Chua Chang & Wu Inc. is planning its operations for next year, and the CEO wants you to forecast the firm's additional funds needed (AFN). Data for use in your forecast are shown below. Based on the AFN equation, what is the AFN for the coming year?

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Scenario: You are the Chief Executive Officer [CEO] of a health services organization. This organization has inpatient and outpatient facilities, home healthcare services, and other services that meet your patient population’s needs. It also has a world-renowned AIDS treatment center. The organization has always enjoyed an excellent reputation and its quality of care is known to be excellent. Unfortunately, your organization has recently been featured in every media vehicle known to man. The reason: Someone downloaded the names of 4,000 HIV+ patients seen in your HIV clinic and posted the list on the Internet. The Board of Trustees is furious and wants to fire you. You have been able to convince them that they need to keep you as CEO to fix this major crisis. You hire a computer security consultant who comes into your organization, disguised as a nurse manager. After three days, she comes to you with the following report.

• Nurses log in to the computer system with their passwords and then walk away, leaving the system open and running.

• Dr. Jones leaves his password taped to his PC on a piece of paper.

• Fax machines and printers are in open rooms without locks.

• One password can access the entire database in the hospital including human resources.

• There are no programs reminding staff to change their passwords on a regular basis.

• She pretended to forget her password and other nurses gave her their password.

• She requested sensitive patient files and staff provided her with the files without question

You must address the following:

• A brief assessment of the problems that your organization faces from a ‘big picture’ health care management point of view. This should be a high-level overview of the category/categories of problems that your organization currently faces. (1-page maximum)

• An overview of key laws, regulations, and guidelines that are relevant to the scenario. Be sure to support your assessment with examples of why you believe each law, regulation, and/or guideline is relevant. (1-page maximum)

• The identification of 2 similar situations that have occurred within the health care industry in recent years. A brief explanation of how the identified organizations handled the crisis and an assessment of whether this approach would work for your organization. (1-page maximum)

• An explanation of how your organization could best handle this crisis. (1-page maximum)

RUBRIC: Sources, Management issues, Legal issues, Two situations, Recommended actions.

1. You are a consultant to Twinkle Teeth Corporation producing titanium dental implants. The CEO insists that effectiveness must be evaluated by an increase in stock price to satisfy stockholders. The marketing vice president insists that the main goal is to reduce the time to bring products to the customer. The manufacturing vice president states that production costs should be the key focus of the organization. What approach is each manager using to evaluate organizational effectiveness, and What can this organization do to ensure that effectiveness is properly evaluated?

Case 13.2

Ralph O’Riley is a dynamic CEO of a large for-profit system. He is well known in the community. He is a brilliant businessman, and he is highly rewarded for it, enjoying various perks such as a beautifully appointed office suite, a company car, and a parking spot right outside of the hos- pital entrance.

He rarely attends employee-related functions, and he only occa- sionally visits the other facilities in the system, let alone the units on his own campus. He is a mythical figure among employees and intimidates his own leadership team. He shows up to meetings late, relies on hischief executives to “fill him in on the agenda,” and does not know all of his staff’s names and their positions. He does not participate in oper- ational discussions, but he gives orders that affect operations, some- thing that confounds his team and angers employees.

Once during a retreat, he was overheard by some of his team members boasting about his golf game and his power: “This is a waste of my time,” he complained over his cell phone. “It’s not PC to say it, but I own these people. They do what I tell them to do. I made a lot of money for this system. Now they should give me a break.”

Questions

Obviously, everything Ralph is seems to run counter with the practices that build and enhance trust.

1.          What long-term effects does Ralph’s behavior have on the team, the employees, and the organization as a whole? Are these effects irre- versible?
2.          Ralph is clearly a financial wizard and has great business instincts. How should he leverage these competencies to create a better cul- ture? To make himself even more powerful by being approachable and trustworthy?
3.          What role does power play in Ralph’s success?

Assume that you are the chief financial officer at Porter Memorial Hospital. The CEO has asked you to analyze 2 proposed capital investments--Project X and Project Y. Each project requires a net investment layout of $10,000 and the cost for each project is 12%. The projects expected net cash flows are as follows?

Calculate each project's payback period, net present value, and internal rate of return

Calculate each project's payback period, net present value, and internal rate of return

You are the CEO of an industrial chemical plant named Johnson Chemicals. You manufacture the inert chemicals for more than 100 different manufacturers. They range from the military to paint companies. Fifty percent of your gross revenue comes from one company that manufactures fuel for military and commercial aircraft: this is 30 percent of your bottom line. Your second-largest customer manufactures fuel additives and it represents five percent of your bottom line. That company is also a wholly-owned subsidiary of your number one customer.

You have found out that your number one customer has been dumping millions of gallons of waste products into a local small river that feeds into the Mississippi River. If you “blow the whistle” you could be responsible for losing 30 to 50 percent of your bottom line revenue. This would result in the unemployment of nearly half of your 5,000 employee workforce. Also, there could be a backlash among your 98 remaining customers. Your reputation could be ruined if you are deemed to be a “whistleblower” or “rat.” Still, you know that people unaware of the dumping will use the water for fishing, drinking, etc. You also know that people will die from too much exposure to the kinds of chemicals being dumped.

1. What on earth are you to do? Please write two paragraphs. The first paragraph should show how you would justify exposing the dumping. The second paragraph should address justifications for you not exposing your number one client. The two paragraphs should each be at least six sentences long and not more than twelve sentences long. Use at least two of the theories on moral problems you learned about earlier in this chapter to justify your position as proponent or opponent of blowing the whistle or remaining silent.

Question 1:

Suppose that your group is the executive sales team for Starbucks. The CEO has just proposed lowering the price of regular coffee and increasing the price of specialty coffee drinks. The belief is that our customers are sensitive to a price change of regular coffee but much less sensitive to a change in the price of specialty coffee. As such, your team is tasked with providing an analysis on this proposal. In order to provide your analysis, you need to find out if the CEO’s theory about customer behavior, and their sensitivity to price changes for regular and specialty coffee, is correct. In order to find out how sensitive customers are to a price change, you will need to calculate the price elasticity of demand, describe what that means, and evaluate the impact on revenues.

For this activity, use the standard percent change formula (also known as the point method).

You have been given the following data on prices and changes in quantity demanded.

Regular Coffee:

Current Price per cup: $2.00 and quantity sold per month is 1 million

Proposed Price per cup: $1.80 and estimated quantity sold per month is 1.5 million

Specialty Coffee:

Current Price per cup: $4.00 and quantity sold per month is 50 million

Proposed Price per cup: $4.40 and estimated quantity sold per month is 47 million

Part 1: Find the elasticity of demand for regular and specialty coffee.

Part 2: Find the total change in revenue for regular and specialty coffee.

Part 3: Use a demand curve graph to explain the change in revenue. You only need to show the demand curve on your graph.

You may upload a picture/file of your graph or use the creately template.

Question 2:

Suppose that your group is the executive sales team for McDonalds. The CEO has given your team a proposal; To analyze the impact of raising the price of the Big Mac by 10% and raising the price of regular fries by 10%.

In order to provide your analysis, you need to find out how sensitive customers will be to a price change of Big Macs and fries. In order to find out how sensitive customers are to a price change, you will need to calculate the price elasticity of demand, describe what that means, and evaluate the impact on revenues.

For this activity, use the standard percent change formula (also known as the point method).

You have been given the following data on prices and changes in quantity demanded.

  Big Mac:

Current Big Mac Price: $2

Current Big Mac monthly sales: 1 million

Estimated monthly Big Mac sales at the new price: 980,000

Regular Fries:

Current regular fry Price: $1.50

Current regular fry monthly sales: 2 million

Estimated regular fry monthly sales at the new price: 1.4 million

Part 1: Find the elasticity of demand for the Big Mac and fries.

Part 2: Find the total change in revenue for the Big Mac and fries.

Part 3: Use a demand curve graph to explain the change in revenue. You only need to show the demand curve on your graph.

You may upload a picture/file of your graph or use the creately template.

Jay Fulcher, the CEO of Zenefits, recently convened ten of his top executives for a management meeting, during which he asked them a personal question, “What would happen if you got sick?” He wanted to know that departments would continue to function if the people running them needed to care for themselves or a loved one due to the pandemic. How can a leader know with any degree of confidence that his/her “number two” can handle to responsibilities to lead/run a department? What are some of the likely reasons that leaders don’t spend an appropriate amount of time and resources on these types of “what if” scenarios?

The CEO of Starbucks and the Practice of Ethical Leadership

Sara Tangdall

Background

One year after becoming CEO of Starbucks, Kevin Johnson faced a leadership test when two black men were arrested in a Philadelphia Starbucks. The men were waiting to meet a business associate, but they didn’t purchase anything while they were waiting. The store manager asked them to leave, and they refused, explaining that they were there to meet someone. The manager called the police because the men refused to leave, and the police arrested them.

Another patron at Starbucks recorded the arrest on her cell phone, and it quickly went viral. In an interview after the arrest, the woman who took the video mentions that she had been sitting there for a while, and she wasn’t asked to leave even though she didn’t order anything. Additionally, the video shows the business associate of the black men show up during the arrest, and he asks the manager and the police what the men had done wrong. The general public and those who witnessed the arrest labeled it as discriminatory and racist.

This happened on a Thursday and the following Monday, Johnson said that the manager no longer worked at the store. The arrests led to protests and sit ins at the Philadelphia Starbucks the days following the event.

In his apology statement and follow up video release shortly after the arrests, Johnson said, “The video shot by customers is very hard to watch and the actions in it are not representative of our Starbucks Mission and Values. Creating an environment that is both safe and welcoming for everyone is paramount for every store. Regretfully, our practices and training led to a bad outcome—the basis for the call to the Philadelphia police department was wrong.”  

Before the incident, Starbucks had no companywide policy about asking customers to leave, and the decision was left to the discretion of each store manager. Because of this flexible policy, Starbucks had become a community hub--a place where anyone could sit without being required to spend money. Johnson mentioned this community in his apology when he said Starbucks works to create an environment that is “both safe and welcoming for everyone.”

Also in his apology, Johnson outlined the investigation he and the company would undertake. The apology detailed actionable steps Starbucks leadership would follow to learn from the situation, including meeting with community stakeholders to learn what they could have done better. Johnson took full responsibility for the actions of his employees, and he acknowledged that Starbucks customers were hurt by the arrests. Johnson acknowledged that employees needed more training, including about when to call authorities, and that the company needed to conduct a thorough analysis of the practices that lead to this incident.

After issuing his apology, Johnson went to Philadelphia and met with the two men face to face to involve them in dialogue on what Starbucks needed to do differently.

The week following the arrests, Starbucks announced it would temporarily close 8,000 stores to conduct unconscious bias training, which they did on May 29, 2018. A month after the arrests, Starbucks released a new “Use of Third Place Policy,” which states that anyone can use Starbucks and its facilities without making a purchase; it also explains what managers should do if a customer becomes disruptive. Additionally, the policy says that Starbucks seeks to create “a culture of warmth and belonging where everyone is welcome. This policy is intended to help maintain the third place environment in alignment with our mission ‘to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.’”

Practice of Ethical Leadership

How is Johnson practicing ethical leadership? Additionally, we can consider what we learn about his character through his actions and his impact.

1. Did his decision to close all Starbucks stores for unconscious bias training and to create a new “Third Space Policy” align with Starbucks’ mission and goals? If so, how?

2. Explain everything Johnson did right and what positive outcomes resulted from his actions?

3. What leadership traits did Johnson exhibit?

1. You are a consultant to Twinkle Teeth Corporation producing titanium dental implants. The CEO insists that effectiveness must be evaluated by an increase in stock price to satisfy stockholders. The marketing vice president insists that the main goal is to reduce the time to bring products to the customer. The manufacturing vice president states that production costs should be the key focus of the organization. What approach is each manager using to evaluate organizational effectiveness, and What can this organization do to ensure that effectiveness is properly evaluated?