagine that you are the sales manager for a company that makes cabinet hardware, which it has traditionally sold to large contractors who build homes and offices. Your company has built a solid reputation and grown its business regionally, and it is now looking to sell its products to end consumers through national retailers such as Home Depot and Lowes. Your challenge is to create a sales force structure that will meet the expanding role of sales in your company.

In an essay, explain how you would:

structure the sales force. Explain why the structure you recommend is better than alternative approaches. compensate the sales force.

Explain why the approach you recommend would provide the right incentives for the sales force.

After spending 500,000 to study the potential market for a new specialty chemical, hart industries is considering a new plant requiring an initial investment in new construction and equipment. The company will purchase 6,000,000 in new plant equipment. The IRS will allow hart to depreciate the plant equipment to a salvage value of zero on a straight-line basis over a six-year useful life. At the end of five years they expect to sell the plant and equipment for 2,000,000. The firm estimates revenue year1= 26M, Year2= 25M, Year3= 25M, Year4= 25M, Year5= 25M. Variable cost will be 70% of revenue. Fixed costs for the project are estimated to be 3,000,000 annually. Initial net working capital requirements for the project are expected to be 700,000. In addition, the company will increase required working capital 50,000 each year. at the end of five year project the net working capital will no longer be required. The company tax rate is 30%. What is harts cash flows from assets for the 5 years of the project? If your required return rate is 10%, what is the projects NPV and IRR? Should the company accept the project?

Problem 5-27 (LO 5-1, 5-2, 5-3, 5-4, 5-5, 5-7)

Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $513,000 in cash. The subsidiary's stockholders' equity accounts totaled $497,000 and the noncontrolling interest had a fair value of $57,000 on that day. However, a building (with a ten-year remaining life) in Brey's accounting records was undervalued by $51,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (five-year remaining life).

Brey reported net income from its own operations of $83,000 in 2016 and $99,000 in 2017. Brey declared dividends of $28,500 in 2016 and $32,500 in 2017.

At December 31, 2018, Pitino owes Brey $35,000 for inventory acquired during the period.

The following separate account balances are for these two companies for December 31, 2018, and the year then ended.

Note: Parentheses indicate a credit balance.

What was the annual amortization resulting from the acquisition-date fair-value allocations?

Were the intra-entity transfers upstream or downstream?

What intra-entity gross profit in inventory existed as of January 1, 2018?

What intra-entity gross profit in inventory existed as of December 31, 2018?

What amounts make up the $105,255 Equity Earnings of Brey account balance for 2018?

What is the net income attributable to the noncontrolling interest for 2018?

What amounts make up the $645,300 Investment in Brey account balance as of December 31, 2018?

Prepare the 2018 worksheet entry to eliminate the subsidiary’s beginning owners’ equity balances.

Without preparing a worksheet or consolidation entries, determine the consolidation balances for these two companies.

In what follows use any of the following tests/procedures: Regression, multiple regression, confidence intervals, one sided T-test or two sided T-test. All the procedures should be done with 5% P-value or 95% confidence interval.Some answers are approximated, choose the most appropriate answer. SETUP: Is it reasonable to claim that cars with higher city MPG have also higher Highway MPG? Given the data your job is to help answer this question.

I. What test/procedure did you perform? (6.66 points)

• a. One sided T-test
• b. Two sided T-test
• c. Regression
• d. Confidence interval

II. Statistical interpretation? (6.66 points)

• a. Since P-value is small we are confident that the slope is not zero.
• b. Since P-value is small we are confident that the averages are different.
• c. Since P-value is too large the test is inconclusive.
• d. None of these.

III. Conclusion? (6.66 points)

• a. Yes, we confirm that this was a reasonable claim.
• b. No, we cannot confirm that this was a reasonable claim.

2. DesMoines Valley Company has two divisions, Computer Services and Consultancy Services. In addition to their external customers, each division performs work for the other division. The external fees earned by each division in 20X5 were $200,000 for Computer Services and $350,000 for Consultancy Services. Computer Services worked 3,000 hours for Consultancy Services, who, in turn, Consultancy Services worked 1,200 hours for Computer Services. The total costs of external services performed by Computer Services were $110,000 and $240,000 by Consultancy Services.

Required:

a.   Determine the operating income for each division and for the company as a whole if the transfer price from Computer Services to Consultancy Services is $15 per hour and the transfer price from Consultancy Services to Computer Services is $12.50 per hour.

b.   Determine the operating income for each division and for the company as a whole if the transfer price between divisions is $17 per hour.

c.   What are the operating income results for each division and for the company as a whole if the two divisions net the hours worked for each other and charge $12.50 per hour for the one with the excess? Which division manager prefers this arrangement?

3. Dow Company manufactures tables in U.S. The standard (budgeted) cost of one unit is shown below:

Here is the following information on the Cheesecake Factory, I am trying to answer question 1 below. Can you please help me out? Excel assignment.

• Current Dividend (Source – Yahoo!Finance) $1.28
• Required Return (Estimated) 8.9%
• Current EPS (Source – Yahoo!Finance) $2.14
• Current Book Value Per Share (Source – Yahoo!Finance) $13.24
• Current EBITDA per share (Source – Yahoo!Finance) $5.25
• Current Debt per share è $2.80 Current Cash and Equivalents per share $0.61
• Initial Growth Rate for H-Model (Estimated) 9%
• Terminal Growth Rate for H-Model (Estimated) 3%
• Time to Reach Terminal Growth Rate for H-Model (Estimated) 10 years
• Forecasted Growth Rates (Estimated)
  • Year 1 6%
  • Year 2 9%
  • Year 3 12%
  • Year 4 6%
  • Year 5 4%
  • Years 6 through infinity 3%
• Historical PE, PB and EV/EBITDA (Source – Morningstar and Gurufocus.com)
  • 5-Year Average 19.8 4.1 9.3        
• Comparative PE, PB, and EV/EBITDA for S&P 500 (Source – Morningstar and estimate)
  • 19.2 (5-year avg = 19.6)     3.7 (5-year avg = 2.9)     13.0 (5-year average 12.3)

1. Calculate the price for Cheesecake Factory using the
   1. H-Model
   2. Non-Constant Dividend Valuation Approach
   3. Relative valuation
2. 1. Historical PE, PB, and EV/EBITDA
   2. Comparative PE, PB, and EV/EBITDA (Adjust S&P 500 to reflect Cheesecake Factory’s average discount or premium to the market over the past 5 years. Example, if the S&P 500 had an average PE over the past 5 years of 17.0 and your company had an average PE of 14, then your company has historically traded at 82.35% of the market average PE. Therefore, if the current S&P 500 PE is 17.7, your company should have a PE of 14.58 based on the comparative relative valuation to PE. Take the 14.58 times your firm’s EPS to get fair value using this method.)

Case study

Chicago-based Groupon was launched in 2008 by Andrew Mason with the idea to email subscribers daily deals of heavily discounted coupons for local restaurants, theatres, spas, etc. Via the emails or by visiting the Groupon website customers purchase these substantially discounted deals in the form of electronic coupons which can be redeemed at the local merchant. Groupon brings exposure and more customers to the merchants and charges them commissions for the same. The venture rapidly grew into a daily deal giant and became the fastest-growing internet business ever to reach a $1bn valuation milestone and, thus, became a 'unicorn' (name for start-ups with valuations over $1bn). In 2010 Groupon rejected a $6bn (€4.5bn) takeover bid by Google and instead went public at $10bn in 2011.

While Groupon's daily deals were valued by customers - the company quickly spread to over 40 countries - they also attracted thousands of copycats worldwide. Investors questioned Groupon's business and to what extent it had rare and inimitable resources and capabilities. CEO Andrew Mason denied in the Wall Street Journal (WSJ) that the model was too easy to replicate:

'There's proof. There are over 2000 direct clones of the Groupon business model. However, there's an equal amount of proof that the barriers to success are enormous. In spite of all those competitors, only a handful is remotely relevant.

This, however, did not calm investors and Groupon shares fell by 80 per cent at its all-time low in 2012. One rare asset Groupon had was its customer base of more than 50 million customers, which could possibly be difficult to imitate. The more customers, the better deals and this would make customers come to Groupon rather than the competitors and the cost for competitors to acquire customers would go up. Further defending Groupon's competitiveness, the CEO emphasised in WS) that it is not as simple as providing daily deals, but that a whole series of things have to work together, and competitors would have to replicate everything in its operational complexity":

'People overlook the operational complexity. We have 10,000 employees across 46 countries. We have thousands of salespeople talking to tens of thousands of merchants every single day. It's not an easy thing to build.

Mason also emphasised Groupon's advanced technology platform that allowed the company to 'provide better targeting to customers and give them deals that are more relevant to them'. Part of this platform, however, was built via acquisitions - a route competitors possibly also could take.

If imitation is the highest form of flattery Groupon has been highly complimented, but investors have not been flattered. Consequently, Andrew Mason was forced out in 2013, succeeded by the chairman Eric Lefkofsky. Even though Amazon and other copycats left the daily-deals business he struggled to explain how Groupon would fight off imitators. The company was forced to exit over 30 international markets. Lefkofsky later returned to his chairman role and was followed by Rich Williams in 2015. He managed to turn Groupon profitable for the first time ever in 2017, but still did not regain investors' confidence with the share price still below $4, far from the $20 IPO price. Williams, however, was optimistic:

'[Groupon) is one of the first unicorns. It got a lot of praise and attention it didn't deserve at the beginning. We've not recovered from that. Over time, the numbers will speak for themselves.'

NOTE " ANSWER IN SRTATEGIC MANAGEMENT WAY "

1. If you were the new Groupon CEO what resources and capabilities would you build on to give the company a sustainable competitive advantage?

ABCD currently has one outside drive-up teller. It takes the teller an average of four minutes (exponentially distributed) to serve a bank customer. Customers arrive at the drive-up window at the rate of 12 per hour (poisson distributed). The bank operations officer is currently analyzing the possibility of adding a second drive-up window at an annual cost of $20,000. It is assumed that arriving cars would be equally divided between both windows. The operations officer estimates that each minute’s reduction in customer waiting time would increase the bank’s revenue by $2,000 annually.

1. Is it cost effective to install a second drive-up window? (Show calculations to support your answer.)
2. What other factors should be considered in the decision besides cost?

Advertisers contract with Internet service providers and search engines to place ads on websites. They pay a fee based on the number of potential customers who click on their ad. Unfortunately, click fraud—the practice of someone clicking on an ad solely for the purpose of driving up advertising revenue—has become a problem. According to BusinessWeek 43% of advertisers claim they have been a victim of click fraud. Suppose a simple random sample of 300 advertisers will be taken to learn more about how they are affected by this practice. Use z-table.

a. What is the probability that the sample proportion will be within +- 0.03 of the population proportion experiencing click fraud?

(to 4 decimals)

b. What is the probability that the sample proportion will be greater than 0.49?

(to 4 decimals)