Project Parameters:
You have been selected as the consultant to develop a business plan for Durango Manufacturing Company, which is 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 (5) 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.
Based on your knowledge of accounting and financial, prepare a ten to twelve (10-12) page report in which you:
- As the consultant, create an argument that you will 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 five (5) years. Provide support for your argument.
- 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 your rationale.
- Given the strategy to increase revenue during the five (5) 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 your position.
- In order for the company to improve its operational efficiency, recommend which production departments should use process, job order, and activity-based costing—all three (3) of which must be implemented within Durango. Defend your choice for each department.
- The CEO would like to consider outsourcing his manufacturing operations if labor can be supplied cheaper overseas than in the U.S. Create an argument either for or against outsourcing the manufacturing operation to a foreign country. Your argument should include key points that support your position. The key points should address economic and business management aspects related to outsourcing.
- Predict the economic and business environment over the next five (5) years, indicating at least two (2) ways it may impact Durango Manufacturing Company’s ability to achieve the desired 10% growth in revenue. Provide support for your prediction.
- Formulate a strategy to improve the opportunities for Durango to reach its revenue goals (i.e., increase revenue by 10% within five [5] years).
- Assess the potential for fraud within Durango based on the lack of IT controls and determine at least two (2) ways Durango will structure its internal IT controls to ensure that such controls are effective in detecting fraudulent transactions.
- Use at least six (6) quality academic resources in this assignment. Note: Wikipedia and other Websites do not qualify as academic resources.
Please Note
Regarding the last assignment, I have some guidelines/suggestions that might be considered for part of the paper’s answers. These are merely suggestions but are not requirements. An excellent paper might ignore most of the points that am raising.
- #1 The CEO has limited knowledge of financial management. Why is this knowledge important? In addition to being familiar with “numbers”, Durango Management will have a Corporate Responsibility for ethical behavior. How should the CEO address this issue?
Q#2. I do not want to read how any ratio is calculated. How are the ratios analyzed? Are quantitative factors only considered?
Q#3. Many companies use multiple quantitative and qualitative factors to evaluate potential long-term investments such as NPV and IRR. If the future capital budget is expected not to significantly change over the next five (5) years, how will this affect the NPV and IRR accept/reject decision. What if the capital budget is expected to fluctuate over the next five years? If the projects being considered all have positive NPVs, how should Durango decide which projects to invest in?
Q#4. What is meant by “operational” efficiency? Do not describe any detailed calculations i.e. equivalent units.
Q#5. Be sure to discuss some economic and business management factors. Should any non-manufacturing costs be outsourced or in-sourced?
Q#6. Your prediction could be either a positive or negative change. Describe how this will affect Durango.
Q#7. This question requires a relatively detailed answer.
Q#8. This question as well as Q#7 requires a more detailed answer.
Review the paper’s writing format requirement. Any paper with a SafeAssign percentage above 20% should be reviewed by each member of our class. If the high percentage is due to common references, there will be no problems. This is a common issue. If not, review the paper for missing citations. I hope that I do not have to deal with any serious issues. I suggest that as many questions as possible be answered this week. Even partial answers would be a good idea.
