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PLEASE follow these instructions closely. They are designed to ensure that I get your work, that I can identify it as your work, and that I can evaluate it carefully and accurately.

1. Group work is required for this assignment; please work in groups of TWO.
2. You are to submit requirement 4 ONLY. Penalties will be levied for submission of extra stuff that is not part of requirement 4 [below]. You are to provide a 1 - 2 page summary in which you justify your decisions. In your summary, cite the ending cash balance [and other relevant financial ramifications] that would result from your recommended actions. Indicate clearly which employees [if any] would be eliminated, as well as any other actions you suggest. I must be able to replicate your work in the Excel model.
   1. Electronic copy [Word file ONLY] due no later than 9:30 am PDT on November 30th, 2010. Late receipts go to cyberheaven.
      1. email subject line: mti final; messages with other subject lines will be ignored and deleted.
      2. MS Word filename: yourlastnamemti.xls; files with other filenames will be ignored and deleted.
   2. Hard copy [MS Word printout only; due at the start of your respective sections]

Bill Young, president and CEO of MTI was in Victoria, BC at the time of the terrorist attacks on the World Trade Center on September 11, 2001. Bill knew that his Seattle, Washington-based market research firm faced numerous challenges in the aftermath of the attacks. The economic turmoil which was certain to follow a national disaster of this magnitude would have a serious impact on the business. This was particularly true since reliable market research depended heavily on consumer confidence and perceptions about the future. Young was unsure how to respond to the challenges he faced. Bill Young is attempting to develop revised cash projections and to determine whether staffing cuts and other cost-saving measures will be needed in order to maintain the financial health of the firm.

The case provides insight into Young's thinking about his responsibility to his employees and the potential strategies that might be used to avoid a financial meltdown. The accompanying Excel spreadsheet [get it here] enables students to implement a variety of decisions to deal with the potential cash flow problems under best case, worst case and middle ground scenarios. Your assignment questions are as follows:

1)   Bill Young believes that because his employees were not responsible for the 9/11 attacks, they should not have to suffer loss of income as a consequence. Businesses are always subject to economic forces over which they have little or no control. Should the business response to something like the 9/11 attacks be any different from the response to “normal” fluctuations in the business cycle? If so, why and how? If not, why not? How does the example set by Aaron Feuerstein influence your decision?

2)   Bill Young has adopted a practice of sharing as much financial information with his employees as possible. How does the existence of a financial crisis affect the wisdom of such a strategy? How much information do you share with employees about the financial condition of the company? Do you tell them everything or do you sugar coat the numbers to give them hope?

3)   The case cites a request from the director of marketing research for one of MTI’s client firms. He was afraid of losing his job because he did not have any projects to work on and proposed that MTI start a telephone survey of consumer buying habits, and requested that the contract be back-dated to September 5.  What do you say to the client?

4)   Use the spreadsheet model to develop a cash budget for MTI for the remainder of the 2001-02 fiscal year [October 2001 through August 2002]. Determine what actions Young should take to ensure that the company remains solvent. If you make changes in staffing, be prepared to justify your decisions, given the potential impact of layoffs on MTI’s ability to respond when business recovers.

Copyright © 2010 Gerald M. Myers
Last modified: 1/31/2011; 17:24