Managerial Economics Essay Example

Managerial Economics Essay Managerial Economics Exam at EMBA program at Cotrugli Business School Belgrade Prepared by: Enor Cerimagic Date: January 2013 Managerial Economics Prepared by: Enor Cerimagic CONTENT SECTION A: Question 1 Provide a specific example of a poor decision that cost your company money. Identify the key decision-maker, and explain what happened. Did that person have the right incentives? Did they have sufficient knowledge? Explain how an improvement in incentives mechanisms and/or knowledge systems could prevent similar mistakes being made in future. SECTION B: Question 4 In response to the global financial crisis central banks across the world have cut interest rates. Why? What are the main arguments against rate cuts? SECTION C: Question 5 Many economic commentators believe that the dollar is weak at the moment. Why is this? What are the key drivers of foreign exchange markets? What do you think will happen to the dollar in future? /8 Managerial Economics Prepared by: Enor Cerimagic SECTION A: Question 1 Provide a specific example of a poor decision that cost your company money. Identify the key decision-maker, and explain what happened. Did that person have the right incentives? Did they have sufficient knowledge? Explain how an improvement in incentives mechanisms and/or knowledge systems could prevent similar mistakes being made in future. For almost twelve years I have been working for internatio nal pharmaceutical companies. We will write a custom essay sample on Managerial Economics specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Managerial Economics specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Managerial Economics specifically for you FOR ONLY $16.38 $13.9/page Hire Writer During this period of time with different companies’ philosophies, I have been able to realize that most of business or business related projects, which have been generated and led from regional offices or headquarters, without market specific modifications and inputs were usually, at least, more expensive. Sometimes, it can lead to project failure or project poor results. Local apples or a foreign strawberry does not matter, if result will come, if business opportunities will be recognised, if strategy will be improved and revenue/profit will grow. Although, nice apple and strawberry salad should be able to satisfy both taste and flavour or result and cost. Decision by our Regional manager (RM) has been made to engage consulting agency from Hungary to lead the project of Profiling, Segmenting and Targeting (PST) physicians and pharmacies in Adriatic Region, which includes Bosnia and Herzegovina. Main purpose of project was to determinate clients who will be segmented, related to current strategy, and targeted based on their potential and their adaption stage. Pareto principle (after Vilfredo Pareto, Italian scientists, 1848-1923), which states that 80% of our revenue/profit comes from 20% of our clients, was undisputed project goal for recognition. We have intended to cover 90% of total universe of doctors and pharmacies in country, and to profile them based on their potential and loyalty. In the project, further analysis included also our internal capacity, internal sales results (national and in territories) and market segments value and volume shares (national and in bricks). 00 90 80 70 80/20 RULE SALES 60 50 40 30 20 10 0 0 10 20 30 40 50 60 70 80 90 100 20% CLIENTS 80% RESULTS CLIENTS 3/8 Managerial Economics Prepared by: Enor Cerimagic In preparation stage we have alarmed RM that in BH IMS data (traditional market data in pharmaceutical industry) does not exist with recommendation and suggestion that local agency should be engaged for project execution, what would give us an opportunity to hire the agent based on references (advers e selection) and to monitor further actions. Also, local agencies are operating with valuable market data on daily basis. So, our intention was to decentralise project, but RM insisted on Hungarian agency for entire region. Result project realisation lasted for five months, instead of three, with additional costs for market data from different sources and additional costs of Hungarian agency for analytics and deliverables. Finally, we had to engage local agency for additional consultancies in project. Project itself was finished with costs 25% higher than in the bid, and 56% higher than the local agency’s offer for entire project. Project also included additional work of sales persons with additional, locally adopted, incentive mechanism for motivation. Conclusion RM made the decision although his knowledge about market specifics was not sufficient. Right incentive was questionable, as well. Project described that project costs are unpredictable in case of centralized project with lack of information. This case shows that project decentralisation, with right incentive program for local agency, and adequate (in this case – local) KPI (key performance indicators) would decrease costs in both terms – money and time. 4/8 Managerial Economics Prepared by: Enor Cerimagic SECTION B: Question 4 In response to the global financial crisis central banks across the world have cut interest rates. Why? What are the main arguments against rate cuts? Central Bank look after monetary policy through manages money supply. In theory central bank is using three main tools of monetary policies. First is that central bank has power to create interest rate for lending money to commercial banks, second is to define reserve requirement on bank’s deposit and third is market operations through purchasing or selling assets. With regard to mentioned activities, central bank is able to monitor credit potential of commercial banks in country, to manage financial stability and liquidity in country, to oversee operations of the banking system in country and to be the fiscal agent of government (take care of servicing foreign and domestic obligations). In a time of global crisis and threatened economy growth (decline in economic activity, investment, rising unemployment and general illiquidity), central bank with its instruments of regulation and stimulation of cash flow in country has an obligation and responsibility to influence the policy of commercial banks. The main goal of creating monetary policy of central bank in the current financial crisis is to increase the mass of money in circulation in commercial banks that will serve to increase their loan potential. By increasing the money supply, central bank indirectly intends to generate more investment to the industry as well as to the consumers, what allows faster economical growth and stabilizes liquidity in country. As mentioned, one of significant stimulative monetary policy instrument used by central bank is interest rate policy. Due to decline in economic activity and consequently reduction in investment and consumption, commercial banks are showing more prominent caution in extending credits, what leads to high quantity of money in commercial banks, and less money in circulation. Commercial banks are increasing the mass of deposits held at central bank, which could be higher than the deposit obligation (prescribed by legal regulations). On such deposited funds, commercial banks get a certain interest rate. To indirectly increase the economic growth, central bank is reducing its benchmark interest rate on funds deposited, and stimulating banks to release higher level of money in circulation through loans. Through mentioned activities commercial banks should realize higher interests through earns from the basis of the referral interest rate. In addition to the benchmark interest rate, central bank can influence determination of interbank interest rate. Central bank can lend money to commercial banks, as well. This means that central bank can indirectly affect change in interbank interest rate. Namely, the interest rate at which the central bank lends money to commercial bank is discount rate. Lower central bank discount rate indirectly affects decrease of prime rate. 5/8 Managerial Economics Prepared by: Enor Cerimagic Low discount rate increases the interest of commercial banks to borrow money from central bank, what affects the increasing level of money in circulation and, on the other side, lowers its price (cheaper money) for crediting the economy, population, etc. This means that it will generate lower nominal interest rate to consumer and investment loans. With these activities, mainly with focus on short-term interest rate, central bank is indirectly influencing money supply with intention to boost economy growth and investments, decreasing unemployment and increasing government public works. Most powerful central banks in the world firstly began to apply this type of monetary stimulus. In the second half of 2008 the Fed and the Bank of England began to decrease interest rates dramatically, and these banks ended 2012 with rates of 0. 00% (Fed) and 0. 50% (Bank Engl. ). This type of monetary stimulus was accompanied by many other central banks of the world. However, simulative monetary policy pursued by the central bank through interest rates, as a monetary instrument, if not controlled, can cause negative effects. If there is an increased amount of money in circulation, and on the other hand there is no economic progress, growth in production of goods and services, prices will begin to rise, and lead to significant inflationary disorders. If this stagnation further lead to the lack of major investment in new technology and projects, the entire economy, or the economy of country will become ineffective. Manufacture costs (inputs) start to grow, products’ prices and working costs start to increase, and that all contributes to inflation and multiply inflationary growth. Consequently, money depreciates which can lead to a general financial instability. To keep process in control and do any necessary adjustments in monetary policy or to interest rate, central banks’ committees meet plenty of time a year to review the nation’s economy through essential economic targets and the global financial trends. For instance, the FOMC (Federal Open Market Committee), the branch of Fed, meets eight times a year for reviewing process. 6/8 Managerial Economics Prepared by: Enor Cerimagic SECTION C: Question 5 Many economic commentators believe that the dollar is weak at the moment. Why is this? What are the key drivers of foreign exchange markets? What do you think will happen to the dollar in future? I will start with key drivers of foreign exchange markets. First of all, it is important to emphasize main factors which determinate the foreign exchange markets country’s economic and political situation and Forex market philosophy. Economic situation is assessed with real GDP (nominal GDP adjusted with inflation rate), labor market (unemployment rate, incomes), purchasing power and consumer price index, human potential (described through HDI – human development index / index is conglomerate of human education, expectation, incomes , foreign trade exchange (trade balance report relations between export and import / directly influence GDP level ), index of industrial production, retail sales (measure the sales of retail goods over a time period), public finance policy (fiscal policy, direct and indirect taxis), value of foreign debt and country credit potential. Political stability or instability can generally cre ate positive or negative impacts on economic situation and developments. Stabile government, with vision and responsible activities can influence in stronger investments from abroad or by domestic investors. Elections can be reason for fiscal policy changes, or influence the demands and costs of a certain currency. Marketplace philosophy is simple Foreign currency market is driven by demand and supply! However, some drivers are constantly presented like: Central Banks’ activities- explained in section B Crude oil price some currencies are oil dependant (US, Japan), and if oil price decreases, the import value will decrease what will have a positive impact on countries currency value and its strengths. Price of gold – for currencies of countries which are leaders in gold production and trade, for countries that have gold as a standard for monetary exchange. Additionaly, as current key drivers of foreign exchange markets, I would recognize: Greece situation and threats in Spain, Italy, Portugal Arabic political instability and its implications Further development of BRIC markets 7/8 Managerial Economics Prepared by: Enor Cerimagic The intentional weakening of dollar was logical direction for rescuing the U. S. economy. It was direction for healing serious impairments, like: recession, debt crisis (mostly mortgages / which reduced the amount of money in circulation), rising unemployment and increasing government expenditure on social and health care programs. That is why dollar is cheap, for almost two years. The Fed’s monetary policy has significantly increased the amount of money by reducing the interest rate, which was a sure way to weaken the dollar. Main reasons for weakening dollar were: Decline in general economic activity, especially in the most important branches of the economy real sector – manufacturing, especially car and construction industry, with the highest number of employees, Fear of worsening investor mortgage crisis which has hit most commercial banks and America, A more vulnerable population standard, High state deficit, mostly due to the growing needs of social funds, Ineffective fiscal policy tax incentives from the Bush era (rates of tax benefits were not progressive, ie, dependent on the amount of annual income) and so on. The effects of a falling dollar have affected the growth of U. S. exports due to decrease of prices of US goods on world markets, and the launch of additional production capacities, which resulted in a reduction in unemployment rate from 10% to 7. 8% (December, 2012). However, the weakening dollar has caused the falling confidence in the stability of the U. S. currency on the world market. The U. S. olitical scene is currently looking â€Å"promising†, as well, due to positive trend of monetary and fiscal changes. Support came through â€Å"fiscal package† (adopted in January 2013. ) which, certainly, helped to avoid the â€Å"fiscal cliff†, for the time being. Whether these measures will require some new monetary stimulus package to strengthen the dollar and, what is more important for world stock markets, restore confidence in the U. S. currency, it remains to be seen. There is an ABBA song â€Å"Money, money, money must be funny in the rich men’s world†, and we are speaking about US which hold almost 25% of world economy, its currency which is the most famous Money, which â€Å"believe in God†, which determinate measures for suitcases productions etc. Yes, I believe in dollar, as well! Predictions of the world’s stock exchanges and markets are that the dollar will appreciate, over the next 3, 6 and 9 months primarily in relation to the Euro, Japanese Yen and Chinese Yuan. Why? Primarily because the U. S. conomy is showing significant level of vitality. The economy growth rate in 2012 was 2. 5%. Number of employees increased, so the unemployment rate dropped from 10% at the beginning of 2012 to 7. 8% in December. Furthermore, the U. S. Congress has done and additional move to reduce the deficit. The newly adopted fiscal stimulus package (Jan. 2013 taxing Americans with annual income over $ 400,000) will reduce the defic it. According to analysts, USA will ensure the level economic growth and stability of the dollar, trough these fiscal measures, for the next few months. The Fed entered into a program of new monetary measures timeless-unlimited purchases of long-term government bonds or repurchase banks active assets. With these measures, the Fed â€Å"relaxed† conditions on financial markets and enables banks to invest with less cautions at low rates. Measures should expand investment and consumption and result should be further economic growth, reduction of unemployment, rise of confidence and strengthening of dollar. 8/8

Importance of Requiem essays

Importance of Requiem essays How important is the requiem to the play in content and mood? A requiem is a special ceremony to honour the souls of the dead. In the requiem we see Linda, Biff, Happy and Charley paying their last respect to Willy, who had died earlier on. In many ways, the play has a great significant, as it gives us the opportunity to assess the validity of what Willy said about his funeral and to an extent see the aftermath of his life. Willy believed that his funeral would be as the funeral of Dave Singleman, which was, "Hundreds of salesmen and buyers were at his funeral," which is the way Willy expects his own funeral to be, as he said, earlier in the play, "But the funeral-Ben, the funeral will be massive." In contrary to what Willy believed his funeral wasn't "massive," there were only four people who attended it, Biff, Happy, Linda and Charley, there wasn't any "strange license plates." The belief that he was respected, liked and known becomes clearly unfounded. In some ways the simple funeral can act as a justification to Willy's life, which is based on his dreams of "making it big," was simply just a phony dream and imagination. His philosophy of life of being "well liked," respected and successful, seemed to be unjustified by the absence of people who "respect" him. It also gives a sense that the dream that Willy believed in so deeply, the American dream, doesn't apply top everyone, and that most of the people are just ordinary. Willy, who believes in the greatness of the America dream, never realised that he was just ordinary, despite Biff saying, earlier on, "Will you take that phony dream, and burn it before something happens?" Willy, however remained to live in his dream world, and took Biffs love as a justification of Willy committing suicide. Biff also knew that Willy had the wrong dreams, as he says, "He had the wrong dreams. All, all wrong" Willy also never realised that what is important in life i...

Are Americans Getting Over On Our Welfare System Essay

Are Americans Getting Over On Our Welfare System - Essay Example Even Devilma admits that, if it were not for her son and the recent expiry of her cash aid, she would rather live on welfare than take an entry-level job at McDonald’s, which she considers unsuited to her level of education (economist.com). Thus poses the question, â€Å"Are Americans Getting over on Our Welfare System?† If given the opportunity to have a job which would bring in a source of income so that one would not be solely dependent on federal aid, which in turn would free funds for those who do not have employment opportunities, why not take advantage of it to better your situation? It is in no way equal or fair that some people must work for a living while others sit back and be catered for by other persons’ tax dollars. Seeing things such as this is what persuaded me to really analyze the qualifications, surveys, and federal websites to see if taxpayer’s funds are being taken advantage of (Ramsey, 2010). The research involved analyzing the amount that the low-income earners earn in the US and the amount that people get from the welfare state (Levin, 2011). From my analysis, I realized that most of the people who depend on the welfare state are more comfortable with what they get because they do not work the only receive money for doing nothing (Hewitt, 2012). This is opposed to the people who work hard and only earn a small amount of money that cannot sustain their families. From the analysis, I also found out that most of the people who do not rely on the welfare state are not happy with the initiative. The project was started with an aim of helping the needy. However, with time, the welfare has been exploited and most able people are taking advantage of it. That means that people who have the ability to work do not look for jobs because the welfare state is providing for them some income that they can use to survive. According to a research carried out by Forbes, when the war on poverty began, the poverty levels fell to 1 2.1% (Moore, 2001) However, the poverty level rose to 14.3% in 2009 and it is currently at 16.1%. That means that poverty won the war that was aimed against it. That happened because after the initiative, the poor stopped working so that they can depend on the money from the welfare state. That means that the initiative is currently not helping the poor but rather making them lazy and the poverty levels are rising. Recommendations on the welfare state It would be advisable for the law dealing with the welfare state to be changed. The law should state that only the physically disabled persons should benefit from the money. That will help the able persons to look for jobs. Working to earn a living will make them to be motivated and they will strive to ensure that they satisfy their needs. That will also make them more motivated and that will help them want to achieve more. Since not all people are able to earn white-collar jobs, the government can start up a program that will forward loans to people so that they can start up their own businesses. That means that all the people will be independent. The loans can be formulated in such a way that the financial institutions give the people a grace period of around 6 months before they start repaying the loan. The grace period will help ensure that the business that has been put up is

Sociology Essay Example | Topics and Well Written Essays - 250 words

Sociology - Essay Example The research methods should be realized as means of acting on the environment and their quality can be judged by their ability to yield reliable results. The act of making observations in life is largely dependent on personal fancy, bias, ideological preferences etc. Therefore, the scientific process of building reliability and validity in life is essential and it should be based on the features of discovery and verification. Both discovery and verification are essential components of finding reliability and validity in life. Consequently, the scientific basis of sociology clearly suggests that the discovery process and the issues of verification should be given equal significance in research methods. â€Å"If priority is given to the discovery process, the issues of verification, reliability, and validity become more than technical in nature†¦ If issues of verification are placed above the discovery process, a wedge is driven between the goals and the methods of sociology.â₠¬  (Douglas, 268) In the former case, the quality of research is determined by the public elements, whereas the latter case the goals and the methods of sociology are affected. Therefore, discovery as well as verification should be given equal relevance in finding reliability and validity in life.

Example Essay on CHANGE MANAGEMENT

Example Essay on CHANGE MANAGEMENT Q) What are the strengths and weakness of Kotters 8-stage model, Lewins Planned Change Model, and the Positivist Model? Change management is a planned process for changing a core function or organization of an enterprise. Interestingly, the process of developing taxonomy can result in the need for change. See Quality Assurance (www.twason.com/glossary.html) Change management is important in every project and this change management will help the project to be successful in any business or organization. There are three models which help change management to be successful in an organization or business and further help them to handle them carefully. The three models which explain about the change in an organization are: Lewins model. Kotters 8-stage model. Positive model. Lewins model There three steps of change management in the Lewins model. Unfreezing. Change. Refreezing Unfreezing is a starting process in an organization in which we determine the need of the change, understand and explain why the change is going on and communicate the vision in order to handle change in an organization. In this starting stage of change, the organization should explain the employees why the change is taking place. When this process starts there may be a crisis in the company and the company should balance everything and it is difficult to maintain it among the employees. The second stage is Change and this is a process in which the employee tries to look forward for new ways to do their work and try to accept the new change. This entire change cannot be done overnight and this is a long process. The third stage is Refreeze which helps to re-shape the organization and employees and also find new ways to work in the organization and it also help the organization to gain a change in every- day business life. There should be benefits to the employees who are trying to find new ways to work and the feedback should be taken from the employees regarding the change in the company. Strengths and Weaknesses of lewins model are. The main strength of the lewins model can be specified as easiest and simplest model to implement in any organization. It also helps employees to face new problems and to overcome those. When the change is taken place, the communication between every individual will increase and they work in teams in order to overcome the problems. The weaknesses of this model lead to the crisis in the company and the entire change cannot be done overnight and there may be lot of confusion in the employees and they need to find new ways to do their work. The weaknesses of this model are not in detail. Kotters 8- stage model The 8- stages of kotters model are Create urgency. Form a powerful coalition. Create a vision for change. Communicate the vision. Remove obstacles. Create short-term wins. Building on the change. Anchor the changes in corporate culture. These are 8-stages of kotters stage model. The first stage of kotters helps the organization to find out the changes to be taken place in the organization and helps to find the threats and defaults in the company and also rectify them and this stage shows the opportunities to overcome these. Finally this stage helps the organization in becoming strong. In the second stage, form a powerful coalition which helps to build teams or groups to lead the changes in the organization and also helps to encourage the teams. The third stage creates a vision of change. That is to Create a vision to help direct the change effort (MINDTOOLS, 2006). This also helps to develop the strategies for achieving the goals. The fourth stage is communicating the vision. This stage shows how to communicate the new strategies and new ways to every individual in the organization. The fifth stage is removing obstacles. This stage shows how to remove the obstacles when changes take place and helps to Change systems or structures that seriously undermine the vision. (MINDTOOLS, 2006). The sixth stage shows the Plan for visible performance improvements and creates those improvements (MINDTOOLS, 2006). There should be rewards and benefits to the employees who perform well in the organization. The seventh stage is same as the Change in lewins model. The eighth stage is same as the Refreezing in the lewins model. Strengths and weaknesses of the kotters 8-stages are Strengths: The strengths of the kotters 8-stage is model is very simplistic and easy to understand rather than lewins model. The strength of this model is, it can easily identify the problem and it also helps to clear the problem in very short period. This can be successful when all the employees are communicated well in all the stages. Weaknesses The major weakness of this model is that it may lead to wrong assumptions. Another weakness of this model is, the model itself. This model is not flexible once this model starts its process than it is difficult to change its way. This model is difficult to communicate to the employees and which may lead to frustration among the employees to find the new ways to handle the change occurring in the organization. POSITIVE MODEL Change models are not only having high success in implementing but also have the failures equally. They also have the negativism in planning their organizational change. The positive model helps to criticize the negativism in the organizational planning. This positive model also guides the organization whether it is going in a right way or not and helps the organization to develop. There are 5 stages in this positive model. (Thomas G. Cummings, Christopher G. Worley, 2009) Initiate the inquiry: In this phase the organization team finds out the issue which is going to be change in the organization. (Thomas G. Cummings, Christopher G. Worley, 2009) Inquire the best practices: In this phase the organization team gathers the information about which is the best policy to implement the change. The organization team members collect the information from every individual of the organization and choose the best one to do. (Thomas G. Cummings, Christopher G. Worley, 2009) Discover the themes: In this phase they gather information and stories from each and every employee about their experience this is done by interviews and meetings. This kind of information helps the organization to overcome all the obstacles. (Thomas G. Cummings, Christopher G. Worley, 2009) Envision a preferred future: In this phase the gathered information from the employees is taken into consideration and then the organization support these ideas into the program. (Thomas G. Cummings, Christopher G. Worley, 2009) Design and deliver to create the future: In this phase, the design and deliver for the future is processed. In this phase, slight changes can be made in order to achieve the goals of the organization. (Thomas G. Cummings, Christopher G. Worley, 2009) Strengths and weaknesses of the positive model: Strengths: The strength of this model is, it helps to find out the negativism in the organization when the change is taken place. The employee satisfaction is taken as a main theme in this model. This model is flexible and slight changes can be done during this process. Weaknesses: The weakness of this model is that it will not create urgency in the change process. There may be conflicts between the employees in decision making. There is no specialty in this model. It is same as the remaining models. Conclusion I finally conclude that all the models have their own strengths and weaknesses. The lewins model is the easiest model but it is not explained in detail and it is complicated. Positive model is same as the remaining models and it is slightly different when compared to remaining models. I strongly recommend that kotters 8-stage model is the best model among all the change models as it is explained in detail and it is flexible in changing process and the communication between the employees when compared with the other models. So I finally conclude that, though all are the best models according to my research, but I strongly say that kotters 8-stage model is the best model.

Essays --

History is important to modern American spirituality because we are the past. We are the totality of all events that have happened to us. This beginning and ending product guides our actions in the present. The understanding of American spirituality today can be implied through it’s the repetition of itself. Histories matter the most because we learn and understand our human nature to see how others dealt with conflicts and problems so we can further understand how to not only prevent but also deal with it faster in the future. In Bron Taylor’s â€Å"Dark Green Religion† and Courtney Bender’s â€Å"Religion and Spirituality: History, Discourse, Measurement†, explains of the best ways to live life through knowing one’s history. The individual and the societies that are built through the struggles of our past events are the only way we can understand who we are and how we got to be the way we are is by studying the past. History is a study of the past that can help oneself understand what made them who we are. In cases like if we had lost the American Revolution, or if the Spanish had founded ... Essays -- History is important to modern American spirituality because we are the past. We are the totality of all events that have happened to us. This beginning and ending product guides our actions in the present. The understanding of American spirituality today can be implied through it’s the repetition of itself. Histories matter the most because we learn and understand our human nature to see how others dealt with conflicts and problems so we can further understand how to not only prevent but also deal with it faster in the future. In Bron Taylor’s â€Å"Dark Green Religion† and Courtney Bender’s â€Å"Religion and Spirituality: History, Discourse, Measurement†, explains of the best ways to live life through knowing one’s history. The individual and the societies that are built through the struggles of our past events are the only way we can understand who we are and how we got to be the way we are is by studying the past. History is a study of the past that can help oneself understand what made them who we are. In cases like if we had lost the American Revolution, or if the Spanish had founded ...

Business: Revenue and Target Gross Margin

Additional facts about this case: 1. CHP is believed to be close to a long-term contract to supply parts to Medit, a giant construction company with excellent government contracts in southern France and nearby Euro countries. 2. Mission’s price for the coupling in questions (PT40) is $1. 26, FOB, Los Angeles. The target gross margin for exports is 30% FOB$1. 26 (location Los Angeles) COGS$ . 88 (Fixed) GTM $0. 38 CIF$1. 3627= $1. 36 FOB (1. 05) (1. 03)= 1. 0815 Pricing FOB $1. 33- $. 88= $. 45 $1. 54- $. 88=$. 66 Target (Gross Margin for exports 30%) 3.Mission has a reputation for high prices in the US, and running the factory below capacity limits will raise costs further. 4. International sales missed forecast for 1Q03 by 7%. 2Q03 forecast is $4. 3 million, but early customer response is not encouraging. International sales are now 20% below target. 5. Key account sales force compensation: 70% salary, 15% bonus on sales quotas, 15% bonus on profitability targets. 6. In 4Q02, Mission’s sales to CHP were $83k – 18% of CHP’s flexible couplings purchases. Questions to answer: 1. Write a short, one-paragraph summary of the facts in this case.Mission Rubber Technology Corp. is a company that creates an industrial product. The traffic has created trouble with CHP. Shipping has costs $11,000 for CHP because Mission Rubber Technology error. Damages occur often. The issues need to be addressed be Mission Rubber Technology and CHP is late on their payments. Late payment causes a lack of losing customers and cash, which can also cause a company to fail. Sales 20012002 $114k$165 Increased 165/114= 1. 44 percent growth The American market has become weak domestically and slowing down which businesses tend to lose assets.Sales and productivity decreases causing the growth of the business to also decrease. One of alternative is to globalization seeking for new business. An unsuccessful Cash flow issues can occur because lack of assets or maybe bec ame they okay with paying late. Price 2. Prior to negotiations, what price will you ask for each unit of PT40? 3. What is the highest price you think you can get for PT40 (explained)? 4. What is the lowest price you would accept for PT40 (explained)? 5. What is the highest price you believe CHP will accept (explained)? There are times when the company receives credit from the company instead of cash refunds.