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Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value Answer

Jackson Corporation’s bonds have 12 years remaining to maturity. Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?

Ans:

Years to Maturity 12
Annual Payment $80
Par value $1,000
Going rate, rd 9%
   
Value of bond = $928.39

Current market price of these bonds = $ 928.39

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Please define and explain three different ways that a firm can utilize operations management as a competitive advantage Answer

Please define and explain three different ways that a firm can utilize operations management as a competitive advantage. Also, please describe how well your present organization — or a favorite one– practices this concept and please provide examples.

 

Ans:

Organizations can utilize operations management as a competitive advantage by doing the following:

  • Making things right – the quality advantage.
  • Making things fast – the speed advantage.
  • Making things on time – the dependability advantage.
  • Changing what is made – the flexibility advantage.
  • Making things cheap – the cost advantage.

Operations management can offer as an implementer, supporter and driver of the overall business strategy; to translate competitive market requirements into performance objectives (Slack et aL, 2001). A resource is a basic element that a firm controls in order to best organize its processes. A person, machine, raw material, knowledge, brand image, and a patent can all be viewed as examples. A resource, or set of resources, can be used to create competitive advantage.

Competencies refer to the fundamental knowledge owned by the firm (knowledge, know-how, experience, innovation, and unique information). To be distinctive they are not confined to functional domains but cut across the firm and its organizational boundaries. Competitive advantage can come from a focus upon key competencies. Capabilities reflect an organization’s ability to use its competencies. Capabilities refer to the dynamic routines acquired by the firm; the managerial capacity to improve continuously the effectiveness of the organization. The essence of the resource-based view is its focus on the individual resources, competencies and capabilities of the organization; rather than a market-based strategy that may have commonalities with others in the industry. Sustainable advantage comes from exploitation of the unique resources of the individual organization.

Organizations are bundles and clusters of resources and managers must develop these in individual ways. These can be managed and combined to create the difference that supports a strategic positioning. However, they cannot be easily re-shuffled to take account of market opportunities; organizations must define opportunities in terms of existing internal capabilities and focus on unique expertise; outsourcing anything that is not central to this. Sustainable competitive advantage can be built over time based upon unique combinations of resources and competencies. The activities and processes utilizing these components are hard to replicate by competitors. Products and technologies offer only a short-term strategic advantage, as they have a relatively limited life span and are easy to copy or improve upon.

The Aztec Retail Group is a UK-based clothing retailer, known internationally for its ‘social-occasion’ clothing. With seventeen divisions and twenty-six labels it reaches into four segments of the clothing market: ladies’ wear, menswear, children’s wear and textiles. Aztec has also expanded globally and almost half of its business is done outside the UK. In the early 1990s, Aztec went through many lean years until in 1995–96 it decided to restructure and deploy an operations strategy with its main suppliers. In order to first refocus it employed a ‘50–30–10’ strategy. The plan was to reduce the design to sales cycle by 50 per cent, the inventory by 30 per cent and costs by 10 per cent in the hope of growing profit margins. Execution of the ‘50–30–10’ strategy was largely accomplished by cutting back the size of the clothing lines offered as a method to prepare for future, sound diversification. This initial focus also enabled a clearer understanding to be gained of the basic operational systems needed. Aztec blended various operational management core competencies, technologies, resources and activities into what they called high level packages. For example, shared pipeline information systems, data interchange support, joint planning approaches, replenishment and re-estimation and reorder systems, and inventory management components, all of which contained a number of operational subsystems. These were then deployed by supply situation using different emphases dependent upon the unique product and/or customer behaviour needs.

 

References:

Slack, N., Chambers, S. and Johnston, R. (2001), Operations Management, Financial Times and Prentice-Hall, Harlow.

 

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Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year Answer

Nick’s Enchiladas Incorporated has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock’s required rate of return?

 Ans:

  

Dps $5.00
rps 10%
   
Vps $50.00

 

Stock’s required rate of return = Dps (the preferred dividend) / Vps (value of the preferred stock)

 Stock’s required rate of return = 5 /50 = 0.10 = 10 %

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Would you expect that a company’s WACC would increase as the firm took on more debt in its capital structure Answer

Yes a companies WACC would increase with increased debt. See examples below:

Base

T = 40%

wd = 30% rd = 6.0%

wps = 5% rps = 5.8%

ws = 65% rs = 12.0%

WACC = Weighted average cost of capital

= wd rd(1 – T) + wps rps + ws rs

WACC = 9.17%

increased debt

T = 40%

wd = 40% rd = 6.0%

wps = 5% rps = 5.8%

ws = 65% rs = 12.0%

 

WACC = Weighted average cost of capital

= wd rd(1 – T) + wps rps + ws rs

WACC = 9.53%

decreased debt

T = 40%

wd = 20% rd = 6.0%

wps = 5% rps = 5.8%

ws = 65% rs = 12.0%

 

WACC = Weighted average cost of capital

= wd rd(1 – T) + wps rps + ws rs

 

WACC = 8.81%

 

Weighted average cost of capital (WACC) is the average rate of return a company expects to compensate all its different investors. The weights are the fraction of each financing source in the company’s target capital structure Here is the basic formula for weighted average cost of capital:

WACC = ((E/V) * Re) + [((D/V) * Rd)*(1-T)]

 

E = Market value of the company’s equity

D = Market value of the company’s debt

V = Total Market Value of the company (E + D)

Re = Cost of Equity

Rd = Cost of Debt

T= Tax Rate

 

It’s important for a company to know its weighted average cost of capital as a way to gauge the expense of funding future projects. The lower a company’s WACC, the cheaper it is for a company to fund new projects.

http://www.investinganswers.com/financial-dictionary/financial-statement-analysis/weighted-average-cost-capital-wacc-2905

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Monterey’s Restaurant is currently the only restaurant in town that sells Mexican food. Monterey’s advisors estimate that the demand Answer

Monterey’s Restaurant is currently the only restaurant in town that sells Mexican food. Monterey’s advisors estimate that the demand for Mexican food in the area is given by:

Q = 10 -0.5P

Where P is the average price of a meal and Q is the quantity of meals. The restaurant’ s costs are estimated with the following equation:

TC = 150 + 5Q + 0.5Q2

  1. Given this information, how much output should Monterey’s produce to maximize profits?

f.How much should it charge for each meal? Is Monterey’s restaurant making a profit? If yes, how much?

g.Without doing any calculations, if you were Monterey’s advisors, what would you recommend they do to improve their profits ?

h.Suppose that price discrimination was an option available to Monterey’s? What would Monterey’s need to do to be able to practice second or third degree price discrimination?

 

Show all your work. Your explanation determines your grade.

Question 36

When producing 10 units, Jean has total variable costs of $400, total fixed costs of $550, and assets of $3000. Assume you can approximate MC with AVC.

  1. If she wants a return of 10%, what price should she charge?
  2. Suppose that instead of determining price based on his target return, Jean decides to use a standard markup pricing scheme. What is the optimal markup for Jean if she estimates that the price elasticity of demand for her product is -2?
  3. If she uses the optimal markup obtained in part b, how much should he charge for her product?
  4. Given your answers to parts a and c, which pricing mechanism should he chose? How would your answer change if the price elasticity for her product decreases considerably due to an decrease in the availability of substitutes.

Show all your work. Your explanation determines your grade

Question 37

The Allen Corporation, a sofa retailer, wants to determine how many sofas it must sell in order to earn a profit of $10,000 per month. The price of each sofa is $400, the average variable cost is $200. What is the required sales volume if fixed costs are $4000 per month?

 

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Suppose a fast-food restaurant wishes to estimate average sales volume for a new menu item Answer

  1. Below shown two NBA players’ scoring points per game:

 

Game                                     Player A                      Player B

1                                             21                                34

2                                              52                                29

3                                              15                                29

4                                              10                                22

5                                              29                                36

6                                              29                                27

7                                              29                                25

8                                              27                                12

 

  1. a) Which player is better? Show all the calculations (1 pt).

 

  1. b) Which player’s performance is more consistent? Use all the sample points andshow all the calculations (3 pts).

 

  1. The movie The Hunger Games: Mockingjay – Part 1 is in theaters in the U.S. as well as overseas. The movie distributor wants to know whether the audiences enjoy watching this film. In each of the three countries, Australia, Germany, and the U.S., a local research agency was hired to conduct surveys among the movie goers. Andrew, an Australian movie attendee gave a rating of 3 for enjoyment. Hanna, a German movie attendee gave a rating of 8, and Scott, an American movie attendee gave a rating of 85. The mean and standard deviation of the ratings in each country were also known. Which movie attendee enjoys watching the movie most? (2 pts)

Country                                    Mean                       SD                              Audience’s score

Australia               2.8                             1.1                             3 (Andrew)

Germany               7.0                             2.5                             8 (Hanna)

U.S.                           76.0                          12.0                          85 (Scott)

 

  1. Suppose a fast-food restaurant wishes to estimate average sales volume for a new menu item.  The restaurant has analyzed the sales of the item at a similar outlet and observed the following results:

x=  500 (mean daily sales)

S =    100 (standard deviation of sample)

n =    25 (sample size)

The restaurant manager wants to know into what range the mean daily sales should fall 95 percent of the time.  Perform this calculation (2 pts).

 

4.  A group of marketing researchers study the expenditures on dinning out. They want to have a 95 percent confident level (Z) and accept a magnitude of error (E) of less than $3.00. The estimate of the standard deviation is $24.00 based on their pilot study. What is the calculated sample size if they want to run a survey? (2 pts)

 

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Bozeman Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process Answer

Bozeman Corporation manufactures a single product. Monthly production costs incurred in the manufacturing process are shown below for the production of 3,300 units. The utilities and maintenance costs are mixed costs.The fixed portions of these costs are $446 and $445, respectively.
Production in Units
3,300

Production Costs

Direct materials $7,507
Direct labor 14,994
Utilities 1,865
Property taxes 1,036
Indirect labor 6,539
Supervisory salaries 1,774
Maintenance 1,138
Depreciation 2,361
Now Calculate the expected costs when production is 4,600 units?

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House of Tata: Acquiring a Global Footprint What is your assessment of the role of the Tata Group Answer

Read the case study, “House of Tata: Acquiring a Global Footprint”, (see attachment link labeled Case Study). Provide your answers to each of the questions below regarding the case study and use the textbook (see attachment link labeled Textbook) to use as reference. Type your answers below each question.

You may use the ‘House of Tata: Acquiring a Global Footprint’ Case Study or textbook chapters (see attachment links). Please be brief and concise in your answers. Answer each question posed below in each question group. Avoid unnecessary repetition of case material. Your contribution will be judged more on its quality than its quantity.

 Please answer the following questions (place your answer below each question):

 What is your assessment of the role of the Tata Group Center in enhancing the competitiveness and the performance of the individual companies? What kinds of resources and capabilities has this Center been able to provide to those individual companies? How have individual companies in the group managed to remain competitive in their respective industry segments?

 

 

Why did Indian Hotels, Tata Tea and Tata Steel (member companies of the Tata Group) choose to pursue international expansion at the (different) times? Provide a specific example of institutional considerations (refer to section 13-2a that starts on page 405 of the textbook) that one of these companies employed in their international expansion. Provide a second specific example of resource-based considerations (refer to section 13-2b that starts at the bottom of page 407 of the textbook) that one of these companies employed when expanding internationally.    

 

What different modes of entry (refer to section 10-4b on the bottom of page 320 of the textbook, section 10-4c at the bottom of page 321 of the textbook and table 10.3 on page 322 of the textbook) have the Tata Group of companies employed when expanding internationally? Why have they used acquisitions as their preferred mode of international entry, especially when entering into developed country markets? Discuss the pros and cons of Tata Motor’s bid for Ford’s Land Rover and Jaguar units as a part of its globalization efforts?

 

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The manager of Sensible Essentials conducted an excellent seminar explaining debt and equity financing Answer

Assignment 2: Cost of Debt and Equity

 The manager of Sensible Essentials conducted an excellent seminar explaining debt and equity financing and how firms should analyze their cost of capital. Nevertheless, the guidelines failed to fully demonstrate the essence of the cost of debt and equity, which is the required rate of return expected by suppliers of funds.

 You are the Genesis accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6–8 minutes using the examples and information below:

 Debt: Jones Industries borrows $600,000 for 10 years with an annual payment of $100,000. What is the expected interest rate (cost of debt)?

 Internal common stock: Jones Industries has a beta of 1.39. The risk-free rate as measured by the rate on short-term US Treasury bill is 3 percent, and the expected return on the overall market is 12 percent. Determine the expected rate of return on Jones’s stock (cost of equity). Here are the details:

 Jones Total Assets

 $2,000,000

 Long- & short-term debt $600,000

 Common internal stock equity $400,000

 New common stock equity $1,000,000

 Total liabilities & equity $2,000,000

 Develop a 10–12-slide presentation in PowerPoint format. Perform your calculations in an Excel spreadsheet. Cut and paste the calculation into your presentation. Include speaker’s notes to explain each point in detail. Apply APA standards to citation of sources.

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You are a newly promoted supervisor for Playing with God, a company that makes computer games for a Christian bookstore Answer

Larry Podder or Harry Potter?

You are a newly promoted supervisor for Playing with God, a company that makes computer games for a Christian bookstore. One of the directors on the corporate board is Jon Bakker, a long lost nephew of TV evangelists Jim and Tammy Faye. Jon’s son, Larry Bakker, is a member of your department. He writes the story lines that go into the different games. He has very little computer expertise, but he does have a creative writing degree and writes really great Bible-based game stories. One of his games has won an award in the Christian Video Game arena.

This morning you are served with a lawsuit from Nintendo. It alleges that your last game, Praying with Larry Podder, violates their exclusive right to market games under the Harry Potter label. You are incensed. Larry Podder was the invention of Larry Bakker and was actually a story he made up about himself, drawing on his own childhood experiences. At least, that is what he told you. You personally know that the aunt in the game looks just like Tammy Faye.

To make matters worse, you receive a phone call from your boss that Warner Brothers is preparing a lawsuit, unless you agree right now to pull Praying with Larry Podder from shelves and send them all the profits from the game, to date. Praying was your number one seller this year and could move your company into the first place rankings for christian video games. Your boss, a company vice president, demands to know if the story line is even remotely like Harry Potter. You are horrified to admit you have no idea, having neither played the game nor having read Harry Potter. 

As if this wasn’t bad enough, your boss states, “And why do you suppose Warner Brothers mentioned the Napster case in the call? We’re not hosting file sharing in that game are we?” You are suddenly stricken as you remember that one of the really cool things about the game is that players can go online and share prayers, sheet music for hymns, and Christian music CDs in MP3 format. That was one of the best parts of the game. The vice president states, “The Warner Bros. exec said that his daughter just bought the game and called it the Christian Napster. Furthermore, I have a message from J. K. Rowling’s attorney I have to return next. You better have an answer for this!” He hangs up.

You’re not a lawyer, but you did hear about Napster. It’s time to do some research. You need to call in Larry and find out about this video game.

  1. What things do you need to find out from him?
  2. If you are allowing file sharing on this game, does this open you up to liability for violation of the Digital Millennium Copyright Act?
  3. If it is true that the game is about Larry Bakker’s life and not Harry Potter’s, what will you need to prove to defend against this lawsuit?
  4. Will being a Christian organization protect you from this lawsuit under the First Amendment? Is it analogous to parody?

Pick one of the above and respond to it, or respond to a classmate’s response. More questions and deeper movement to follow!

 

  1. What things do you need to find out from Larry?
  2. If you are allowing file sharing on this game, does this open you up to liability for violation of the The Digital Millennium Copyright Act?
  3. If it is true that the game is about Larry Bakker’s life and not Harry Potter’s, what will you need to prove to defend against this lawsuit?

 

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