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Gary Vaynerchuk is considered to be one of the top marketers in the US due to his innovation and influence. He is a solid follow for any marketing manager that wants to stay ahead of the competition. In his post from a few years ago – he notes that the one thing that people are willing to overpay for is time from the article THE ONE THING PEOPLE WILL MASSIVELY OVERPAY FOR.

Do you agree that customers are willing to pay a premium for their time? Can you give a specific example from your own life where you are willing to pay a premium for time saved or time convenience?

 
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Fitness Plus is thoroughly investigating the option of opening a new facility downtown. Doing so would be an aggressive capacity expansion strategy, opening up new markets when competition is increasing at the original facility. This strategy would enable Fitness Plus to expand its market area, but may not help the overcrowding at the current facility. There are several uncertainties as to future costs, customer demands, and strategies of competitors. It also will take some time to bring the new capacity on line. However, the resurgence in activity downtown makes this option worth more careful analysis. Fitness Plus can lease a facility at $8 per square feet at a new downtown location. It would be very accessible to the new offices and businesses that are moving back into downtown. The lot is sufficiently large to handle a full-service club comparable in size with the original facility, with ample room for parking. It would probably take about one year before financing could be arranged, the workforce hired and trained, and the facility open to customers. The new facility would have 8,000 square feet, without further expansion. Either new or used Nautilus and cardiovascular equipment can be purchased for the new facility. Buying the full complement (53 machines) of equipment currently at the original facility would be $160,000 new, and only $80,000 used. However, there is a concern that a brand new facility furbished with used equipment would not project a good image, and that membership might be adversely affected. The initial investment in carpeting (and rubber matting just for the weight lifting area) would cost a total of $16 per square yard for the whole facility. Annual costs would include $120,000 for salaries and wages, $25,000 for insurance and liability, $2,400 for maintenance, and $20,000 for electricity. The facility should attract customers from a 6-mile radius. Membership fees would be $70 per month, with an additional $200 initiation fee in the first year. A juice bar and tanning beds can be added to bring in additional revenues. The juice bar can generate an added 14% of sales, and tanning beds can add another 1% of sales. A tanning bed costs around $5000 with a payback of just one year. Demand for the new facility can be low or high. If low, there would be 150 members in the first year of operation, and grow until reaching a 500-member plateau in the 6th year. This level is the largest the leased facility can currently handle. If demand for the new facility is high, the membership would be 300 in the first year and could increase to 1000 in the 6th year (assuming sufficient capacity). If demand turns out to be this high, Fitness Plus has the option of having the leased facility expanded to 14,000 square feet. This expansion would accommodate a 1000-person membership. If expansion occurs before the facility is opened, the lease cost will increase only to $9 per square foot. If expansion occurs after the facility is opened, the leasing cost would jump to $10 per square foot once the expansion is finished. While the facility would not close down during this later expansion (which would affect revenues), construction costs would be disproportionately higher and thus the $10 leasing rate thereafter. 1

2A larger facility also means that annual costs would increase to $4200 for maintenance, $195,000 for salaries and wages, $30,000 for insurance and liability, and $38,000 for electricity. There would also be the added investment of $10,500 in carpeting. The investment in equipment would also have to be increased from 53 to 100 machines to handle the larger demand. Management believes that the high-demand scenario is 60 percent likely, with the small demand estimates only 40 percent likely. It should be clear the end of the first year of operation whether the high- or low demand scenario is correct. Of course, if demand is high, the best decision might not be to expand but instead forego any increase in market share in the downtown area. The MACRS accelerated depreciation schedules would be used when estimating after-tax cash flows for any new capital investments in the facility and equipment. The income-tax rate, including relevant federal, state, and local taxes, would be 40 percent. This rate is based on the average income-tax rate experienced by Fitness Plus over the past several years. Management is not sure what discount rate should be used, but generally expects a return on investment of at least 15 percent.

QUESTIONS

1. Which alternative seems best, a small expandable facility that might be expanded later, or a full-sized facility comparable to the original facility? Combine notions of capacity planning with capital budgeting (see Supplement F, “Financial Analysis”), decision trees (see Supplement A, “Decision Making”), and computer spreadsheets to support your conclusions. List any reasonable assumptions that you must make when doing your analysis.

2. How sensitive are your conclusions to estimated probabilities for demand (see “sensitivity analysis” in Supplement A, “Decision Making”)? The discount rate?

3. What qualitative factors bear on these two alternatives, and whether Fitness Plus should expand downtown at all?

 
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When considering how organizational and operational models may vary among three different health care organizations, such as transitional care, home health, and long-term care, we must consider the different goals of each organization as this will affect these models. Each organization serves a different purpose for the patients they are treating. Transitional care is care that helps patients transition from one care setting to another. This type of organization would focus on coordinating with the care settings and strategizing an effective plan for continued care and treatment. Home health care is care that a patient receives inside their home from a caregiver rather than a hospital or nursing home. The focus of this organization would be to focus on the patient’s well-being in their home setting and how to optimize this care to avoid any possible hospitalization. Long-term care refers to “services designed to meet a person’s health or personal care needs during a short or long period of time that help people live as independently and safely as possible when they can no longer perform everyday activities on their own” (National Institute on Aging, n.d.). As you can see, each care here has a different purpose, different type of patient, with different needs. Therefore, they each function differently, will have different day-to-day and long-term operational tasks and focuses, and may vary in the roles they carry out within the organization.

1. According to the statement above what can you agree and or disagree with? Please answer asap

 
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Apple is breaking a 15-year partnership with Intel on its Macs — here’s why

Apple’s new laptops and desktop uses its own chips, instead of processors from Intel. Apple is making the move because it already makes its own phone and tablet processors, and it says it can improve laptop battery life. Intel has also fallen behind on manufacturing, and Apple’s chip manufacturing partner is more advanced, analysts say.

Apple announced three new Mac computers on Tuesday: a MacBook Air, a 13-inch MacBook Pro, and a Mac Mini. They essentially look the same as their predecessors. What’s new this time is the chip that runs them. Now they’re powered by Apple’s M1 chip instead of Intel processors. Tuesday’s announcement marks the end of a 15-year run where Intel processors powered Apple’s laptops and desktops, and a big shift for the semiconductor industry.

Apple is the fourth-largest PC maker measured by shipments, according to a Gartner estimate, so its plan to use its own chips in its entire lineup of laptops and desktops, first announced in June, is a blow for Intel.

“We believe Intel-powered PCs—like those based on 11th Gen Intel Core mobile processors—provide global customers the best experience in the areas they value most, as well as the most open platform for developers,” Intel said in a statement.

Apple’s chips are based on ARM technology, as opposed to the x86 architecture that Intel’s chips use. ARM was originally designed for mobile devices, and chips built with ARM designs are consistently more efficient, leading to longer battery life. On a laptop, that could mean several extra hours away from the plug.

But that’s only one reason why Apple is switching out the brains of its laptops. Here’s a rundown of why Apple made the move:

Apple’s strategy of owning core technologies. Apple CEO Tim Cook has frequently said that the company has a “long-term strategy of owning and controlling the primary technologies behind the products we make.” For a computer hardware company, there are few technologies less essential than the silicon processors that the machines run on.

Apple has invested heavily in its silicon department, including major purchases, starting with a $278 million purchase of P. A. Semi in 2008, which started the department, and most recently, $1 billion for part of Intel’s modem business in 2019. It’s been building its own A-series chips for iPhones, iPads, and Apple Watches since 2010. Now it’s essentially bringing the same technology to laptops and desktops, meaning that all Apple computers basically run on the same framework.

“Apple Silicon is totally in keeping with the strategic goal of Apple to really control an entire stack,” CCS Insight research director Wayne Lam said. “Now in computing, they own everything from silicon to the software to how the user moves the mouse around, so it’s tremendously integrated.”

Controlling its own technologies helps Apple integrate its products more deeply. It also means that it runs its own schedule — chips take 3 years to develop, Apple senior vice president Johny Srouji said last year — and has more control over costs.

“Apple thinks they can innovate faster than the standard business model of Intel or Qualcomm doing the development on chips and then they build on top of it,” Lam said.

Intel is falling behind in manufacturing. Apple proudly said on Tuesday that the M1 chip in the new Macs uses 5-nanometer transistors. “Five-nanometer is the leading edge of process technology right now and there are only a few products out at this point,” Gartner research director Jon Erensen said. Currently, Intel is shipping chips with 10-nanometer transistors. In general, the more transistors a chipmaker can fit into the same space, the more efficient the chip is. Currently, Intel ships chips only with 10-nanometer transistors.

Intel famously controls its own factories, called “fabs,” around the world, compared to Apple, which contracts with companies in Asia to manufacture chips to its own specifications. But Apple’s chip manufacturing partner, TSMC, can make 5-nanometer chips while Intel can’t.

“Intel’s had some challenges over the last couple of years on the manufacturing side. And I think those challenges have opened a window or opportunity for ARM-based designs for come in. Apple is one of the best ARM-based processor designers out there,” Erensen said.

Earlier this year, Intel CEO Bob Swan said that it was considering outsourcing its manufacturing, like what Apple does. “With the challenges that Intel has had moving to 10-nanometer and 7-nanometer while foundries like TSMC and Samsung have pushed more aggressively, it’s taken one of Intel’s key advantages and leveled the playing field a bit,” Erensen said.

More battery life, potentially better performance, and laptops that work like phones. Apple says that the M1 Macs are better products than the older models, mainly because Apple claims its chips enable better performance and longer battery life than it could achieve using Intel’s chips.

It’s clear that the new Macs will have improved battery life. Apple’s previous chips have been used in smartphones and tablets, which have significantly smaller batteries. During Apple’s launch event on Tuesday, the company emphasized how it mainly evaluates chips on performance per watt, not raw performance.

On the entry-level MacBook Air, Apple says that it can manage 15 hours of web browsing on one charge, nearly 30% more than the advertised 10 to 11 hour battery life of the previous Intel-based model.

The new Macs also work more like phones or tablets, Apple said, with features like the ability to wake up from sleep instantly. The new M1 Macs can even run iPhone apps, if the developer takes a few steps to make them available on Apple’s App Store.

However, analysts warn that Apple’s performance claims, like that it is faster than comparable PCs, will need to be tested once the computers hit shelves next week. “Performance of the new M1 chip is nearly impossible to gauge as the company didn’t provide any detailed substantiation around any of the performance claims made,” Moor Insights founder Patrick Moorhead said.

Apple did not stop selling Intel laptops on Tuesday, and its highest-end laptops are still Intel-based, suggesting that there are still performance advantages to some Intel chips.

Questions to answer:

  1. Describe the strategies Apple adopted in developing and using M1 chip for its products.
  2. Discuss the reasons behind Apple adopting these strategies.
  3. Assess the risks associated with Apple adopting these strategies.
  4. Should Apple pursue different strategies? Why?
 
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