Imagine you have been selected as the consultant to develop a business plan for Durango Manufacturing Company, a start-up, medium-sized public manufacturing company. The CEO has a background in manufacturing and is well versed in supply chain management. However, the CEO has limited experience in financial management and creating value for the various stakeholder groups. Your business plan must include a five-year strategy to increase revenues by 10% and a recommendation for creating an organizational structure to comply with SOX mandates for strong corporate governance over the internal controls. Your business plan must also include prescriptions for creating an ethical environment. Your recommendation must be approved by the board of directors before the company can begin its operations.

Instructions

1. As the consultant, what is an argument to present to the CEO that suggests accounting and financial management knowledge and skills will be essential to the company's success and stability over the next fiveyears. Provide support for the argument.
2. Suggest to the CEO how the company's stakeholders (investors, lenders, and employees) will use financial statement information and ratio calculations to make key determinations related to the financial condition and operational efficiency of the company. Provide support for the rationale.
3. Given the strategy to increase revenue during the five-year plan period, which will need to be achieved through expansion and capital expenditures, determine which capital budgeting ratio is appropriate for Durango to evaluate its proposals for capital expenditures, such as NPV, IRR, etc. Defend the position.
4. For the company to improve its operational efficiency, recommend which production departments should use process, job order, and activity-based costingall threeof which must be implemented within Durango. Defend the choice for each department.
5. The CEO would like to consider outsourcing manufacturing operations if labor can be supplied cheaper overseas than in the United States. What is an argument for or against outsourcing the manufacturing operation to a foreign country. The argument should include key points that support the position. The key points should address economic and business management aspects related to outsourcing.
6. Predict the economic and business environment over the next fiveyears, indicating at least two ways it may affect Durango's ability to achieve the desired 10% growth in revenue. Provide support for the prediction.
7. Formulate a strategy to improve the opportunities for Durango to reach its revenue goals (i.e., increase revenue by 10% within fiveyears).
8. Assess the potential for fraud within Durango based on the lack of IT controls, and determine at least two ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.