Your friend Ben Strong just got a job he was seeking as a production manager for a small manufacturing firm. The company has about 200 employees and produces about $5 million worth of goods a year.
Ben has learned that the previous production manager was let go because of problems managing the supply chain. Some suppliers are delivering late, and some others are having quality problems. Ben is trying to decide whether to continue buying the materials and parts he needs from outside suppliers or to recommend that the firm integrate vertically and supply the materials it needs and produce its own parts.
Ben knows you have been studying production management and respects your advice. Prepare a paper of at least two pages for Ben that addresses the questions below.
What are at least two reasons to continue with a supply chain of external suppliers, and what is at least one disadvantage?
What are at least two reasons to vertically integrate and be your own supply chain, and what is at least one disadvantage?
How would you go about making the decision if you were Ben? Include a recommendation if you have one. Explain your reasoning.
Your paper should follow APA guidelines and include references to document the research you did.
select only 1 of the following options and answer each of the questions related to that option. Your responses should be thorough and well supported. You are encouraged to use our textbook and the online book for this class, which is called Popular Economyths.
A good, well-reasoned, detailed answer should be at least 1.5 to 2 pages (total) in length (and please do NOT rewrite the questions). You need to answer each of the questions for the option you select.
OPTION 1 – The Minimum Wage
Since 2009, the national minimum wage has been $7.25 per hour for most occupations in the private sector. Many of those who support an increase in the minimum wage believe this is one way the government could possibly reduce poverty, while its opponents believe that it creates unemployment and hurts low-skilled workers. The following items address the idea of raising the minimum wage from the current federal minimum of $7.25 per hour.
1) Describe who the suppliers and demanders are in the labor market. Is a government-mandated minimum wage a price floor or ceiling? Discuss the effect of a minimum wage law from a supply and demand standpoint, making sure to address the concept of surplus or shortage, and specify what that shortage or surplus is most commonly called in economic terms.
2) Raising the minimum wage will also affect the labor costs of businesses. What is going to happen to the prices these businesses charge for their products? And who is going to be most affected by these price changes, those with low incomes or those with high incomes?
3) Discuss any potential changes in the incentives for low-skilled workers – those who keep their jobs and their hours – to increase their human capital when the minimum wage increases. What about those who lose their jobs or never get hired? Discuss the incentives for employers to substitute capital inputs (technology and automation) for labor.
4) What might be an unintended impact on government spending on entitlements such as welfare, food stamps, and unemployment compensation because of the changes in the minimum wage and its impact on unemployment and underemployment?
5) Do advocates of a minimum wage law believe that workers should be paid based on their output (i.e., performance) or on their level of need? What do opponents of the minimum wage law believe workers’ wages should be based on? Which one is sustainable and why?
For the sake of comparison, how should students be graded in class, based on their performance or level of need?
6) Advocates of a minimum wage often believe that employers would “exploit” or “take advantage” of their workers if there were no minimum wage. How would you know if employers are “taking advantage” of their workers if there were no minimum wage? What simple thing could the employee do if they believed they were being exploited?
7) What percentage of American workers get paid above minimum wage? In general, why do such workers get paid more than the government-mandated minimum wage if employers are supposedly so greedy?
8) Compare and contrast some of the information contained in the three videos:
How the Minimum Wage Creates Unemployment – Note: this video uses an example of a $5 minimum wage as an illustration only. The same exact point could be made with a minimum wage of $7.25, $9, $12.37, or any other amount, so please do not get hung up on the $5 amount. The point is whether or not the government ought to dictate the wages of a private transaction between a willing employee and employer.
Describe the main points of each video. Which one or two videos do you agree with more from an economic perspective and why? Be specific!
9) Based on your previous responses, do you believe that the minimum wage should be raised, lowered, remain as it currently is, or be altogether eliminated? If you think there should be a minimum wage,how would you arrive at the specific wage? You need to give a thorough reason for your answer. Who should get to decide how much a worker gets paid, the worker and their employer or a politician? WHY?
OPTION 2 – Taxes
It has been said that nothing in life is guaranteed except for death and taxes. The next questions ask about the three tax structures as well as rate rates.
1) A lot of students say that some people pay “more (or less) in taxes” than others, but they often confuse tax rates (percentages) with the amount of tax paid (in dollars). Be sure to answer questions in this option with references to the differences between taxes paid in dollars versus percentages.
Please state whether you prefer a progressive, regressive, or flat (proportional) tax system and WHY. Is your preference more in accordance with the concept of equality of opportunity (which is equal treatment) or equality of outcome (which is unequal treatment)? BE SPECIFIC. Which tax system incentivizes taxpayers to earn more money and which structure disincentivizes taxpayers to work harder and earn more money.
2) Please write about marginal tax rates and whether you believe they need to be changed in general. More specifically,
A) If you believe in a flat tax rate system, should income tax rates be raised or lowered?
B) If, however, you think a progressive tax rate is best:
i) should taxes on low-income earners be raised or lowered?
ii) should taxes on average-income earners be raised or lowered?
iii) should taxes on high-income earners be raised or lowered?
C) If, however, you think a regressive tax rate is best:
i) should taxes on low-income earners be raised or lowered?
ii) should taxes on average-income earners be raised or lowered?
iii) should taxes on high-income earners be raised or lowered?
Regardless of which you chose (A, B, or C) be sure to give your reasons WHY you feel the way that you do.
3) Please explain HOW the tax rate changes (the increase or decrease you advocated for in Questions #2 above) will affect each of the following:
a) economic growth: job creation, investment, incentives to work more, and tax avoidance
b) the budget: the difference between tax revenue and government spending
c) economic “fairness”
Your answer needs to have a discussion related to the Laffer Curve, especially with respect to the budget (and to government revenue in particular). In addition, please give your definition of economic “fairness” and WHY you believe that.
Describe the main points of each video in detail. Which video do you agree with more? Please describe WHY. Which video recommends treating people equally and which one does not?
Describe the main points of each article in detail.
Based upon the two articles: By income percentile group, who doesn’t pay their “fair share” of taxes and who pays more than their “fair share” in your opinion? How do you arrive at that opinion?
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Read the news story about producers of disposable gloves and their workers, “The world’s top suppliers of disposable gloves are thriving because of the pandemic. Their workers aren’t”, on CNN (https://cnn.it/332zg9J).
Write an essay to answer the following questions:
1.Identify which model of market structure best describes each of the followings: (1) the market for disposable gloves, and (2) the market for the workers’ labour. *(should be oligopoly & perfect competition)
[400 words]
2.Discuss how profitable the producers of disposable gloves were before the Covid-19 pandemic according to the prediction of the model that you identify in Question #1. Discuss whether you think the actual economic- and accounting profits of these producers were as predicted by the model.
[300 words]
3.Discuss how high/low wages of the workers were before the Covid-19 pandemic according to the prediction of the model (that you identify in Question #1). Discuss whether you think the actual wages of these workers were as predicted by the model.
[ 300 words]
4.Using the models (that you identify in Question #1), analyse why the effects of the Covid-19 pandemic on the two markets differ: Why the profits of disposable glove producers increases during the Covid-19 pandemic but the welfare of their workers remains the same.
[600 words]
5.Using the model (that you identify in Question #1), analyse what happens to the workers if the government increases the minimum wages: Will it improve the welfare of the workers?
Exercise 1. The following information is available for company ABC as of 31December N:Land 500Additional paid in capital (share premium) 150Advance payments to suppliers (from which for inventories 200) 300Licenses 50Customers 600Prepayments 80Legal reserve 70Dividends payable 100Depreciation of plant and machinery 50Investments in associates 700Issued capital paid in (Share capital paid in) ??Sundry debtors 100Raw materials 60Plant and machinery 700Long term bank loans (of which becoming due in less than one year 150) 525Write downs of raw materials 5Cash at bank 30Provisions for guarantees to customers 500VAT payable 50Long term receivables 100Buildings 300Development costs (assets recognition criteria are fulfilled) 100Other reserves 700Salaries payable 200Depreciation of buildings 50Short term bank loans 150Finished goods 180Profit for the period 250Advances received from customer 100Short term financial investments 150Suppliers payable 100Bills of exchange payable 30Other taxes payable 50Deferred income 100 Required:a. Draw up the balance sheet b. Calculate issued capital (paid in capital). https://essaycove.com/please-solve-the-following-exercises-exercise-1-the-following-information-is-available-for-company-abc-as-of-31december-n-land-500-additional-paid-in-capital/ Exercise 2. Using the following elements prepare an income statement by function and by nature (you must obtain the same result with both methods. a. Personal expenses 650 a.1. for production 400 a.2. for distribution 150 a.3. for administration 100 b. Interest expenses 40 c. row material expenses 150 d. income tax expenses 150 e. merchandise expenses 10 f. consumable expenses 300 f.1. for production 200 f.2. for distribution 70 f.3. for administration 30 g. Finish goods revenues 1.400 h. Other op expenses.210 i. Financial expenses 46 j. Other taxes expenses 20 k. Finish goods -31.12.N 200 l. Costs CSS 210: l.1. for production 130 l.2. for distribution 50 l.3. for administration 30 m. INTEREST REVENUE 60 n. Services expenses 10 o. other financial revenue 10 p. seles revenue 50 q. depreciation expenses 250 q.1. for production 180 q.2. for distribution 20 q.3.for administration 50 r. revenue from dividends 120
When a firm is looking at the number of suppliers they should have, it is important to take into consideration the type of business they have as well as the type of relationship they are hoping to have with their supplier.
For example, when a brokerage is looking to get professional photos on all current and future listings, they would benefit from having one photography supplier. One of the advantages of having one supplier is the ability to build a long term partnership that allows both parties to develop methods and expectations that will lower costs. “These close partnerships often lead to high levels of dependency between the customer and the supplier” (Vonderembse, & White, 2013). Because the brokerage uses one photography company, the ordering and delivery process is seamless and the turn around time is quick. In addition, the cost per photo decreases because of the amount that is ordered and the loyalty they show each other. It is important that both the brokerage and the photography company develop contingency plans to deal with unexpected problems that may occur.
The photography company may choose to outsource the editing process and benefits from having multiple suppliers. The reason this works is because no one company can edit the photos fast enough to get them back to the brokerage the following day. By having multiple suppliers the photography company can divide the editing work, and instead of getting photos back 24 hours later, they are able to get edited photos back and sent to the brokerage within 12 hours. One of the disadvantages this could have is the consistency in quality editing from the multiple sources, it is important to have each supplier deliver the same level of quality.
In conclusion, when determining if a firm should have one supplier or several, it is crucial to look at the business structure and determine the type of relationships needed to be successful. A large grocery chain will benefit from forward vertical integration, while a brokerage needing photos has no need for it.
References:
Vonderembse, M. A., & White, G. P. (2013). Operations management [Electronic version]. Retrieved from https://content.ashford.edu
Respond to…
Should a firm attempt to have fewer or more suppliers? What are the advantages and disadvantages of each approach?
My initial response is that it depends on the situation. Looking at it from my organization we have areas where we utilize dozens of suppliers and some where we have only one. The advantage to having fewer or even just one supplier is that these, “relationships enable both parties to work together for greater integration of the supply chain and for development of methods that can improve quality and lower costs,” (Vonderembse & White, 2013, Chap. 5.4). The reason behind having one, in my example, is that it makes it easier to customize those products or services. We use one vendor for all of our shipping supplies. We have customized shipping containers and product specific packaging materials that they have developed around our specifications. In this way we have a working partnership with this vendor.
On the other side of the discussion, we distribute almost 20K different SKUs. In order to carry such a diverse selection for our customer we have dozens of supply vendors. Because of our sales volume, these vendors compete for space within our building especially those with like items. We also have our own manufacturer that produces generic versions of our most popular items. I would relate this to the backward vertical integration discussed in our text (Vonderembse & White, 2013). This gives us flexibility on what products we produce and gives us a competitive advantage over the brand name items, at least from a cost perspective.
Reference
Vonderembse, M. A., & White, G. P. (2013). Operations management [Electronic version]. Retrieved from https://content.ashford.edu/