Question

Write two paragraphs explaining each of the parties’ point of view - Lauren's as well as the CEO's. Explain your final decision on whether or not to go through with the sale as well as WHY this is your decision.

Answer 1

In this case, the final decision has already been made by Lauren to agree to the new terms proposed by Bart's. As the CEO, Jimmy Cricket should address the issue with Lauren and have a discussion about the importance of group decision-making. While it is understandable that Lauren wanted to save time and effort by making the decision on her own, it is crucial for the CEO to emphasize the value of collective decision-making in order to consider different perspectives, mitigate risks, and ensure that the company's best interests are protected. The CEO should emphasize the need for team collaboration and the importance of discussing potential risks, such as Bart's payment history, to make informed decisions that align with the company's goals and objectives.

Step-by-step explanation:

--Lauren's point of view:

Lauren, as an employee, is likely to focus on the potential benefits and opportunities that the new ride can bring to the amusement park. She may see it as a way to attract new customers and increase ticket revenue. Lauren may also believe that the ride would enhance the overall experience of the park, leading to positive word-of-mouth and customer satisfaction. From her perspective, investing in the new ride could be a way to stay competitive in the market and keep the park exciting for visitors.

--The CEO's point of view:

The CEO, on the other hand, has the responsibility to make strategic decisions that will ensure the financial stability and success of the amusement park. The CEO may take a more cautious approach and consider the financial feasibility of the investment. They will carefully analyze the costs, such as the purchase cost of the ride, the annual operating costs, and the potential increase in revenue. The CEO will also factor in the useful life of the ride and the salvage value. They will weigh the potential benefits against the financial risks and assess whether the investment aligns with the long-term goals of the park.

--Final decision and reasoning:

Based on the information provided, it is difficult to make a definitive decision on whether or not to go through with the sale. Further analysis is needed to evaluate the potential additional ticket revenue that the ride would generate. Additionally, other factors, such as market trends, competition, and customer preferences, should be considered.

However, if we assume that the additional revenue generated by the ride is sufficient to cover the costs and provide a positive net present value (NPV), it could be a viable investment. A positive NPV indicates that the present value of the cash inflows exceeds the initial investment, making it an attractive opportunity.

Answer 2

Step-by-step explanation:

Lauren is the top salesperson for Mudge Paper Company. She also leads the sales team that supports Mudge’s largest client, Bart’s Office Supplies. Bart’s is an international office supply chain that is growing rapidly. During the month of May, Lauren and her team members, Andy Griffith and Ronnie Howard, underwent intense negotiations with Bart’s purchasing agent, Jack Black and Bart’s CEO, Cary Grant, to restructure the current sales contracts.

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· Mudge’s CEO was reluctant to tie so much of its cash flow to the success of Bart’s. The concern was raised because in the last six months, Bart’s was paying down the credit line every 60 days rather than 30 days that was agreed upon in the current contract. Bart’s did not appear to have credit issues but Mudge was not in a position to give interest free loans for 60 days.

This week, in time for the Memorial Day holiday vacation the final agreement was reached between Mudge and Bart’s. Bart’s would contract to purchase $1,750,000 of paper products from Mudge. Invoice payment terms was 45 days, with a 3% interest on invoices paid later than 45 days. The credit limit was extended to $1,000,000. was not completely happy with the contract, as she felt Mudge was not protected from cash flow damage should Bart’s not pay timely, not to mention the large line of credit. Still, the parties agreed, including her boss who was skeptical for the same reason as Lauren. The parties were due to sign the contract on Tuesday after the Memorial Day holiday.

On Friday evening, Lauren was packing her belongings readying to leave the office for the Memorial Day holiday, when her cell phone pings. The caller is Jack Black, the Purchasing Agent for Bart’s. It appeared that a recent deal on Bart’s end with UMUC tripled its need for copy paper from Mudge.

Lauren winced at the memory of her teammate Griffith’s constant posturing in front of Black and the Bart’s CEO. She had hoped to be able to pick her own team when she was promoted to leader but that was not to be. Andy Griffith is a problem on this team. All month long, he challenged her ideas in front of Bart’s CEO. Lauren knows that she was promoted over Griffith because her sales record was 20% higher than his was and she could close a deal better than he could. Griffith resents her promotion and reminds Lauren, as often as possible, that he brought in the Bart’s account and that he and Bart’s CEO have a great relationship. They play golf together and often go to dinner together with their wives. Lauren thinks Griffith is a good salesperson but believes he should not be on this team. The tension is at times very thick especially during the negotiations this month. Griffith seemed to want to give away the store.

Unfortunately, Ronnie Howard seemed to be sitting on the fence when it came to the negotiations. Lauren had expected that Ronnie would support her negotiation position with the client rather than Griffith’s because it protected Mudge. Since Ronnie was the niece of Mudge’s owner and CEO, Lauren believed she should be supportive of protecting the company’s money. Still, Ronnie was the one who came up with the idea of paying interest on the late invoices. It just seemed to Lauren that one day Ronnie was agreeing with Griffith and on another day with her. Lauren supposed that it was Ronnie’s new position at the company that made her want to please everyone including Griffith. Lauren believed that pleasing people is a nice gesture but does not add to the efficiency of the team’s decision-making. Lauren believed that Ronnie would be looking for the general thoughts of the group, so she could appear to agree with the group.

Overall, the month’s negotiation process had been long and difficult. The thought of going over it all again to make the changes seemed mind-numbing to Lauren. Yet, making the decision on her own would mean obligating the company to an even greater cash flow commitment. Her boss would not be happy with this obligation because he specifically warned her when they started that there was nothing to prevent Bart’s from continuing to pay its bills every 60 days despite the new contract agreement. Lauren rationalized and thought to herself, “Bart’s knows we are not likely to cut them off easily. They are too big a customer to us. However, the extra sales volume should offset the lost interest due for ten days on late invoices.

Lauren told Black that he could tell the CEO that she would agree to the terms. When Lauren hung up the phone, she said aloud to nobody in particular, “I supposed I should have consulted the group, but it was worth the risk of not having to make another team decision.”