Case Discussion Questions

Global Self-Awareness: Imagine that you were made CEO of Farmacias Similares at the moment the company was considering the decision of whether to expand to higher income-earning segments or to continue focusing on low-income patients by expanding into other Latin American countries. Consider the challenges you would face working in your new work environment in terms of culture and institutional structures. You may analyze the situation in light of what you learned in Chapter 3 and any other material you learned in the book, from outside reading, or life experiences.

Cultural Diversity and Understanding Global Systems:Cultural Diversity: If you found investors to support a venture that created the same type of business model to serve patients in the United States in the current environment, what challenges would you face that would be different from those faced in the Mexican environment? Understanding Global Systems: How might the business need to be designed differently to function in that environment?Cultural Diversity: If you a Russian living in Russia in the 1960s and wished to open a business using the same business model, what challenges might you face? Understanding Global Systems: How might the business need to be designed differently to function in that environment?

Personal and Social Responsibility: Imagine that you were made CEO of Farmacias Similares at the moment the company was considering the decision of whether to expand to higher income-earning segments or to continue focusing on low-income patients by expanding into other Latin American countries. The managers of your company project that the company could make more money if it went 'up-market', serving higher income earners in Mexico, The managers also proposed a plan designed to maximize profits that included gradually shutting down branches that catered to lower income patients in rural areas while laying off doctors and other employees who would not relocate to the new branches in cities.

Imagine that, on your board of directors are shareholders from Germany, the United States and Mexico. Many of the German shareholders hold to a stakeholder model of the company and argue the company should continue to meet the needs of existing employees and patients. Other shareholders are Americans who argue that you have a fiduciary responsibility to work in the interest of the shareholders, and you therefore should take the most profitable course of action. The Mexican shareholders are split between these two opinions. Some shareholders argue that this model could benefit the poor in other nations in the region and that the company should, therefore, expand into those countries following the current model.Discuss the implications of either decision as it relates to shareholders in the business, and explain your opinion regarding the most ethical course of action.Analyze the ethical issues involved in this decision and describe what actions you would take in response to this proposal

Question 1What mechanisms could be put in place to motivate management to consider the interests of: (a) the owners? (bl the dsmhaldsm? Question 2 How could accounting regulators use the research conducted by Positive Accounting theorists? Question Home researchers who utilise Legitimacy Theory posit that organisations will attempt to operate within the terms of their 'social contract'. What is a social contract? Question 4ln 2006 the Australian Government established an inquiry into corporate social responsibilities with the aim of decidirg whether the Corporations Act should be amended so as to specically include particular social and environmental responsibilities within the Act. At the completion of the inquiry it was decided that no specic regulations mold be added to the legislation, and that instead, 'market forces' would be relied upon to encourage companies to do the 'right thing' (that is, the View was expressed that if companies did not look after the environment, or did not act in a socially responsible manner, then people would not want to consume the organisations' products, and people would not want to invest in the organisation, work for them, and soforth. Because companies were aware of such market forces they would do the 'right thing' even in the absence of legislation]. You are required to explain the decision of the government that no specic regulation be introduced from the perspective of: 1. Public Interest Theory 2. Capture Theory 3. Economic Interest Group Theory of regulation. Question 4 Information: Classify each of the following items as either income statement or balance sheet and indicate if the normal account balance is a debit or a credit balance. _ Marks Available: 14 Income Statement (IS) or Debit (DR) or Credit (CR) Balance Sheet (BS) Regular Balance? Accounts Payable Accounts Receivable Accumulated Amortization Allowance For Doubtful Accounts Amortization Expense Bad Debt Expense Cash Note Payable Note Receivable Operating Expense Other Assets Prepaid Expenses Property, Plant and Equipment Revenues ons saved Balance Sheet Items (Liabilities) Accounts Payable 550 560 Notes Payable 83 93 Total Current Liabilities Long Term Liabilities 1020 990 O Total Liabilities Preferred Stock 100 100 Common Stock 3289 3289 Retained Earnings 1350 1000 Total Liabilities and EquityWhat does Year 0 represent in a cash flow timeline? When the very first cash flow occurs 5-2 Future Values Calculate the future value given the following information below: Amount invested at year 0: $80 Number of years invested: Interested rate with annual compounding: 5-3 Present Values-Question 1 Calculate the present value given the following information below: Amount at end of year 6 $1,000 Interested rate with annual compounding: 3%