Big SS Fatma manufactures a pill that is 60% effective in treating theomania and the Dunning-Kruger Syndrome. The drug must be taken weekly and is priced at approximately $300 per dose - only half of which is typically covered by insurance. This pill represents more than 70% of Big $s Faroa's revenue and 80% of its net income. Currently, incidents of theomania are on the rise. (The cost to manufacture this drug is $75 per dose) Recently, a medium-sized medical firm, RX Lago, LLC. has received a patent for a drug that is more than 95% effective in treating theomania and is willing to sell the drug for $25 per dose (to be taken monthly) The cost to produce a dose is $3. The FDA and the CDC have both sanctioned the use of the drug. RX Lago is a privately held firm that was established for the sole purpose of manufacturing and marketing this drug This drug which RX Lago produces contains an necessary ingredient manufactured by a multi-national company. This form is called, Faxim, Inc. The formula for this ingredient is proprietary and is a closely guarded secret (much like the formula for Coca Cola is a secret) and therefore, is not patented. Furthermore, the process RX Lago uses to produce its pill using the Faxim, ingredient is also secret. Big Ss Facma realizes if RX Lago begins to market this new product, the impact would be disastrous. Estimates indicate Big $$ Facma' stock price would drop from $212 per share to about $4.00 per share, practically overnight. Thousands of employees, of both Big Ss Fama and its suppliers, would be laid off. Shareholders would lose most of their investment and the CEO would likely be fired. The CEO, Edith Machiavelli, believes she has only two options. Her efforts to purchase RX Lago have been an abject failure. The Board of Directors of RX Lago believes such a sale would be morally reprehensible. Therefore, she plans to borrow heavily to purchase Faxin, Inc. If successful, she would refuse to sell the vital ingredient to RX Lago. Such a move would deprive millions of sufferers of a cheaper and more effective treatment but would keep Big $$ Facma profitable and fully operational. Your Assignment: You are faced with only two (2) choices as indicated below. Do not create a different scenario or option. Choice 1: Borrow a significantly huge sum and purchase Eaxim, Inc. Then refuse to sell the secret and necessary ingredient to RX Lago Choice 2 Do not implement Choice 1. Big SS Fatma manufactures a pill that is 60% effective in treating theomania and the Dunning-Kruger Syndrome. The drug must be taken weekly and is priced at approximately $300 per dose - only half of which is typically covered by insurance. This pill represents more than 70% of Big $s Faroa's revenue and 80% of its net income. Currently, incidents of theomania are on the rise. (The cost to manufacture this drug is $75 per dose) Recently, a medium-sized medical firm, RX Lago, LLC. has received a patent for a drug that is more than 95% effective in treating theomania and is willing to sell the drug for $25 per dose (to be taken monthly) The cost to produce a dose is $3. The FDA and the CDC have both sanctioned the use of the drug. RX Lago is a privately held firm that was established for the sole purpose of manufacturing and marketing this drug This drug which RX Lago produces contains an necessary ingredient manufactured by a multi-national company. This form is called, Faxim, Inc. The formula for this ingredient is proprietary and is a closely guarded secret (much like the formula for Coca Cola is a secret) and therefore, is not patented. Furthermore, the process RX Lago uses to produce its pill using the Faxim, ingredient is also secret. Big Ss Facma realizes if RX Lago begins to market this new product, the impact would be disastrous. Estimates indicate Big $$ Facma' stock price would drop from $212 per share to about $4.00 per share, practically overnight. Thousands of employees, of both Big Ss Fama and its suppliers, would be laid off. Shareholders would lose most of their investment and the CEO would likely be fired. The CEO, Edith Machiavelli, believes she has only two options. Her efforts to purchase RX Lago have been an abject failure. The Board of Directors of RX Lago believes such a sale would be morally reprehensible. Therefore, she plans to borrow heavily to purchase Faxin, Inc. If successful, she would refuse to sell the vital ingredient to RX Lago. Such a move would deprive millions of sufferers of a cheaper and more effective treatment but would keep Big $$ Facma profitable and fully operational. Your Assignment: You are faced with only two (2) choices as indicated below. Do not create a different scenario or option. Choice 1: Borrow a significantly huge sum and purchase Eaxim, Inc. Then refuse to sell the secret and necessary ingredient to RX Lago Choice 2 Do not implement Choice 1
