Week 2

Over the weekend, Mrs' Durdana has been tirelessly thinking about the decisions me made last week. As she came in class she advised us to reconsider creating a plant at this stage. So we calculated the costs of developing a plant, the training and time involved, and also took into consideration that it will take it three quarters to start manufacturing. Mishal argued that we should stick with the decision and build one now, in that way, we will be able to produce more units. Yaser objected; he said we could that one plant, and the two lines in production should last the year, and if they don't we can order an expansion and maybe even imply a second shift which will both be operational in the very next quarter. The rest of the group agreed with Yaser, and we added that in doing so, we will be able to use the money by investing in CD's and issuing dividends instead, which will ultimately increase the wealth of our stockholders (which is the main goal of this company.)

On Monday, we created a Cash Flow. I, as one of the Finance managers, decided to create it on Microsoft Excel, where it is easier to edit the data in case we need to make changes or amend errors. We saw that in the previous quarter, the company invested $700,000 in CD and they matured at $1,000,000 (which we're receiving.) We decided to invest the million dollars again in CD's and give our shareholders $50,000 worth of dividends. We also took into consideration that Merica is suffering from inflation, and so we decided to increase the salespeople's commission by $0.01 and in Sereno from Lc 70 to Lc 74.

On Tuesday, in Mrs' Susan's class and Mrs. Nickie's class, we were told to create a mission statement and vision for the company. At first, Yaser and I came up with "Wear Audio Art anywhere anytime" the teachers told us that it wasn't a suitable vision, but will make a good slogan. After much debating, Mishal came with the idea of including of the use of technology in the vision, and I came up with it having to be fashionable, and Yaser said it should be comfortable at the same time. In the end, we managed to include them together and created our vision which is: “Our vision is to take headphones to a higher level by combining technology, comfort and fashion.” The order was different at first (fashion, comfort, and technology) but in the end, we decided to list them by order of importance. Our mission statement didn't take long to create, after all, it is simply what our company aims for:“We want to produce a new generation of headphones that reach our customers wants and needs at a reasonable price.”

On Wednesday we inputed our decision at the start of the class. We checked the cash flow and decisions one last time and decided to change a few things. We changed our CD's from $1,000,000 to $1,700,000, and then we saw that if we chose to invest that much, then it will take too much money, and we won't have much left in case of emergency, and so we decreased it eyt again to $1,500,000. We also decided to increase our dividends to $100,000. Later that night, I worked on the financial goals/strategies of the company (without counseling Mohammed, the Financial manager.) I decided that we should always have a minimum of $500,000 in cash, not invested or used in case of emergencies (having more isn't a problem either.) I also decided by the end of year 4, we will have bought back $500,000 worth of bonds (to decrease our expenses) and if we ever need to make a loan, we should issue bonds due to the interest being 2,5% a quarter (10% a year.) I also decided that we should issue dividends ($100,000) every quarter.

However, the next day, after consulting with Mohammed, we decided to change our dividends policy and decided to give away $100,000 worth of dividends semi annually. He also suggested that if our rivaling companies decide to issue shares, then the stock prices will go down, and that will be the right time to buy them (that will also increase our shareholder's wealth.) I also came up with the idea of decreasing the price of our products in Merica from $10.00 per unit to $9.99. That is the "99 cents" strategy that has a psychological effect on consumers. The group agreed and thought it was a great idea, but to be on the safe side, we consulted Mrs. Durdana which told us that the BDS doesn't take into account such psychological factors, and so we decided not to make the change.