Question(Drawn from the Module 10 Case Study) Can Peterson be both the Chair

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Question(Drawn from the Module 10 Case Study) Can Peterson be both the Chairman and CEO of Meditech? Select one: a.The ability to pay the highest dividends to shareholders b.The CEO of Meditech can be both the Chairman and CEO of Meditech c.A person can be the Chairman but not the CEO of Meditech d.The CEO of Meditech cannot be both the Chairman and CEO of Meditech Q2:Should MediTech continue paying Peterson short-term incentives?Select one: a.Short term incentives should be offered to Peterson as they tend to promote long term corporate vision and enhance shareholder gains. b.Short term incentives should not be offered to Peterson as they tend to promote short vision and managerial opportunism rather than long term organisational and shareholder gains. c.Short term incentives should be offered to Peterson as they will allow him to maximise his superannuation should he choose to leave the firm. d.Short term incentives should be offered to Peterson as they will motivate his performance and the high performance of the CEO is ideal. Q3:Should David Peterson be given stock options?Select one: a.Peterson should not be given stock options as this incentivises him to ensure the profitability of the firm and maximise shareholder returns. b.Peterson should be given stock options as he can later trade these for Apple shares. c.Peterson should not be given stock options. The profitability of the firm and maximisation of shareholder returns should be his objective. d.Peterson should be given stock options as this incentivises him to ensure the profitability of the firm and maximise shareholder returns.Peterson’s idea to diversify the firm’s products is controversial amongst the board of directors.    Q4:Does this idea serve the firm’s shareholder interests? a.The Directors are right to oppose the diversification of the firm’s product line. It poses unacceptable risk to the firm by a CEO with little experience in the market place. b.Product diversification reduces market risk should a product portfolio fail, and enables long term shareholder gain. c.Product diversification reduces market risk should a product portfolio fail, and reduces long term shareholder gain. d.Product diversification increases market risk by reducing focus on key products. Resource distribution reduces potential shareholder gain. Q5:What opportunities exist for Meditech? a.Meditech should focus on lithium products by acquiring Lithibeam and abandon Medigaze. b.Meditech should focus on the Medigaze product in the light of the Grenzky incident, secure its lithium battery supply through a potential strategic alliance or vertical acquistion in Papua New Guinea with Lithibeam, and seek to open a training division to meet the shortage of doctors and surgeons.  c.Meditech should sell its Medigaze product under license to HealthShield. d.Meditech should focus on training doctors and surgeons for rural areas and abandon Medigaze because medical scanning is where HealthShield is focussed.                   (Drawn from the Module 11 Case Study) Q6:In what organisational structure is MediTech currently configured?Select one: a.Multi-Divisional b.Simple c.Organic d.Functional Q7:How should Peterson restructure MediTech to solve the company’s issues? a.The non-performing Centrifuge and Robotic Surgery divisions should be closed and personnel terminated b.A functional organisational structure should be implemented with R&D and production planning amalgamated. HR functions centralised or outsourced. c.The MediTech incomplete factories and production planning units should be sold and personnel terminated. d.All production facilities with union labour should be restructured and all union members terminated. Q8:The main problem for MediTech is a.It has exceeded its capital reserves and has not realised its strategic planning to this point. Its expenditure has exceeded income. b.The scholarship program is too expensive. c.It hired too many union members and it pays too much for its skilled labour. d.The expectations of the shareholders are unrealistic and they should be investing more capital. Q9:What financial controls must be implemented at MediTech?Select one: a.Reduced spending is essential at MediTech and austerity measures must be imposed on all divisions. b.Peterson should be restricted by the board. Until he agrees to the implementation of financial controls that match the company’s rate of expansion, and follows the advice of the Board,  MediTech will be in danger of collapse. c.All dividends and managerial bonuses should be suspended until MediTech is once again profitable. d.No controls are necessary. Peterson is a visionary and should not be restricted by the board. Meditech will eventually be profitable.   Q10:The source of Meditech’s problems isSelect one:a.It has sought to simultaneously create a risk mitigating diversified product portfolio and vertical control of its supply chain and this has over extended its financial position.b.The board is incompetent and Peterson is a maniac.c.It has overpaid its senior executives.d.It has hired union labour.                            Week 10 – Corporate GovernanceCase Study (60 mins)The purpose of this in-class case study is to have students consider the corporate environment of a firm, particularly the need to adopt the strategies of merger and acquisition.Read the article below and consider the questions that follow:Aaron Peterson is the new CEO of Australian company MediTech Inc, a profitable company founded by his grandfather, Chester Peterson. The Peterson family own 28% of the firm’s equity (the controlling share). Aaron Peterson’s mother, Dr Edna Peterson, has recently retired and vacated the position of CEO. Prior to his appointment of CEO, Aaron was the Chairman of the Board. He currently retains both positions (CEO and Chairman of the Board).Aaron is well renumerated. Last year he was paid $10.4 million, comprising his salary and short term-incentives, as well as other ‘undisclosed’ benefits.Aaron recently promoted his brother, David, to sit on the company’s board of directors. David is not especially useful and is something of the black sheep of the family, but Aaron hopes this opportunity will give him a chance to make something of himself. David has been given stock options as part of his package, and has access to the MediGaze (below) technology.Image transcription textdepositphotosMediTech produces advanced medical technology:Their resources include high-tech laboratories and technology production plants, as well as associated expertise and capital. Production plants involve relatively unskilled labour. All of MediTech’s facilities are located within Australia.Their capabilities include strong R&D skills within scanning and imaging technologies, but with small scale production capacity.Their core competency is the production of the MediGaze, the world’s best medical scanner. It is a proprietary technology which features advanced lenses and optics, whilst removing all moving parts. It is powered by lithium-ion cells, however MediTech do not make the cells themselves. It is particularly good at detecting plasmoid cancer (85% accuracy) versus the product of their rival, HealthShield (75%)Aaron has long wanted to diversify the company into other medical equipment such as centrifuges, robotic surgery apparatus and gene modification technology, and now has the opportunity to do so. HealthShield, the primary competitor of MediTech, also produce advanced medical technology:Their resources are greater than MediTech’s. These include high-tech laboratories and technology production plants, as well as associated expertise. HealthShield plants are staffed primarily by engineers, as well as mechanically skilled and trained labourers, who are handsomely paid, but still identify as blue-collar workers. Some of HealthShield’s plants are located overseas.Their capabilities include strong R&D skills, particularly within experimental medical technology fields (remote surgery, gene splicing for cancer and disease resistance, and nanotechnology). Their scanning and imaging division is capable and backed by the HealthShield resources, with large scale production capacity. Though the HealthShield scanner only has a 75% detection rate for plasmoid cancer, it is cheaper to produce and more readily available. Most HealthShield technologies have moving parts.Most HealthShield technologies are powered by lithium-ion cells.HealthShield CEO Dr John Getty worked as a surgeon in hospitals around the world before joining HealthShield. He is a respected figure to the public, and has declared to the press his company’s intentions of tackling the plasmoid cancer epidemic (below). Dr Getty’s compensation is undisclosed, but rumoured to be in excess of $15millionHealthShield have recently acquired the BioGuard, ParaCell and DermaTec medical companies, with DermaTec being acquired through a hostile takeover. A number of things are happening in the world and in related industries right now:1) Globally, lithium is in high demand. Electric cars are beginning to dominate the auto-industry, whilst modern smartphones rely on lithium to power their batteries. In Australia, lithium prices have remained steady due to plentiful supply of the metal, though this could change.2) Plasmoid cancer rates are increasing globally as a result of the Grenzky Incident, where an uncontrolled reaction at the Grenzky Fission Plant released airborne fission products into the Earth’s atmosphere. Plasmoid cancer is treatable if detected early, but spreads rapidly.3) ASIC, the Australian Security and Investments commission (responsible for regulating and enforcing company and financial laws in Australia), have announced that thorough reviews and audits of the medical industry will occur beginning with the 2019 financial year.4) There is currently a shortage of doctors and surgeons in rural locations across the world. Institutions are in desperate need of funding and are not getting assistance from governments.5) Boston Dynamics (a robotics company) have just created a robot with sensors accurate enough to snatch a fly out of mid-air. Dr Getty has been spotted having a private lunch with the Boston Dynamics CEO.6) Public sentiment is poor toward highly paid CEOs. Labour unions have public sympathies, and protestors have marched through Melbourne’s CBD, demanding better working conditions and higher pay. 7) A number of cases involving corporate espionage have recently taken media attention. At their most mild, corporate spies gather information to sell to competitors, whilst at their most extreme, they can  infiltrate companies, steal secrets and greatly affect shareholder confidence.8) Imitation and counterfeit products are affecting consumer confidence. A number of counterfeit medical technologies are being sold by unscrupulous individuals, including MediTech and HealthShield products.9) Papua New Guinea is currently experiencing instability in several regions. PNG Prime Minister O’Neill has downplayed this instability, welcoming foreign investment and giving assurances of security. Lithium is plentiful in PNG.10) LithiBeam, a battery production company, have developed a prototype lithium capacitor which can improve battery output and longevity. This company is a very small tech start-up            Week 11 – Organisational Structure and ControlsCase Study (60 mins)The purpose of this in-class case study is to have students consider the corporate environment of a firm, particularly the need to adopt the strategies of merger and acquisition and restructure.Read the case below and consider the questions that follow:Following your advice from last week’s meeting, MediTech Inc CEO Aaron Peterson was able to create value for his company in a few ways, and resist a hostile takeover attempt by CEO John Getty and the HealthShield group.Unfortunately for Peterson and MediTech, this was an expensive solution, and the company must now restructure if they want to survive.  Peterson is now looking for your continued expertise in restructuring his company.Currently, MediTech operations resemble the following:Their resources include:A single corporate headquarters in Sydney, which oversees the companyR&D laboratories in Melbourne, Sydney and Brisbane. These R&D labs research       Radiographic Imaging, Thermal Imaging and Battery Technology Operations,       respectively.Four production facilities (one in Adelaide, Melbourne, Brisbane and Sydney). A    MediTech scanner features three main parts, which are built in one of the first three           factories, before being shipped to and assembled in Sydney. These parts are     extremely delicate and must be transported in special trucks. LinFox Transport   currently have this contract and charge a premium.The LithiBeam company and technology, which they acquired last week under your             recommendation. Any technology built by MediTech which features a lithium        battery will be more effective than those of its competitors. Currently, LithiBeam   technology is only being utilised within MediTech productsThe “MediTech Regional Doctor Scholarship”. This program trains doctors to operate       in rural areas and has been positively received by the public.$100 million dollars (down from $200million) in free capital sitting in the bank.Highly skilled laboratory technicians.Low skilled production facility workers.Intimate expertise with the production of medical scanners and scopes.Intimate experience with construction of technology with no, or very few, moving        parts. Their capabilities include:Strong R&D capability within their field and peripheral fields.Good relationships with lithium suppliers in Papa New Guinea, ensuring a strong supply of lithium for MediTech products.Ability to create more products which are more energy efficient than their competitors.Their core competencies include:The MediGaze scanner, which is the world’s best medical scanner.The LithiBeam technology, which increases the potency and longevity of any lithium batteriesSome other noteworthy points:It turns out Peterson had already begun work on diversifying the company’s portfolio before you were brought onboard. The company has completed 20% of the work required to establish themselves as makers of centrifuges and robotic surgery apparatus. He is convinced that product diversification is the company’s only way forward, and he does not listen to the feedback from his Board of Directors. He has allocated a large amount of funding to both the Centrifuge and Robotic Surgery divisionsEven though you did all the work, Peterson is now seen as a hero inside the company, having bravely fought off the aggressive HealthShield company when nobody else could. In conjunction with this, the MediTech Regional Doctor Scholarship was a popular move. The public, as well as other companies in the industry, are looking at MediTech in a very positive manner, and Peterson as an innovator.The core MediGaze scanner has been augmented by the LithiBeam technology, and the schematics were updated, resulting in two models of product (MediGaze v1, with no  LithiBeam, and MediGaze v2 with LithiBeam). Following your recommendation, Peterson’s brother (David) no longer has access to the scanner technology, however he remains on the Board of Directors.MediGaze scanners have a $1 : $5 dollar return on investment (For $1 spent, $5 are made)LithiBeam technology currently adds an extra $5 return on any technology it is implemented with.Centrifuge and Robotic Surgery do not return any money for their investments yet.  Despite this, MediTech has some issues:The measures you suggested were expensive. Purchasing the LithiBeam company cost $50 million in available capital.The ‘Golden Parachute’ you suggested for Peterson took another $50 million in available capital. Though this is unlikely to be needed, the money allocated to this cannot be moved or spent, and is effectively lost.The labour union strikes have sent the MediGaze production plants into disarray. Performance quotas must be met. MediTech typically produce 50 scanners a day, however this number has dropped to 15 per day during the strikes. The business no longer has sufficient cash flow to cover the day-to-day cost of operations and is losing money. It is using its remaining capital to stem the bleeding, eating into shareholder returns and lowering share price.The business must restructure to survive the next financial year:Image transcription textMelbourne Lab Radiographic Imagingl Sydney Lab MediGaze RED(Thermal Imagingl Bris bane Lab Battery Technology Operations)Melbourne Plant (First Scope) (Large) Lin Fox Logisti… Show more1. In what organisational structure is MediTech currently configured?      a) Simple      b) Functional      c) Multi-divisional2. What do you think the main problem for MediTech is?3. What financial controls must be implemented at MediTech?4. How do you think MediTech’s VPs feel about the situation?5. How should Peterson restructure MediTech to solve the company’s issues?6. What strategies can Peterson use to balance the short-term survival of his company with his long-term vision? Computer ScienceEngineering & TechnologyInformation SecurityMGT 3SMGShare Question

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Author: Ethan Thomas