Reference no: EM132207790

Integrated Case Study -

In this course, you will interact with Part I of a multi-year, integrated case study experience. This part of the case study focuses on financial issues and related ethical decisions.

The Case - Software producer ABCTech maintains a simple organizational structure with its two partners/employees carrying out all of the daily operational tasks of the business including research and development (R&D), marketing, accounting, and production. Thunder Thompson is the founder/CEO, and Chris Christianson is the co-founder/COO. Both men continue to work for a large computer programming organization during the day while starting ABCTech during the evening hours. So, neither is drawing a salary form ABCTech at this time. Based in the founder's garage, the company is on track to post revenues of approximately $250,000 after the first year of operation, and the partners believe the company valuation can soar into the hundreds of millions of dollars over the next several years. With the local economy assessed as being favorable to the support and growth of the company, the partners believe that revenue will double next year to $500,000. Therefore, they are considering borrowing $250,000 to improve cash flow and hire additional staff including a sales and marketing manager to increase product sales and boost revenue. The partners are fully committed to the concept of the company and the quality of its product, and they believe that the company is strong for a first-year startup and moving in a positive direction despite the higher than normal expenses associated with the first year of business. They believe the loan will allow them to survive until the increased emphasis on sales yields a larger client base and makes the company strong enough to stand on its own.

While previewing the required documentation list to secure the loan, the partners begin to fear that the ratio of expenses to revenue may be too high for the lender's preference. While the revenue of the company looks good, expenses are high as one might expect in a startup company. Nonetheless, the partners are preparing carefully the financial records to present to the lender in order to procure the capital to improve cash flow in the short term.

As the partners consider the loan application and its preparations, they are approached by a large, well-established software company with a lucrative offer to buy ABCTech in its entirety for $500,000. The buyout would make the founders moderately wealthy in the short term and provide them with employment in the acquiring company. Nonetheless, the long term potential revenue from continuing to grow the startup company is significantly greater than the value of the proposed purchase and employment package. Continuing the startup means a more difficult and risky road for the partners including continuing to find and invoke creative reporting methods to secure necessary short-term funding. However, the buyout would mean accepting less money than the company could potentially generate over time and eliminating plans to hire the sales manager.

Questions to Consider

• Should the partners continue their business expansion plans including procuring the operating loan? Why or why not?
• Should they take the buyout offer? Why or why not?
• Which is the more ethically reasonable choice? Defend your position by establishing a theoretical foundation using current (within the last three years) or foundational references.

Review the information in "DBA-820 Integrated Case Study" attachment. This includes narrative information as well as financial and supporting documentation.

Write a paper 750 words that addresses the case issues, expresses your decisions regarding the case questions:

1. A summary of the current environment as presented in the case. (Note: Information from the case study does not require a reference note or in-text citation.)

2. A summary of the business issue, emphasizing the financial concerns, from the case. Integrate specific feedback from your instructor regarding your summary of the financial issue.

3. A review of at least two viable potential resolutions and the supporting research and financial analyses you presented in your previous assignment. Integrate specific feedback from your instructor regarding the proposed resolutions.

4. A research-supported discussion of the ethical implications of each option and the extent to which these ethical implications are influenced by the mission, vision, and core values of ABCTech. (Reinforces C.2.6: Incorporate ethical considerations when recommending complex business decisions.)

5. An overtly stated, research-supported recommendation for resolution chosen from the potential resolutions you described and a rationale for the recommended resolution. How does this influence the provided profit/loss statement and/or other financial criteria and statements? (Reinforces C.1.3: Develop, extend, modify, or apply theories for use in business.)

6. A discussion of future research that you could conduct relative to these issues.

Attachment:- Assignment File.rar