Exporters have seen a 20% rise in export enquiries in the last fortnight from the US, Australia and Japan. Also exporters of handicraft, jewellery and shoes have got significant enquiries from the European Union. However, labor-intensive sectors such as gems and jewellery are not able to take decisions about utilization of labor as they grapple with rising labor costs amid social distancing norms. How a export manager in gems and jewellery firm will use Information System (IS) in decision making process in this case.
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Exporters have seen a 20% rise in export enquiries in the last fortnight from the US,
Australia and Japan. Also exporters of handicraft, jewellery and shoes have got
significant enquiries from the European Union. However, labor-intensive sectors such as
gems and jewellery are not able to take decisions about utilization of labor as they
grapple with rising labor costs amid social distancing norms.
How a export manager in gems and jewellery firm will use Information System (IS)
in decision making process in this case.
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- The Zomcast cable TV company is considering out- sourcing its call center to the Philippines. The cost of hiring operators and staff in the Philippines is 60 per- cent of the salary and benefits paid in the U.S. The operators are slightly less efficient at handling calls They frequently read from scripts and are not experi- enced in handling calls. The efficiency is estimated to be 80 percent of the U.S. in terms of staffing operators. Currently, the U.S. has an average of 83 operators handling calls paid at $15.00 per hour and 5 managers. The call center is staffed around the clock and throughout the year, but each operator works 2000 hours in a year. The Philippines will need the same number of managers. It will cost $100,000 to train the operators. It will cost an additional $110,000 per year to administrate the contract and supervise the operation from the U.S headquarters. a. What are the total costs of outsourcing this call center to the Philippines compared to the U.S.? b. What…Due to rising labor costs in Malaysia, Domain Computer, based in Singapore, is considering shifting part of its production facilities from Malaysia to an emerging market, Vietnam, to better integrate its supply chain in the South east Asia region. John Lawson, the CFO of the company, estimates that Domain Computer needs to invest USD735,000 to acquire an existing factory in Vietnam and another USD285,000 in renovations and installation of new machineries. The cost of training new workers is estimated to be USD310,000. He believes that the new factory will lead to an estimated USD928,000 savings in labor costs and another USD417,000 savings in logistics expenses. Required: Use cost-benefit analysis to recommend whether Domain Computer should shift parts of its production facilities from Malaysia to Vietnam. Explain your answer. You are required to write 500 to 800 words. ( Currently I have completed my Cost-benefit analysis; but I am confused as to how to use PESTLE's analysis with…You are a supply chain manager at a UK firm. In 2010, a volcano broke out in Iceland, disrupting air travel across Europe. On the one hand, you are considering switching to local suppliers in the UK. On the other hand, you feel bad about abandoning your Asian suppliers, with whom you have built a pleasant personal and business relationship, and who – in the long run – may be able to deliver products much cheaper. Yet, your tightly coordinated production cannot afford to miss one supply shipment. How do you proceed?
- Paterson Company, a U.S.-based company, manufactures and sells electronic components worldwide. Virtually all its manufacturing takes place in the United States. The company has marketing divisions throughout Europe, including France. Debbie Kishimoto, manager of this division, was hired from a competitor 3 years ago. Debbie, recently informed of a price increase in one of the major product lines, requested a meeting with Jeff Phillips, marketing vice president. Their conversation follows. Debbie: Jeff, I simply dont understand why the price of our main product has increased from 5.00 to 5.50 per unit. We negotiated an agreement earlier in the year with our manufacturing division in Philadelphia for a price of 5.00 for the entire year. I called the manager of that division. He said that the original price was still acceptablethat the increase was a directive from headquarters. Thats why I wanted to meet with you. I need some explanations. When I was hired, I was told that pricing decisions were made by the divisions. This directive interferes with this decentralized philosophy and will lower my divisions profits. Given current market conditions, there is no way we can pass on the cost increase. Profits for my division will drop at least 600,000 if this price is maintained. I think a midyear increase of this magnitude is unfair to my division. Jeff: Under normal operating conditions, headquarters would not interfere with divisional decisions. But as a company, we are having some problems. What you just told me is exactly why the price of your product has been increased. We want the profits of all our European marketing divisions to drop. Debbie: What do you mean that you want the profits to drop? That doesnt make any sense. Arent we in business to make money? Jeff: Debbie, what you lack is corporate perspective. We are in business to make money, and thats why we want European profits to decrease. Our U.S. divisions are not doing well this year. Projections show significant losses. At the same time, projections for European operations show good profitability. By increasing the cost of key products transferred to Europeto your division, for examplewe increase revenues and profits in the United States. By decreasing your profits, we avoid paying taxes in France. With losses on other U.S. operations to offset the corresponding increase in domestic profits, we avoid paying taxes in the United States as well. The net effect is a much-needed increase in our cash flow. Besides, you know how hard it is in some of these European countries to transfer out capital. This is a clean way of doing it. Debbie: Im not so sure that its clean. I cant imagine the tax laws permitting this type of scheme. There is another problem, too. You know that the companys bonus plans are tied to a divisions profits. This plan could cost all of the European managers a lot of money. Jeff: Debbie, you have no reason to worry about the effect on your bonusor on our evaluation of your performance. Corporate management has already taken steps to ensure no loss of compensation. The plan is to compute what income would have been if the old price had prevailed and base bonuses on that figure. Ill meet with the other divisional managers and explain the situation to them as well. Debbie: The bonus adjustment seems fair, although I wonder if the reasons for the drop in profits will be remembered in a couple of years when Im being considered for promotion. Anyway, I still have some strong ethical concerns about this. How does this scheme relate to the tax laws? Jeff: We will be in technical compliance with the tax laws. In the United States, Section 482 of the Internal Revenue Code governs this type of transaction. The key to this law, as well as most European laws, is evidence of an arms-length price. Since youre a distributor, we can use the resale price method to determine such a price. Essentially, the arms-length price for the transferred good is backed into by starting with the price at which you sell the product and then adjusting that price for the markup and other legitimate differences, such as tariffs and transportation. Debbie: If I were a French tax auditor, I would wonder why the markup dropped from last year to this year. Are we being good citizens and meeting the fiscal responsibilities imposed on us by each country in which we operate? Jeff: Well, a French tax auditor might wonder about the drop in markup. But, the markup is still within reason, and we can make a good argument for increased costs. In fact, weve already instructed the managers of our manufacturing divisions to legitimately reassign as many costs as they can to the European product lines. So far, they have been very successful. I think our records will support the increase that you are receiving. You really do not need to be concerned with the tax authorities. Our tax department assures me that this has been carefully researchedits unlikely that a tax audit will create any difficulties. Itll all be legal and above board. Weve done this several times in the past with total success. Required: 1. Do you think that the tax-minimization scheme described to Debbie Kishimoto is in harmony with the ethical behavior that should be displayed by top corporate executives? Why or why not? What would you do if you were Debbie? 2. Apparently, the tax department of Paterson Company has been strongly involved in developing the tax-minimization scheme. Assume that the accountants responsible for the decision are CMAs and members of the IMA, subject to the IMA standards of ethical conduct. Review the IMA standards for ethical conduct in Chapter 1. Are any of these standards being violated by the accountants in Patersons tax department? If so, identify them. What should these tax accountants do if requested to develop a questionable taxminimization scheme?Danna Martin, president of Mays Electronics, was concerned about the end-of-the year marketing report that she had just received. According to Larry Savage, marketing manager, a price decrease for the coming year was again needed to maintain the companys annual sales volume of integrated circuit boards (CBs). This would make a bad situation worse. The current selling price of 18 per unit was producing a 2-per-unit profithalf the customary 4-per-unit profit. Foreign competitors kept reducing their prices. To match the latest reduction would reduce the price from 18 to 14. This would put the price below the cost to produce and sell it. How could these firms sell for such a low price? Determined to find out if there were problems with the companys operations, Danna decided to hire a consultant to evaluate the way in which the CBs were produced and sold. After two weeks, the consultant had identified the following activities and costs: The consultant indicated that some preliminary activity analysis shows that per-unit costs can be reduced by at least 7. Since the marketing manager had indicated that the market share (sales volume) for the boards could be increased by 50% if the price could be reduced to 12, Danna became quite excited. Required: 1. CONCEPTUAL CONNECTION What is activity-based management? What phases of activity analysis did the consultant provide? What else remains to be done? 2. CONCEPTUAL CONNECTION Identify as many nonvalue-added costs as possible. Compute the cost savings per unit that would be realized if these costs were eliminated. Was the consultant correct in the preliminary cost reduction assessment? Discuss actions that the company can take to reduce or eliminate the nonvalue-added activities. 3. Compute the unit cost required to maintain current market share, while earning a profit of 4 per unit. Now compute the unit cost required to expand sales by 50%, assuming a per-unit profit of 4. How much cost reduction would be required to achieve each unit cost? 4. Assume that further activity analysis revealed the following: switching to automated insertion would save 60,000 of engineering support and 90,000 of direct labor. Now, what is the total potential cost reduction per unit available from activity analysis? With these additional reductions, can Mays achieve the unit cost to maintain current sales? To increase it by 50%? What form of activity analysis is this: reduction, sharing, elimination, or selection? 5. CONCEPTUAL CONNECTION Calculate income based on current sales, prices, and costs. Then calculate the income by using a 14 price and a 12 price, assuming that the maximum cost reduction possible is achieved (including Requirement 4s reduction). What price should be selected?Please answer this question *Explain and discuss the direct and indirect impact of economic exposure on a UK department store (seller of a wide range of iterns; clothes, gifts, toys, electrical goods, etc.) if there were an * unexpected downward movement in the UK & that was expected to last for some vears. The department store has 80% of its stores in the UK and 20% of its stores in France
- When President Carlos Menem of Argentina took office in 1989, he and his economy minister Domingo Covallo decided that competition from foreign producers would stimulate Argentine businesses to provide better products at competitive prices. To the delight of Argentine shoppers, the import tariffs were lowered and goods began pouring in from all over the world: calculators and copy machines, scissors and automobiles, bicycles, toothpicks – and peaches. When Menem’s new policies took effect, California peach growers responded eagerly to the opening of the new market. Individual growers banded into the California Peach Growers Association to ship their fruit to Edcadassa, the Argentine firm that oversees all imported goods while they await customs clearance at Ezeiza international airport. As supervisor of the Argentine project for the growers association, you were extremely pleased with success of the first few shipments; everything had gone smoothly. Then word came back from…Tangent Controls Ltd. is a manufacturer of crash-protected event recorders that are used in railway systems around the world to record event data. These data can be retrieved and analyzed to monitor and improve operations, but also to provide diagnostic data in the event of rail crashes. The small Ottawa-based company has customers across the world, but its largest market is North America. The company has been hurt by the U.S. economy, seeing a 12% decline in sales over the prior year. The company is hoping that the latest industry developments, which call for a significant increase in the shipment of oil by railcar, will mean an increase in sales. In the meantime, the company has been seeking new investors and has approached a leading Canadian venture capital firm to see if it might be interested in investing. As part of its approach, Tangent has provided the following financial information for the most recent fiscal year. TANGENT CONTROLS LTD. Statement of Financial Position As at…As the world reports on inflation, companies are taking steps to adjust their prices and manage their resources. Citizens are worried that prices will increase to a level that is difficult. Atten’tive Corporation is a private corporation formed since 2000 for the purpose of selling products to local and regional economies. The government has consulted with Atten’tive for assistance with providing cheaper product options. As at January 2005, they switched to Activity Based Costing System and has been using it ever since. Due to the switch in costing methods, Atten’tive Company used multiple cost drivers, which has a direct cause/effect relationship in its applied overhead costs. This method allows for a better accounting of costs, which may invariably have transferred out and therefore reduce some manufacturing costs. The Chief Operating Officer held a meeting with all Department Heads on their operational budgets and to present a cash flow position of the company among other schedules.…
- Fruity Co is a distributors of fresh good and vegetables. It currently has 15 warehouses in the US from which it supplies produce to grocery stores. Each warehouse has an average inventory level of 3.88 million $. Due to advances in transportation services and infrastructure, management believes that if they reduce the number of warehouses to 10, they would still be able to provide timely replenishment to the grocery stores. What would be the total inventory in the system in millions of dollars, if inventory was consolidated from the 15 warehouses to only 10 warehouses? (Enter your answer in millions of dollars. E.g. if you get 30.24 million $ simply enter 30.24 without the million$ sign. Round your answer to 2 decimal places.)Recently, Gardenia Philippines Reported an increase of 35% in bread sales in Quarter 2 of 2020. How has this possible given the pandemic situation we are experiencing? What do you think makes gardenia's brand successful among its rivals despite the pandemic? What unique characteristics have you observed in their operations? Can a well-planned and well-managed operations and supply chain help build a competitive advantage? Explain your answers comprehensively.Petal Providers Corporation opens and operates “mega” floral stores in the U.S. The idea behind the super store concept is to model the U.S. floral industry after its European counterparts whose flower markets generally have larger selections at lower prices. Revenues were $1 million with net profit of $50,000 last year when the first “mega” Petal Providers floral outlet was opened. If the economy grows rapidly next year, Petal Providers expects its sales to growth by 50 percent. However, if the economy exhibits average growth, Petal Providers expects a sales growth of 30 percent. For a slow economic growth scenario, sales are expected to grow next year at a 10 percent rate. Management estimates the probability of each scenario occurring to be: rapid growth (.30); average growth (.50), and slow growth (.20). Petal Providers net profit margins are also expected to vary with the level of economic activity next year. If slow grow occurs, the net profit margin is expected to be 5…
