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Baron Art Mart, Inc.
Team 1BUS 302 #13159October 21, 2015
Case AnalysisBy
Aarti Khurana, Marlene Gonzalez, Alex Sanchez, Jose Morales, Marqus Robinson, Mohammed Salaam, and Miles Steele
(Jamie, 2012)
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Questions will be answered at the end of the presentation.
If you are unable to hear the speaker, please raise your hand and the presenter will speak up.
uestionsQ
Miles 2
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pecial AcknowledgementsS
“On the whole, human beings want to be good, but not too good, and not quite all
the time” –George Orwell
Miles 3
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T able of ContentsExecutive Summary……………………………………………………………….5 Main Body…………………………………………………………………………….6
Facts and Issues…………………………………………………………………………………..6Statistical Analysis……………………………………………….………………………………7Regression Analysis……………………………………………………….....................10 Future Income……………………………………………………………….....................15 Legal Analysis…………………………………………………………..……………………….16Assessing the Damages……………….……………………….……………….21
Ethical Considerations………………………………………………………...25Strategic Considerations …………………………………………………….33Recommendations ……………………………………………………………..42Thank you ………………………………………………………………………….43References………………………………………………………………………….44Appendix…………………………………………………………………………….46
Miles 4
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• Main Characters• Baron Art Mart, Inc.• Bruce Levin• Jimmy Lee• Susan Kim• Donald West• Jennifer Parker• Kimberly Youseff
xecutive SummaryE
• Analysis• Descriptive Statistics• Regression Analysis• Accounting• Economics• Legal• Ethics• Strategic
• Recommendations• Terminate Jimmie Lee’s
employment• Compensate Susan Kim
with the net real income
• Consider ethical training for employees
• Consider e-commerce model
Miles 5
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Susan Kim has asked Baron Art Mart Inc. to compensate her for injuries she sustained while on company property. Her injuries have left her permanently disabled and she seeks $765,000 for medical expenses and $500,000 lost in future income”(Efrat & Gunther, 2007).
acts and IssuesF
Alex 6
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tatistical Analysis: Descriptive Statistics
S
➢Ms. Kim’s real income for the last fifteen years
What these numbers mean (Anderson, Sweeney, & Williams, 2011):
• Mean • Median• Standard deviation• Sample Variance
➢Can we use mean income to forecast future earnings?
Alex 7
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tatistical Analysis: Descriptive Analysis
S
Number Year Gross Income Price Index Adjusted Price Index Real Income1 1991 50,599 135.2 1.352 37425.302 1992 53,109 141.3 1.413 37585.993 1993 53,301 142.5 1.425 37404.214 1994 56,885 149.2 1.492 38126.685 1995 56,745 151.4 1.514 37480.186 1996 60,493 158.9 1.589 38069.867 1997 61,978 160.5 1.605 38615.588 1998 61,631 161.0 1.610 38280.129 1999 63,297 164.6 1.646 38455.04
10 2000 66,531 173.2 1.732 38412.8211 2001 67,600 178.1 1.781 37956.2012 2002 66,889 180.9 1.809 36975.6813 2003 70,024 182.0 1.820 38474.7314 2004 70,056 187.9 1.879 37283.6615 2005 71,857 197.3 1.973 36420.17
Variance: $403,900.03
Median: $37,956.20
Standard Deviation: $635.53
Mean: $37,797.75
Total Real Income: $566,966.21 Alex 8
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efining A Price IndexD
What is a Price Index?
How is a Price Index constructed?1. Housing 2. Entertainment 3. Transportation4. Food 5. Medical Care6. Other Goods & Services (Schmidt, 2015)
Alex 9
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egression Analysis (Anderson, Sweeney, & Williams, 2011)R
Adjusted Price Index
1.3521.4131.4251.4921.5141.5891.6051.6101.6461.7321.7811.8091.8201.8791.973
Dependent Y Variable
Independent X Variable
Year
199119921993199419951996199719981999200020012002200320042005 Aarti 10
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egression FindingsR
Coefficient of Determination (R-square) = 0.982Graph 1. Regression Line
Aarti 11
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egression FindingsR
P-value for Year
Null Hypotheses (Hₒ) = 0 Alternative Hypotheses (H₁) ≠ 0
Assuming α = 0.05
P Value = 7.395E-12
0.05 > 0.00000000000739Reject Null
No RelationshipSome Relationship
Aarti 12
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egression FindingsR
Regression Coefficient for Year = 0.041❖ 4.1% yearly increase❖ Slope of regression function
Graph 1. Regression Line Aarti 13
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y -80.33 0.041x
Price Index Intercept (Coefficient) x (Year)
egression FindingsR
Equation 1. Regression Equation
Aarti 14
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Refer to Excel sheet.
uture IncomeF
Marlene 15
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The merchant privilege would not relieve Baron Art Mart, Inc. from liability under the cause of action of false imprisonment.
egal AnalysisL
Mohammed 16
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egal AnalysisL
What is Merchant’s Defense?• According to the Case Library, “ A peace officer, a merchant,
or a specifically authorized employee of a merchant, may use reasonable force to detain a person for questioning on the merchant’s premises, for a reasonable length of time, when he has reasonable cause to believe that the person has committed theft of goods held for sale by the merchant, regardless of the actual value of the goods. The detention shall not constitute false imprisonment”(Efrat & Gunther, 2007).
Mohammed 17
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egal AnalysisL
Requirements for authorized detention 1. The person effecting the detention must be a peace
officer, a merchant, or a specifically authorized employee of a merchant
2. The party making the detention must have reasonable cause to believe that the detained person has committed theft.
3. The detention was conducted in a reasonable manner. Determining facts:
4. The detention must occur on the merchant’s premises
5. The detention may not last longer than a reasonable period of time (Efrat & Gunther, 2007)
Mohammed 18
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egal AnalysisL
Table. 1 Requirements for authorized detention Requirements Were the requirements met?
Peace office, merchant, or authorized employee
YES
Reasonable Cause YES
Reasonable Manner NO
Merchant’s Premise YES
Reasonable Time NO
Mohammed 19
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ounterargumentC
Factors which may affect argument• Reasonable Detention
- Store’s policy
Mohammed 20
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Marqus 21
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ssessing the DamagesA
➢Compensatory Damages- actual damages awarded to the plaintiff due to a tort. Can include physical harm, medical expenses, lost wages, etc.(Mallor et al., 2001).
• “To make the person whole”
Marqus 22
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ssessing the DamagesA
• Susan Kim is owed compensatory damages, but not the entire amount she’s asking for.
• To pay for the damages, we want to make sure we’re not paying more than we need to make her whole again.
Marqus 23
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ssessing the DamagesA
➢Punitive Damages- Damages awarded in addition to compensatory remedy that are designed to punish a defendant for particularly reprehensible behavior and to deter the defendant and others from committing similar behavior in the future (Mallor et al., 2001).
• Punishing flagrant wrongdoing
Marqus 24
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Tucker’s Five Questions Approach (Smith, 2015)
Is the decision profitable (shareholders)?
Is the decision legal (society at large)?
Is it fair?
What is the impact on the rights of stakeholders?
What is the impact on sustainable development (environment)?
thical ConsiderationsE
Marqus 25
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Stakeholders Primary (Direct) Susan KimJimmie LeeJennifer ParkerKimberley YouseffCustomers Other employees
Secondary (Indirect)
Bruce LevinDonald WestSusan Kim’s familyCompetitorsSociety
thical ConsiderationsE
Marqus 26
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1. Is the Decision Profitable?
Utilitarianism: Firing Jimmie Lee to prevent lawsuits pertaining to him in the futureConsidering settlement with Susan Kim
Corporate Social Responsibility (CSR):
Ethical/Customer service training
Considering shift to e-commerce
thical ConsiderationsE
Marqus 27
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2. Is the Decision Legal?
Utilitarianism: Firing Jimmie is legal
Justice Theory: Settlement with Susan is legal because we would make her whole, without facing punitive damages
thical ConsiderationsE
Marqus 28
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3. Is it fair? Utilitarianism: Firing Jimmie is fair because he committed a tortuous actSettlement with Susan to pay only her compensatory damages is fair
Deontology: Training employees is fair because we have an inherent duty to provide the best service
Corporate Social Responsibility (CSR):
E-commerce is fair, even if it means shutting down some of our stores
thical ConsiderationsE
Marqus 29
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4. What is the impact on the rights of stakeholders?
Utilitarianism: Compensating Kim would be best consequence for stakeholders
Corporate Social Responsibility (CSR):
Ethical training will create better customer service
Rights Theory: Mrs. Kim has right to be treated equally
Nicomachean: Lee could have shown moral virtues by attending to Mrs. Kim’s injuries
thical ConsiderationsE
Aarti 30
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5. What is the impact on sustainable development?
Utilitarianism: If Baron Art Mart settles, they could use the money saved from not entering lawsuit to create jobs
Corporate Social Responsibility (CSR):
Society would prefer employee’s to be put in ethical training
Deontology: Duty to make shopping safe for customers
thical ConsiderationsE
Aarti 31
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Alternatives and Consequences
Jimmie could sue for wrongful termination
Susan Kim may not accept a settlement
Ethical Training may not improve employee’s customer service skills
E-Commerce may not take off
thical ConsiderationsE
Marqus 32
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trategic ConsiderationsS
Using Michael Porter’s Five Forces Analysis (Porter, 2008)
Jose & Marlene 33
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POWER OF
SUPPLIER
POWER OF
BUYER
THREAT OF ENTRY
THREAT OF SUBSTITUTES
RIVALRY AMONG
EXISTING FIRMS
Jose & Marlene 34
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he Stationary Supplies IndustryT
Jose & Marlene 35
Industry at a GlanceOverview of the Incumbent: BARON ART MART
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ower of SupplierP
Jose & Marlene 36
POWER OF SUPPLIER
• Solution posed
• Reason why?
• IBISWorld (IBISWorld, 2015)
• Porter's reasoning
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ower of BuyersP
Jose & Marlene 37
• Solution posed
• Reason why?
• IBISWorld
• Porter's reasoning
POWER OF BUYERS
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hreat of EntrantsT
Jose & Marlene 38
THREAT OF ENTRANTS
• Solution posed • Medium threat (IBISWorld,
2015) • Strong/High barriers • And, their use in strategy • Low/weak barriers • And, their use in strategy • Porter's reasoning
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hreat of SubstituteT
Jose & Marlene 39
THREAT OF SUBSTITUTE
• Solutions• Online sellers in the
industry• Discount stores• Any store willing to sell at
a profitable price with a valuation that is high by the customer for a product originally purchased at Baron
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ivalry Among Existing FirmsR
Jose & Marlene 40
• Rivalry and competition is HIGH• Improved staff training, reorganization of
operations for efficiency in order to compete in the industry with little growth and small margin of profit
• CEO should promote more interaction between Marketing, Operations, and Finance to form Strategical Planning and Thinking (Stevenson, 2007)
• Retraining of strategical formulation to avoid the use of Price and instead use Strategies that promote Higher Quality, Better Service, cleanliness, and Flexibility among all employees--sense of urgency and zeal in everything.
• Firms competing online and offline
RIVALRY AMONG
EXISTING FIRMS
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trategic ConsiderationsS
Jose & Marlene 41
Further Considerations
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ecommendationsR
• Legal Recommendations• By Jimmy being an employee of the company, his employers are also
liable.• Settlement highly recommended, going to court possible PR nightmare.• Also recommend terminating Jimmy’s employment.
• Statistical Analysis• A regression equation was created that calculated the real value of Ms.
Kim’s income and projected her income for the next 10 years.• In truth, Ms. Kim is only actually owed $416,203.34 rather than $500,000
in lost wages• Ethical recommendations
• The injury caused to Ms. Kim by Jimmy was an ethical violation and a massive overstepping of boundaries on Jimmy’s part.
• From a utilitarian perspective, firing Jimmy prevents him from harming other customers in the future.
• Highly recommend training Jimmy’s replacement/peers in ethical practices and restraint.
Miles 42
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hank You!T
We are grateful for the opportunity to work for you on this case. Thank you for your time.
SukriaArigato
ShukranGracias
Merci Kiitos
43
Thank you
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eferencesRAnderson, D. R., Sweeney, D. J., & Williams, T. A. (2011). Hypothesis Tests. Essentials of Statistics for Business and Economics (pp. 88-100, 485-551). Ohio: South-Western Cengage Learning.Efrat, R., & Gunther, R. (2007). Baron Art Mart, Inc. Csun. Retrieved October 15, 2015, from http://ocw.smithw.org/2015fall/bus302-13159/outline.htmlIBISWorld. (2015). Office Supply Store in the US April 2015. Retrieved from file://http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1098Investopedia LLC. (n.d.). Consumer Price Index - CPI. Retrieved October 18, 2015,
from Investopedia: http://www.investopedia.com/terms/c/consumerpriceindex.aspJamie. (2012). When I Write. Retrieved October 20, 2015, from Through Two Blue Eyes: https://throughtwoblueeyes.wordpress.com/2012/05/21/when-i-write/Mallor, J. P. (2001). Understand the Differences Between Compensatory and Punitive Damages. Business Law and the Regulatory Environment. McGraw-Hill Higher Education. 44
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eferencesR
Parrino, R. (2014). Level Cash Flows Annuites and Perpuites. In Fundamentals of corporate finance (3nd ed., p. 165). Danvers, MA: John Wiley and Sons Australia.
Porter, Michael E.(January 2008) . "The Five Competitive Forces ThatShape Strategy." Special Issue on HBS Centennial. Harvard BusinessReview 86, no. 1 : 78–93.
Schmidt, P. (2015). Consumer Price Index See Biggest Drop In Six Years. World Report Now. Retrieved October 18, 2015, from http://www.worldreportnow.com/consumer-price-index-see-biggest-drop-in-six-years/113/Smith, W. (2015). Ethical Thinking WS [PowerPoint slides]. Retrieved from http://ocw.smithw.org/2015fall/bus302-13159/outline.htmlStevenson, W. (2007). Competitiveness, Strategy, and Productivity. In Operations
management (Twelfth ed., Vol. 9E, pp. 27-56). New York, New York: McGraw-Hill/Irwin.
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ppendixA
46