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Prior to beginning work on this discussion forum, read Unit 2: Integrated Marketing and Unit 4: Operating a Small Business Effectively from your course textbook, Entrepreneurship: Starting and Operating a Small Business. In addition, read the following article, Up to code: Does your company’s conduct meet world-class standards?.

The retrieved article above proposes a set of guiding principles organizations of all sizes can use to guide organization conduct at all levels. The principles are also useful as a starting point for developing an ethics policy tailored to a specific organization. Critique the article using the following as a guide:

  • Do the proposed standards have worldwide applicability? Why or why not?
  • The proposed code is framed by eight guiding principles. Are these principles adequate to define world-class ethics standards? If not, what is lacking?
  • Would you use the eight guiding principles as a foundation to guide behavior in your organization, or are the guiding principles more applicable to large, established organizations?

Offer a link to a video or an article that provides additional information about the codex discussed above or about other approaches used to define ethical business behavior.

 
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Quoting for Exports or Projects – Currency Fluctuation Considerations

This Assignment or Exercise does not require the use of any textbook or academic research and material. Rather, it seeks to develop the basic quantitative reasoning that is used in making currency decisions while quoting (as a supplier) for the export of a product.

Context to Develop Our Reasoning:

Here let us assume that an American manufacturer wishes to export his product (baseball bats) to a European country. The question that we are asking is: Should the American Exporter “Quote for/Invoice the product” in Dollars or should he quote in Euros.

The current exchange rate is 1 $ = 0.85 Euros, which implies that 1 Euro = 1.176 Dollars

Now let us make a very normal assumption: The European buyer (being no fool) is very aware of manufacturing costs in USA so in any current negotiations he uses the current manufacturing costs as his base for arriving at a price: He therefore agrees to pay $ 7 for a single bat. Alternatively, he would be ready to pay Euros 5.95 using current exchange rates. The contract is for the sale of 1000 bats by the American exporter. The quoted price per bat can be $7 or Euro 5.95, depending on the currency you choose to transact in.

The contract will take 3 months to execute (it is very normal for international contacts to take time), and by the time the European recipient will receive the bats, 3 months would pass. In these three months, the exchange rate would (quite naturally) change:

Consider two scenarios:

  1. The dollar depreciates and after three months 1 $ = 0.50 Euro

If the quotation is in Euros, the American exporter will receive payments in Euros in his own American bank, in keeping with the quotation. The bank will then convert the Euros to Dollars at the prevailing exchange rate at that time. Ultimately the American exporter wants dollars since he wishes to spend money in USA.

If the payment and corresponding quotation is in dollars, then the payment received is in the same value of dollars, anyway.

QUESTIONS

  1. calculate and show, what the American exporter gains by quoting in the Euro.
  1. Based on questions 1 and 2 can you develop and state any generalized recommended rules regarding which currency should be used while “quoting”, on the assumption that you can forecast the ‘direction’ of exchange rate changes (even if you cannot forecast the extent). This means you can guess which currency is going to appreciate or depreciate (even if you cannot forecast exact exchange rates).
  1. Suppose there are five currencies, each appreciating or depreciating at different rates, and you had the choice of quoting in ANY currency, which would you choose? Can you suggest a rule to make this choice?
 
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A survey question for a sample of 150 individuals yielded 80 Yes responses, 50 No responses, and 20 No Opinions.

. What is the point estimate of the proportion in the population who respond Yes?
What is the point estimate of the proportion in the population who respond No?

The National Football League (NFL) polls fans to develop a rating for each football game (NFL website, October 24, 2012). Each game is rated on a scale from O (forgettable) to 100 (memorable). The fan ratings for a random sample of 6 games follow.
57 61 86 74 72 73.
Develop a point estimate of mean fan rating for the population of NFL games.
Develop a point estimate of the standard deviation for the population of NFL games.

The average score of an online test is 502, and the standard deviation is 100.
What is the probability a sample of 90 test takers will provide a sample mean test score within 10 points of the population mean of 502 (i.e., between 492 and 512) ?
Suppose we have already know that P (z<=-0.1) = 0.4602 and P (z<=0.1) = 0.5398, for z is the random variable from a standard normal distribution.
Hint: You can transfer the normal distribution to the standard normal distribution to solve this problem.
 
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The Gorman Manufacturing Company must decide whether to manufacture a component part at its Milan, Michigan, plant or purchase the component part from a supplier. The resulting profit is dependent on the demand for the product. The following payoff table shows the projected profit (in thousands of dollars):

State of Nature
Low Demand Medium Demand High Demand
Decision Alternative s 1 s 2 s 3
Manufacture, d 1 -20 40 100
Purchase, d 2 10 45 70

The state-of-nature probabilities are P(s1) = 0.50, P(s2) = 0.40, and P(s3) = 0.10

(a) Use a decision tree to recommend a decision.
– Select your answer -Manufacture component partPurchase component partItem 1
(b) Use EVPI to determine whether Gorman should attempt to obtain a better estimate of demand. Enter your answer in thousands dollars. For example, an answer of $200 thousands should be entered as 200,000.
Gorman – Select your answer -shouldshould notItem 2 attempt to obtain a better estimate of demand, as the additional information could be worth up to $ for Gorman.
(c)

A test market study of the potential demand for the product is expected to report either a favorable (F) or unfavorable (U) condition. The relevant conditional probabilities are as follows:

P(F|s1) = 0.10 P(U|s1) = 0.90
P(F|s2) = 0.40 P(U|s2) = 0.60
P(F|s3) = 0.60 P(U|s3) = 0.40

What is the probability that the market research report will be favorable? [Hint: We can find this value by summing the joint probability values as follows: P(F) = P(Fns1) + P(Fns2) + P(Fns3) = P(s1)P(F|s1) + P(s2)P(F|s2) + P(s3)P(F|s3) .] If required, round your answer to three decimal places.
(d) What is Gorman’s optimal decision strategy? Choose the correct option.
A. Conduct test market, and manufacture component part, regardless of the market research report
B. Conduct test market, and purchase component part, regardless of the market research report
C. Conduct test market, and manufacture component part if market is favorable, or purchase component part if market is unfavorable
D. Do not conduct test market, and purchase component part
E. Do not conduct test market, and manufacture component part

– Select your answer -ABCDEItem 5
(e) What is the expected value of the market research information? Enter your answer in thousands dollars. For example, an answer of $200 thousands should be entered as 200,000. If your answer is zero, enter “0”.
$
 
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