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You are the assistant to the CEO of a small textile firm that manufactures high-quality, premium-priced, stylish clothing. The CEO has decided to see what the opportunities are for exporting and has asked you for advice as to the steps the company should take. What advice would you give the CEO?

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Chika Ilonah
Chika IlonahLv10
29 Sep 2019

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Related questions

A small firm faces an inverse demand function of P = 100 - Q. Its total cost function is given by TC = .5Q2. (You should see right away that marginal revenue is thus MR = 100 - 2Q, and it also happens that marginal cost is just MC = Q. Both MR and MC are the first derivatives of total revenue and total cost. And a quick comment on MC: unlike some marginal cost functions we've seen, this one is not constant, because marginal cost is getting $1 higher with each additional unit of output.)

The Chief Executive Officer will manage the firm, choosing output and price. Currently, the CEO is negotiating an incentive-based contract with the shareholders of the company.
(Hint: basing compensation on revenue will motivate revenue maximization rather than profit maximization!)

Hint: since the plan creates incentives for the CEO to maximize revenue rather than profit, you should not set MR = MC at this point. BIG hint: revenue is maximized when selling an additional unit won't increase your revenue, or in math terms, when MR = 0.)

Owners' proposal: CEO keeps 10% of TR.

Firm price:

  

Firm output:

  

Total revenue:

  

Firm profit:

  

CEO compensation:

  

Remaining profit for owners:

  

prompt: In 1995, the Malden Mills factory in Lawrence, Massachusetts, burned to the ground. The company is the maker of the fabric Polartec, which is used to make jackets and other winter clothing. The company's CEO, Aaron Feuerstein, gained a measure of fame from two decisions he made in the fire's aftermath. First, he decided to rebuild the factory in Lawrence. Most textile manufacturers had moved their factories outside the U.S, where labor costs are lower, it is relatively unusual today to find a shirt or any article of clothing with a "made in the U.S" label. despite a golden opportunity to make an overseas move, Feuerstein directed that his factory be rebuilt in its traditional home. Second, he paid his workers their full wages during the period of rebuilding. For months, Malden Mills employees picked up paychecks, although there was no fabric to be made.

Does a corporation have an obligation to care for its employees?

What if the company can make a lot more money if it lays everyone off and "outsources" jobs?

What if the company has a golden opportunity to make such a change?

€The setting is an 82-bed hospital located in a small city. One day an employee of the maintenance department asked the supervisor, George Mann, for an hour or two off to take care of some personal business. Mann agreed and asked the employee to stop at the garden equipment dealership and buy several small lawn-mower parts that the department required. While transacting business at a local bank, the employee was seen by Sally Carter, the supervisor
of both human resources and payroll, who was in the bank on hospital business. Carter asked the employee what he was doing there and was told the visit was personal. Upon returning to the hospital, Sally Carter examined the employee's time card. The employee had not punched out to indicate when he had left the hospital. Carter noted the time the employee returned, and after the normal working day, she marked the card to indicate an absence of two hours on personal business. Carter advised the chief executive officer (CEO), Jane Arnold, of what she had done, citing a long-standing policy (some would say infrequently used, policy manual) requiring an employee to punch out when leaving the premises on personal business. The CEO agreed with Sally Carter's action. Carter advised Mann of the action and stated that the employee would not be paid for the two hours he was gone. Mann was angry. He said he had told the employee not to punch out because he had asked him to pick up some parts on his trip; however, Mann conceded that the employee's personal business was probably the greater part of the trip. Carter replied that Mann had no business doing what he had done and that it was his (Mann's) poor management that had caused the employee to suffer. Mann appealed to the CEO to reopen the matter based on his claim that there was an important side to the story that she had not yet heard. Jane Arnold agreed to hear both managers. State their position.

Instructions:

1. In either paragraph form or as a list of points, develop the argument you would be advancing if you were in Georges Mann's position.

2. In a similar fashion, thoroughly develop the argument you would advance if you were in Sally Carter's position.

3. Assuming the position of the CEO, Jane Arnold, render a decision.

Document your decision in whatever detail may be necessary, complete with an explanation of why you decided in this fashion.

4. Based on your responses to Questions 1-3, outline whatever steps-policy changes, guidelines, payroll requirements, or something else you believe should be considered to minimize the chances of similar conflict in the future.

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