Kindly go through the instructions and write a report based on Master card case provided below.
1 of 6 | P a g e Administrative Poli cy, GMGT 4010 Fall 2022 Take -home Individual Mid -term Examination Professor _______________ Section ___ Class day and time_______ IMPORTANT NOTICE – READ THIS FIRST STATEMENT OF INTEGRITY This assignment is intended to exercise and evaluate your capabilities in Administrative Policy. This take -home exam is to be completed on an individual basis and no consultation about this case with anyone else, either within or outside the Administrative Policy course is permitted. Any violations of this policy will be considered a breach of academic integrity by all the students involved, and will be referred to the Dean’s office for disposition according to Faculty policy. To reinforce the importance of this stipulation for the ac ademic integrity of this examination, your report must include the following signed statement, attached as a separate page to the front of your paper. I, __________________________________(please print your name), certify that I have completed this take -home mid -term examination written analysis strictly on my own, without consultation with any other individual, either within or outside the Administrative Policy course. Further, I certify that I have not provided any advice or assistance with regard to th is take – home mid -term examination to any other student currently enrolled in Administrative Policy at the University of Manitoba, Fall 2022 . Finally, I certify that I have not used any information after the time of the case and that the paper meets length and other format specifications given in these mid -term case instructions. Its word count (including executive summary) is: _____________ (N ot to exceed 2800 words) Its page count (including executive summary) is: _____________. (Not to exceed 9 pages ) ______________________________________ Signature and Name Examinations will not be accepted unless they are accompanied by this signed statemen t. However, this statement should be uploaded as a separate file so that the grading can proceed on an anonymous basis. 2 of 6 | P a g e (SAMPLE) TITLE PAGE ADMINISTRATIVE POLICY GMGT 4010 Student Number _________ (Please do not write student name ) W ord Count (including Executive Summary )___ ___ (N ot to exceed 2800 words) Page Count (including Executive Summary)_ __ ___ (N ot to exceed 9 pages) Instructor’s Name Section Number Class Day & Time MIDTERM TAKE -HOME EXAM. FALL 2022 3 of 6 | P a g e GMGT 4010 – Administrative Policy Take -home Midterm Case Instructions A. The Deadline 1. PAPERS ARE DUE BY 11:59 P.M. ON SATURDAY , OCTOBER 29 , 20 22 AT UM LEARN WEBSITE OF THE COURSE . You should plan to upload the paper by 11:30 p.m. to avoid any chances of being late. Any papers that arrive late will receive a late penalty as described in these instructions and the course outline. The late policy will be strictly enfor ced to keep the level playing field for all students . B. The Assignment 1. Mastercard’s CEO Michael Miebach and his team , aware of your skills in strategic analysis, have asked you to help them assess the situation and to recommend a strategy for the company for the next five years. Please prepare a report for them giving your ap praisal of the situation and your recommendations, considering strategy formulation as well as implementation issues, and using the format given in the “ General Guidelines for Analyzing and Writing Cases ” provided at the UM Learn website of the course. Ple ase do not limit yourself to the alternatives, if any, given in the case so you may build other strategic alternatives and consider them before making a recommendation. 2. The case is available for purchase at the Ivey Publishing’s website . Its title is “ Mastercard: Creating a World Without Cash ” and its number is 522001 . The case is from Harvard Business School . Be sure to buy the case mentioned above because there are other cases on Mastercard . In fact, we have added this case to the Administrative Policy coursepack as well (see at the bottom of the coursepack) . 3. As mentioned below, you may conduct external research on the case up to April 20, 202 2 (i.e., the date of the case ). Please feel free to ask if you have any questions. C. External Research 1. You are required to access the company’s annual financial information (Income Statement, Balance Sheet, Cash Flows, and Stock Prices) from the Internet for at least three years (2019 – 2021). As you may know, this information is easily available at several w ebsites, e.g., Yahoo Finance, Google Finance, Marketwatch, Macrotrends, Wall Street Journal, etc. Some of these websites may also have key financial ratios of various companies available for several years. Usually, trends of these ratios for the most recen t five years is sufficient. You may use the ratios from these websites in your report but be sure to provide the reference. As you know, it is more important to know how to interpret these ratios than how to calculate them. 2. This assignment is primarily based on the case and the financial information. Thus, you are not required to conduct any other external research on the company and its industries. You may search for other information up to April 20, 2022 , if you would like to. Even if you are searchin g for information from external sources, external research should not be the focus of the paper. 4 of 6 | P a g e Moreover, search for or use of any information or data regarding this company and its industries after the above -mentioned date will be subject to hind -sight b ias and will be considered a violation of university policy on Academic Integrity . 3. Be sure to provide references on a separate page for any search before the date given above and attach this page at the end of the paper. This page may contain only references and can be in addition to the text -pages and exhibits. The words on the referenc e page are not included in the word count of the paper. You may use the APA (American Psychological Association) format for the references rather than simply providing the links . You may provide the citations (e.g., when you are providing Assumptions and t heir Justification exhibit) by the name of the author and year (e.g., Smith, 2020). If the source material does not have an author, you may use the name of publication (e.g., Wall Street Journal, 2020). Please note that there is no need to provide citation or reference of the case . 4. Please use your own words throughout the paper and do not use any direct quotations from the case or from the external sources. 5. Please keep in mind that you are not allowed to consult any case solutions or teaching notes for the midterm case or any other case that may be related to the midterm case in any way. D. Midterm Examination Case Specifications 1. The paper must be between 2,000 –2,8 00 words and printed on a maximum of nine (9) pages in double -space with 12 -point Times New Roman font and one -inch (2.54 centimeters) margins on all sides (maximum 23 lines per page). 2. You must use paragraphs and headings in keeping with appropriate b usiness writing form. Use a tab at the beginning of the paragraph to clearly distinguish it fro m previous paragraphs. Do not us e any footnotes. You may use either left justification or both left and right justification. 3. The word -count limit and the nin e-page limit do not include the Title Page or any exhibits. However, they do include the executive summary. Therefore, ignore the Title Page and begin page number one with the Executive Summary. 4. Please do not use fancy fonts. Avoid extended use of bol d or italics also. 5. Papers that grossly violate these guidelines will receive a failing grade (e.g., using a font smaller than the one specified here or using single space text in the body of the paper will receive a failing grade). Points may be deduc ted for other violations (e.g., at least ten per cent points will be deducted for each additional page or part thereof {Hint: “part thereof” here means at least ten per cent points will be deducted for any part of the ten th or any subsequent page}). Ten per cent deduction means that if you receive 80 per cent marks in the exam, violation of one page (or part thereof) will reduce it to 70 per cent. 5 of 6 | P a g e 6. Please be sure that the text of the paper as well as the exhibits are readable. It may be better to copy and paste exhibits from Excel to Word rather than use their pictures or screenshots. As you know, pictures or screenshots mak e the numbers difficult to read and are not professional quality. 7. Clarif ication : Stop when you reach 2,8 00 words or nine pages in the given format. In other words, the paper must meet bo th conditions: Not more than 2,8 00 words and not more than nine pages in the given format. Include the Word Count and the Page Count on the statement of integrity and the title page (as shown above). Keep in mind that the word count and the page count include the headings and subheadings that are part of the text of the paper. You may underline or use bold letters for the headings of various sections to show them clearly . E. Submitting the Case – Uploading at UM Learn 1. Pap ers mus t be submitted in a pdf format by the deadline at UM Learn in the Midterm Exam folder of the course . The pdf copy must have all pages of the text as well as the exhibits. The papers should have a Ti tle Page as given in these instructions. Papers with any student’s name or without the word count will not be accepted ( No student names anywhere on the exam !). Each page of the report should contain a header or footer with the student number, section numb er, and page number. 2. Make sure you put the signed Statement of Integrity (SOI) in a different file and name it so it is easily identifiable. 3. Students are also required to submit an exact electronic cop y of the paper in the Microsoft Word format at UM Learn . This file should have all the text as well as the exhibits. 4. Please do not email the electronic copies to your instructor. When you submit a file at UM Learn, you will get a receipt. Also, AACSB Assurance of Learning Committee may need to access them at UM Learn for their use. 5. Please name the files as follows: GMGT4010 -Midterm -Sec tion Number -Student N umber . Please do not submit more than these three documents (a pdf file, a Word file, and the Statement of Integrity (SOI) file ). As you know, the pdf document ensures that the formatting stays the same, irrespective of the computer settings. 6. As mentioned in the course outline, please note the following for late p enalty ( on weekdays as well as weekends): Late submissions, including those delayed by computer -related difficulties, will be penalized ten percentage points for every 24 hour period, or portion thereof late. For example, a student who earns a score of 80% on his/her paper will receive a score of 70% if the paper was submitted one day late. Exam pape rs will not be accepted after 72 hours. Exceptional circumstances which might jeopardize your ability to meet this deadline must be brought to your instructor’s attention prior to the due date, or else they cannot be considered as grounds for exemption from this late penalty. Please keep in min d that any time extension cannot exceed 72 hours. If you are involved in any co -curricular activities (e.g., case competitions at another university ), you are expected to complete and submit the paper prior to the deadline. 6 of 6 | P a g e F. Saving Copies of the Paper 1. Neither the department nor the university accepts any responsibility for potential loss of papers during handling. Such a loss may be extremely rare; nevertheless, to protect against this theoretical possibility, all students are required to keep a har d and an electronic copy of the paper that they submit. 2. Don’t forget to save multiple soft copies to avoid any chance of losing your disk, computer crash, or other such problems!
Kindly go through the instructions and write a report based on Master card case provided below.
A0201 GMGT 4010 – ADMINISTRATIVE POLICY TEAM NUMBER A0201 Word Count 828 Page Count 3 Professor Jie Yang Section A02 HAND-IN TEAM ASSIGNMENT Fall 2022 External Assessment Health spending globally was US$7.8 trillion in 2017, equivalent to about 10 percent of gross domestic product (GDP). The industry is in the middle of tectonic shifts caused by changes in demography, digitalization, delivery, democratization, and decree that created a lot of opportunities for Philips to grow. The COVID-19 pandemic had accelerated these shifts. The World Health Organization predicted that by 2020, the prevalence of chronic diseases would increase by 57%. In order to provide the long-term care and chronic illness management services needed by a rapidly growing senior population, more resources for health care would be necessary. Patients are now more actively participating in their own care due to mobile technology and apps. By separating care from institutional settings, remote monitoring is assisting in lightening the load on healthcare systems. Outpatient services are gradually taking the role of inpatient care. The change in distribution method is creating new opportunities allowing potential competitors from the retail sector to enter the market. Some industries, including those based in technology and software, are particularly well-suited to make the switch from goods to platforms. Digital technologies have a disruptive impact on how a corporation can personalize and customize its offerings. Being alert of all incoming threats is not always easy. Since information is now more readily available than ever, Phillip is facing difficulties in preventing competitors from exploiting the information to imitate their products. Internal Assessment Philips is a leader within the global health and health care technology sector, operating in over 100 countries. The company has transitioned from providing household electronics, to health-tech products, and most recently moving towards health care platforms with an aim to combine the capabilities of their product line to improve customer outcomes. The company has consistently produced quality products and comprehensive customer solutions to establish a sustained distinctive competency. This competency is extremely valuable as Philips is known as a trusted and reputable health care tech provider. To reach this high level of product utility requires deep understanding of customer needs and process knowledge which makes it rare and difficult to imitate. Philips’s organization structure enables them to capitalize on this competency. Philips has established a high level of service resulting in loyalty and trust among their global customer base which is both an important strength and a sustained distinct competency. This strong relationship is very valuable and continues to serve them while they have transitioned their business model towards a solutions based technology which requires enhanced collaboration with their institutional customers. This deepened relationship continues to improve their product line and platform capability as they gain valuable insight on the ways their technology can improve to maximize utility. This trust and loyalty takes time to obtain which makes it rare and difficult to imitate. Philips is now organized to capitalize on this strength/distinct competency. The restructuring of Philips organizational architecture based on customer needs, and updating the metrics for evaluating sales performance is a distinct competency as it directly aligns with the company’s strategy. This shift is extremely valuable as it addresses earlier weaknesses to maximize synergy among various departments through improved information sharing resulting in increased product utility, relationship oriented sales, and overall improved customer experience. This organization architecture is rare and difficult to immediate because no two companies operate exactly the same. Financial Assessment As Philips discovered new opportunity within the healthcare system by shifting from product focus to consumer focus, Philips introduced a new strategy that led to developing platforms which enabled efficient and improved healthcare delivery and accessibility for the consumer. Although a new opportunity has been identified, Philips faces several dilemmas. Thus, it is important for Philips to have enough financial capacity to implement new strategy while simultaneously continuing to sell its products to generate revenue. Last three years (2018-2020) of Philips’ financial performance shows that Philips are operating in net positive with steady increase of net income each year. The financial ratios from the years 2018 to 2020 also indicate positive performance as well (see Exhibit 3). This means that since net incomes are increased each year along with positive financial ratios, it enables Philips to utilize capital gains and make internal investments. The company has enough financial capabilities to implement the new strategy and eliminate technology dilemmas that the company faces. First, Philips should optimize the process of creating and designing platform software which would lead to low expense. Second, Philips should invest in building infrastructure and hiring skilled managers that can develop, improve, and properly maintain the platform. Calculations show positive cashflow for the next 5 years with the initial investment for infrastructure and R&D for the platform. Consequently, expenses can be avoided and have positive outcomes with the new platform strategy. Exhibit 1: Risk of entry by potential competitors due to easy access of data Mobile technology and apps working as complementors to Phillip products Low bargaining power of buyer There are many opportunities for Phillips in the current external environment. Their products are innovative and are new in the market leaving low bargaining power for buyers. Rapid development of mobile technology and apps complements the products by providing easy access to health information to patients. Excessive accessibility to information is a threat to Phillips as risk of potential entrants can decrease their market share. Exhibit 2: Internal Assessment / VRIO Analysis Value Chain Activities Specific Attributes Along the Value Chain V R In W/S/DC/SDC O Competitive Implication Research and Development Quality product assortment and innovative comprehensive customer solutions yes yes no SDC yes Sustained Competitive Advantage Marketing/Sales Established global brand recognition yes yes yes SDC yes Sustained Competitive Advantage Customer Service Loyal customers due to deepened relationship based on collaboration for increased utility of future products yes yes no S & SDC yes Sustained Competitive Advantage Engineering and Design In-depth process knowledge yes yes yes SDC No Sustained Competitive Advantage Human Resource Organizational architecture aligned with company strategy yes yes yes DC yes Sustained Competitive Advantage Human Resources Large pool of skilled labor force operating in over 100 countries. yes no no yes Competitive Parity In order to remain a leader in the health tech industry, Philips will need to increase collaboration as they move from products to platforms to ensure software development is compatible with one another in order to maximize utility of their system. Exhibit 3: Financial Analysis Koninklijke Philips 2020 2019 2018 PROFIT RATIOS 1. Return on Investment 6.8443 6.7866 8.4277 2. Return on Assets 4.3481 4.4122 5.0348 3. Return on Equity 10.1244 9.4423 10.8122 4. Gross Margin 44.9501 45.5549 47.2049 5. Operating Margin 7.8935 8.4437 9.4807 6. EBIT Margin 7.8935 8.4437 9.4807 7. EBITDA Margin 16.4116 16.138 15.4958 8. Pre-tax Profit Margin 7.6273 7.8483 8.2942 9. Net Profit Margin 6.0763 5.9901 6.0151 LIQUIDITY RATIOS 1. Current Ratio 1.4515 1.3555 1.2051 2. Quick Ratio ACTIVITY RATIOS 1. Asset Turnover Ratio 0.7049 0.7211 0.6965 2. Inventory Turnover Ratio 3.5931 3.8251 3.5782 3. Receivable Turnover Ratio 4.5367 4.1179 4.3331 4. Days Sales in Receivables 80.4551 88.6364 84.2354 LEVERAGE RATIOS 1. Debt to Assets Ratio 2. Debt to Equity Ratio 0.5826 0.4314 0.3979 3. Long-term Debt to Capital Ratio 0.324 0.2812 0.2205 4. Interest-Coverage Ratio SHAREHOLDER-RETURN RATIOS 1. Total Shareholder Returns 2. Price-Earnings Ratio 3. Market-to-Book Ratio 4. Dividend Yield 5. Book Value Per Share 15.0194 15.8703 15.6535 6. Operating Cash Flow Per Share 0.9684 0.246 0.0099 7. Free Cash Flow Per Share 0.9839 0.0879 -0.1494 Source: https://www.macrotrends.net/stocks/charts/PHG/koninklijke-philips/financial-ratios Most Profit Ratios and Leverage Ratio show unfavorable numbers. However, Liquidity Ratios, Activity Ratios, and Shareholder-return Ratio indicate favorable numbers. Thus, the ratios indicate Philips are performing well for the years 2018 to 2020. Exhibit 4: Net Present Value Assessment *Numbers in millions (euros) YEAR 1 2020 YEAR 2 2021 YEAR 3 2022 YEAR 4 2023 YEAR 5 2024 Sales (1*) 20456 21479 22553 23680 24864 Expenses Direct (2*) 11137 11694 12279 12892 13537 Selling expenses (2*) 4916 5162 5420 5691 5975 General Admin (3*) 650 670 723 781 843 Research and Development Exp (4*) 3068 3222 2255 2368 2486 Other Expenses (5*) 110 110 110 110 110 Other Income (5*) 111 111 111 111 111 Operating Income 685 732 1876 1948 2022 Financial Income (6*) 97 96 96 97 97 Financial Expense (6*) 367 365 363 367 368 Investment in Associates (7*) 5 5 5 5 5 Income Before Tax (8*) 410 458 1604 1673 1746 Net Income 307 344 1203 1255 1309 Discount Factor (9*) 1.1 1.21 1.331 1.4641 1.61051 PV of Cash Flows 279 284 904 857 813 TOTAL PV OF CASH FLOWS (NPV) 3137 With initial investment, after 5 years of projected operations we have determined a net present value 3137 million euros associated with introducing the platform strategy. Costs associated with the resources required to develop the infrastructure for the platform have been implemented into research and development costs. We recommend proceeding with the project. Exhibit 6:Assumptions and Justifications (NPV) 1*-Due to the trend in the past 3 years (2% increase in sales from 2017-2018, 7.5% from 2018-2019) we will assume a 5% increase in sales per year after 2019 (2019 as basis). This trend is assuming the success of Healthsuite and continuing global conditions. 2*- directly proportional to sales, therefore we will assume a 5% annual increase (2019 as basis) 3*- Will assume a 3% increase in 2 years with 2019 numbers as a basis, will then assume a 8 % increase every year after compensation metrics for Platform strategy are refined. 4* will assume a slighter higher estimate than normal (15% of Revenue) for the first 2 years for Research and Development as well as infrastructure investment required for the platform, and will then assume normal (10%) R&D costs for the remaining years. 5*- Due to the negligible amount and difficulty of an objective estimate, we will assume a static expense based on the average from the previous 6 years of income statements. 6* Will assume declining interest rates for 2020, 2021, and 2022 due to COVID 19 pandemic (2%, 1.5%, 1%). We will then assume a 2% interest rate in 2023 and a 2.5% rate in 2024 due to the estimated global economic upturn. Both financial expenses and income will be based on average from the previous 6 income statements and we will assume an interest rate of 2.5% as a basis. 7* Due to the necessity for collaboration with industry players in order to create an effective platform we recommend an increase to associate investments to a static 5 million euros a year, this will be for the purchase of shares in associated organizations to encourage partnership. 8* Due to a tax rate of 23% in 2019 and 27% in 2018 we will assume an average tax rate of 25% 9* Due to lack of data for wacc and alternative discount rates, we will assume a constant 10% per year, discount factor=discount rate to the power of years ahead of time 0. References Koninklijke Philips Financial Ratios for analysis 2009-2022: PHG. Macrotrends. (n.d.). Retrieved October 4, 2022, from https://www.macrotrends.net/stocks/charts/PHG/koninklijke-philips/financial-ratios Koninklijke Philips N.V. (2021, July 25). Philips annual report 2019. Philips Results. Retrieved October 5, 2022, from https://www.results.philips.com/publications/ar19