According to Peters (2017), the pharmaceutical industry faced a challenging situation in September 2017 with the significant weather disruption incurred by their manufacturing plants when the island of Puerto Rico was hit by damaging Hurricane Maria. How big of a deal was it for the industry? For many years, favorable tax laws made it cost beneficial for pharmaceutical companies to locate manufacturing plants in Puerto Rico. In fact, almost 75% of Puerto Rico’s exports in 2016 were pharmaceutical products according to the Bureau of Labor Statistics. Shortly after Maria hit, the U.S. Food & Drug Administration identified a list of more than 40 high-priority pharmaceutical drugs where short-term distribution disruption could be an issue! That’s a huge hit to the industry which it likely had not planned for and would have to incur significant additional costs to remedy. Bye-bye to some of those cost savings…

If the CEO of a newer pharmaceutical company was in the process of looking to outsource the manufacturing of a medication currently produced at a plant in the U.S. to Puerto Rico when Maria hit, should (s)he immediately stop his/her consideration of the plans because of the hurricane, even if it was financially favorable to outsource there?

Vetting each qualitative and quantitative matter takes time and resources, but it is necessary to make sure the company makes sound business decisions from both perspectives.

You are the controller of PWC Ltd. PWC Ltd. is a public company with 30% of its common shares traded on the Toronto Stock Exchange; the remaining 70% of shares are owned by members of the PWC family. The CEO would like to take PWC private by re-acquiring and cancelling the 30% of common shares that are currently publicly traded. Once PWC becomes a private company, it will likely switch to ASPE. In preparation for this potential change, you have decided to create a reference document that provides a brief overview of how financial reporting under ASPE would differ from PWC Ltd.’s current accounting approach in each of the following key areas that affect PWC’s financial statements: Investments (PWC currently holds FV-OCI bonds, FV-OCI shares, and FV-NI shares); convertible bonds; mandatorily redeemable preferred shares; defined benefit pension plan; leases (PWC is a lessor for several leases); income taxes; EPS; cash flow statement. For items where ASPE accounting would be substantially the same as IFRS, indicate that this is the case. When ASPE allows for more than one option, describe each option available, indicating which, if any, of these options is substantially the same as IFRS requirements. PWC currently follows IFRS16 and IFRS9. Required: Prepare a draft of the reference document.

Year Plant Expansion Product Intro  

0 -$3,200,000 -$500,000
1 $1,500,000 $375,000
2 $2,250,000 $275,000
3 $2,500,000 $350,000
4 $2,500,000 $300,000

The High-Flying Growth Company (HFGC) has been growing very rapidly in recent years, making its shareholders rich in the process. The average annual rate of return on the stock in the last few years has been 25%, and HFGC managers believe that 25% is a reasonable figure for the firm's cost of capital. To sustain a high growth rate, the HFGC CEO argues that the company must continue to invest in projects that offer the highest rate of return possible. Two projects are currently under review. The first is an expansion of the firm's production capacity, and the second project involves introducing one of the firm's existing products into a new market. Cash flows from each project appear in the above table

a. Calculate the NPV for both projects. Rank the projects based on their NPVs. (Round to the nearest dollar.)

b. Calculate the IRR for both projects. Rank the projects based on their IRRs. (Round to the nearest dollar.)

c. Calculate the PI for both projects. Rank the projects based on their PIs. (Round to the nearest dollar.)

d. The firm can only afford to undertake one of these investments. What do you think the firm should do?

At Cleveland Hopkins International Airport in northeastern Ohio, a vending machine that dispenses socks was recently installed. Located in the C concourse, the Stance sock vending machine offers a variety of what Stance refers to as “uncommon” socks. The designs on the socks in the Cleveland airport vending machine include Cleveland Browns, Cleveland Indians, patriotic flag designs, Hawaiian tropical flowers, and others.

The machine is stocked with an assortment of socks. The airport traveler inserts a credit card, makes a sock selection in the keypad, and the socks are dispensed to the purchaser.

Stance sells its socks through retailers, at its own stores, via vending machines, and through monthly subscriptions.

Requirements:

You are the CFO of Stance Inc. write a memo to the CEO. The form of the memo should include a brief statement of the facts. An analysis of the situation covering the items listed below, a recommendation.

1) the types of costs incurred with the airport vending machines. Assume that Stance rents the vending machine from a vending service. Use your imagination and list as many costs as you can.

Use the chart below to list the types of costs you think the company has.

2) the impact of the current cost structure on the breakeven volume analysis for the airport machines.

3) the impact on the breakeven analysis if the company were to purchase the vending machines.

A Internet food delivery company advertises that it has 3 different diets that will result in weight loss if strictly followed. One diet is advertised as a moderate weight loss, a second offers a slightly more aggressive weight reduction program, and a third that is the most aggressive weight loss. The company gathers some data by taking a random sample from people using the different diets at the end of a two months trial. The data on weight loss are recorded below. ( This is an ANOVA problem)

1. What type of data are these values? Quantitative data as all the values are numerical.

2. Can these data be generalized? Explain. Yes as the random sample of people is used.
3. Can cause and effect statements be made? Explain. Yes as the type of diet will affect weight loss.
4. Conduct a test to see if the weight losses are equal with the three diets using a alpha of .05.
5. Construct 95% confidence intervals.

6. Write a brief conclusion to the CEO of this firm. The wright losses are equal with the three diets

Relay Health is a company that has operated in the health care environment for several years. This organization has developed a platform whereby patients are able to communicate with their doctors online for consultations (www.relayhealth.com). The adoption of this service has been slowly growing for many years but has not received widespread acceptance in the marketplace by physician groups, although there are many benefits that can be discerned from the platform for patients or employers who might have employees who have doctors who are on such a platform. And, insurers such as Blue Cross and Cigna have also begun to accept that online visits are acceptable and are moving increasingly to reimbursing this approach. In spite of this growing trend, less than 3% of the family physicians in the American Academy of Family Practice report doing e-visits.

Recently, a company called Sophrona Solutions (https://sophrona.com/) has developed a platform that initially was for ophthalmology practices. One of the larger developers is American Well (https://amwell.com/cm/?test=true&gclid=CI7Zw4Xdp8oCFUUTHwodqssEhw), the producer of online care. They have announced that they are expanding their online portal nationally.

The CEO of Relay Health has called you in as a consultant to analyze this rapidly changing market.

There are several growth strategy alternatives available. Explain each alternative and then consider/apply each alternative for Relay Health. Which one did American Well employ? Which alternatives might be available to Relay Health? How might they be implemented?

A company that produces coffee for use in commercial machines monitors the caffeine content in its coffee. The company selects 35 8-oz samples each hour from its production line to analyze. The samples collected one morning between 8:00 - 9:00 am contained on average 96.1 mg of caffeine, with standard deviation 1.2 mg.

1. a) Compute and interpret a 95% confidence interval for mean caffeine content based on the collected data.

2. b) According to production standards, the mean amount of caffeine content per 8 ounces should be no more than 95 mg. An overly high caffeine content indicates that the coffee beans have not been roasted long enough.

   Conduct a formal hypothesis test to investigate whether production standards are being met, based on the observed data. Summarize your findings to the CEO using language accessible to someone who has not taken a statistics course and make a recommendation as to whether an adjustment needs to be made to the bean roasting time.

3. c) A set of samples collected between 10:00 - 11:00 am on the same day has average caffeine content of 95.3 mg, with standard deviation 1.1 mg. Based on observing this data, would you change your recommendation in part c)? Explain your answer.

Honicker Corporation was well-recognized as a high-quality manufacturer of dashboards for automobiles and trucks. Although it serviced mainly U.S. automotive and truck manufacturers, the opportunity to expand to a worldwide supplier was quite apparent. Its reputation was well-known worldwide but it was plagued for years with ultraconservative senior management leadership that prevented growth into the international marketplace.

When the new management team came on board in 2009, the conservatism disappeared. Honicker was cash-rich, had large borrowing power and lines of credit with financial institutions, and received an AA- quality rating on its small amount of corporate debt. Rather than expand by building manufacturing facilities in various countries, Honicker decided to go the fast route by acquiring four companies around the world: Alpha, Beta, Gamma, and Delta Companies.

Each of the four acquired companies serviced mainly its own geographical areas. The senior management team in each of the four companies knew the culture in their geographic areas and had a good reputation with their clients and local stakeholders. The decision was made by Honicker to leave each company’s senior management teams intact provided that the necessary changes, as established by corporate, could be implemented.

Honicker wanted each company to have the manufacturing capability to supply parts to any Honicker client worldwide. But doing this was easier said than done. Honicker had an enterprise project management methodology (EPM) that worked well. Honicker understood project management and so did the majority of Honicker’s clients and stakeholders in the United States. Honicker recognized that the biggest challenge would be to get all of the divisions at the same level of project management maturity and using the same corporatewide EPM system or a modified version of it. It was expected that each of the four acquired companies may want some changes to be made.

The four acquired divisions were all at different levels of project management maturity. Alpha did have an EPM system and believed that its approach to project management was superior to the one that Honicker was using. Beta Company was just beginning to learn project management but did not have any formal EPM system although it did have a few project management templates that were being used for status reporting to its customers. Gamma and Delta Companies were clueless about project management.

To make matters worse, laws in each of the countries where the acquired companies were located created other stakeholders that had to be serviced, and all of these stakeholders were at different levels of project management maturity. In some countries, government stakeholders were actively involved because of employment and procurement laws whereas in other countries government stakeholders were passive participants unless health, safety, or environmental laws were broken.

It would certainly be a formidable task developing an EPM system that would satisfy all of the newly acquired companies, their clients, and their stakeholders.

ESTABLISHING THE TEAM

Honicker knew that there would be significant challenges in getting a project management agreement in a short amount of time. Honicker also knew that there is never an acquisition of equals; there is always a “landlord” and “tenants,” and Honicker is the landlord. But acting as a landlord and exerting influence in the process could alienate some of the acquired companies and do more harm than good. Honicker’s approach was to treat this as a project, and each company, along with its clients and local stakeholders, would be treated as project stakeholders. Using stakeholder relations management practices would be essential to getting an agreement on the project management approach.

Honicker requested that each company assign three people to the project management implementation team that would be headed up by Honicker personnel. The ideal team member, as suggested by Honicker, would have some knowledge and/or experience in project management and be authorized by their senior levels of management to make decisions for their company. The representatives should also

understand the stakeholder needs from their clients and local stakeholders. Honicker wanted an understanding to be reached as early as possible that each company would agree to use the methodology that was finally decided upon by the team.

Senior management in each of the four companies sent a letter of understanding to Honicker promising to assign the most qualified personnel and agree- ing to use the methodology that was agreed upon. Each stated that their company understood the importance of this project.

The first part of the project would be to come to an agreement on the methodology. The second part of the project would be to invite clients and stakeholders to see the methodology and provide feedback. This was essential since the clients and stakeholders would eventually be interfacing with the methodology.

KICKOFF MEETING

Honicker had hoped that the team could come to an agreement on a companywide EPM system within six months. But after the kickoff meeting was over, Honicker realized that it would probably be two years before an agreement would be reached on the EPM system. There were several issues that became apparent at the first meeting:

● Each company had different time requirements for the project.

● Each company saw the importance of the project differently.

● Each company had its own culture and wanted to be sure that the final design was good fit with that culture.

● Each company saw the status and power of the project manager differently.

● Despite the letters of understanding, two of the companies, Gamma and Delta, did not understand their role and relationship with Honicker on this project.

● Alpha wanted to micromanage the project, believing that everyone should use its methodology.

Senior management at Honicker asked the Honicker representatives at the kickoff meeting to prepare a confidential memo on their opinion of the first meeting with the team. The Honicker personnel prepared a memo including the following comments:

● Not all of the representatives at the meeting openly expressed their true feelings about the project.

● It was quite apparent that some of the companies would like to see the project fail.

● Some of the companies were afraid that the implementation of the new EPM system would result in a shift in power and authority.

● Some people were afraid that the new EPM system would show that fewer resources were needed in the functional organization, thus causing a downsizing of personnel and a reduction in bonuses that were currently based upon headcount in functional groups.

● Some seemed apprehensive that the implementation of the new system would cause a change in the company’s culture and working relationships with their clients.

● Some seemed afraid of learning a new system and being pressured into using it.

It was obvious that this would be no easy task. Honicker had to get to know all companies better and understand their needs and expectations. Honicker management had to show them that their opinion was of value and find ways to win their support.

The question is:

What if all four companies agree to the project management methodology and then some of the client stakeholders show a lack of support for use of the methodology?

What would you recommend to the CEO and Board as to how to more fully apply a population health model and positively impact the health of the community and control costs at the same time (The Triple Aim)?

• The CEO of your hospital asks you to outline a strategic plan for improvement in delivery of nursing services. What information would you gather and who, if any, would you involve in the process?