MSM 630 Case Study Analysis

1. MSM 630 Case Study Analysis Baseline profit for 1986-1988 Number of gas accounts in 1990 How entry level salaries for management were determined Number of gas accounts transferred to hedge fund Appropriate raise for female accountant Corporate management style Accounting practices Profit structure Lines of communication

2. Baseline profit for 1986-1988 • During 1986-1988, Resources Unlimited Corporation reported quarterly profits of (listed in millions): • $342, 267, 321, 157, 33, 349, 132, 289 • From this available information, if accuracy can be assumed, the baseline profit for these years is: • $200,000,000 (Taylor, 2013)

3. Number of Gas Accounts in 1990 • In 1988, Resources Unlimited Corporation reported they held 32 gas accounts • Based on the number of oil accounts estimated for 1990 and the assumption of direct variance between the numbers, the number of gas accounts for 1990 should be: 43 (Cooper & Schindler, 2011)

4. How entry level management salaries are determined Mean: $47,250 Standard Deviation: $8983

5. Gas Accounts Transferred to Hedge Fund • Accounting offered a guess that 500 gas accounts could generate revenue to last 30 days • After 6 days, the CEO transferred 100 gas accounts to a dummy hedge fund (6 days = 20% of 30) • Bankruptcy occurred in June 1994

6. Salaries

7. Raise for Female Accountant • Male accountant salaries: • $50,000 • $52,000 • $55,000 • Female Accountant salary: • $32,000 • Appropriate raise for female accountant would be: • $20,128

8. Corporate management style • Laissez-faire management style (Bolman & Deal, 2008) • No action taken for memo’s received from Accounting • Potential inaccurate data sent out • Discrimination suit for unequal pay • Idea to transfer to hedge funds as a “best guess” solution • Bankruptcy • Decisions seemed to be made on a whim

9. Accounting practices • Accounting department attempted strategic planning regarding changes in industry and financial impact • Ignored by CEO and didn’t seem to push the issue • Didn’t review mean salaries for like jobs: shows non-involvement • Plan for hedge funds was last ditch, desperate attempt to stay afloat temporarily: was not a strategic move

10. Profit Structure • Profit structure based on industry deregulation and unregulated pricing • Entire process too complex and too variable: • Price of one commodity expected to move in opposition to the price of another • Vicarious balance to this • Dummy hedge fund attempted to lessen cash demands, but wasn’t attempted soon enough • Unrealistic, unverified, and potentially falsified

11. Lines of communication • Lines of communication flowed up form Accounting to CEO, but not back down • Lines travel out to Wall Street form Accounting • Lines appears to travel across equal channels • Accounting and strategic planning division talked across, but not up or down to CEO or management

12. References • Bolman, L. G. & Deal, T. E.  (2008).  Reframing organizations: Artistry, choice and leadership.  San Francisco, CA: Jossey-Bass. • Cooper, D. R. & Schindler, P. S. (2011). Business Research Methods. New York, NY. McGraw-Hill/Irwin. • Taylor, C. (2013). How to Calculate a Baseline. eHow Money. Retrieved from http://www.ehow. com/ how_7280431_calculate-baseline.html • Unknown. (2008). Guidelines for Preparing PowerPoint Slide Presentations. Retrieved from http://www.ismrm.org/ 03/ppguide.htm