Auerbach Enterprise Essay Example for Free

Auerbach Enterprise Essay â€Å"Auerbach Enterprises uses machine hours as the cost driver to assign overhead costs to the air conditioners. The company has used a company-wide predetermined overhead rate in past years, but the new controller, Bennie Leon, is considering the use of departmental overhead rates beginning with the next year. â€Å"(Schneider, 2012). One product is affected more than the other by use of departmental rates rather than companywide rate. â€Å"Companies can choose to use the accounting job order costing method when they have a single product line or numerous products to manufacture. However, it is less costly and less time-consuming if they elect to use process costing when calculating the manufacturing of a single product line. With similarities and differences, there are also pros and cons that come with these costing methods. Every company is unique and what may work well in a car repair shop, may not work in an automobile company. When we think about the similarities between job order costing and process costing we can agree that they both monitor three specific elements, which are direct material, direct labor and manufacturing overhead. In addition the flow of costs in each method is essentially the same when you look at both accounts. † (Huntington, 2013) Radiator Parts Fabrication equal Overhead Costs divided by Machine Hours $80,000 equal $8 per machine hour 10,000 Radiator Assembly, Weld, and Test equal $100,000 equal $5 per machine hour 20,000 Compressor Parts Fabrication equal $120,000 equal $24 per machine hour 5,000 Compressor Assembly and Test equal $180,000 equal $4 per machine hour 45,000. The department overhead rates included the compressor assembly and test department has the highest overhead costs with the most machine hours that total $4 per machine hour. The compressor parts fabrication department yields the highest cost per machine hour at $24. †Job order costing gives managers the advantage of being able to keep track of individuals and teams performance in terms of cost-control, efficiency and productivity. Process costing, on the other hand, gives managers the advantage of being able to ascertain the same qualities in entire departments and compare performance over time. (Ingram, D 2013) The next feasible objective for the company is to determine the company wide overhead rate using machine hours as the cost driver. Company Wide Overhead Rate equal Forecast Overhead divided by Expected Machine Hours Overhead Rate equal $480,000 equal $6 per machine hour 80,000. Company Wide Rate: Direct Material Costs x Batch Size plus Direct Labor Costs x Batch Size Maxiflow: Alaska: 135 x 20 equal 2700 110 x 20 equal 2200 75 x 20 equal 1500 95 x 20 equal 1900 equal $4200 per batch equal $4100 per batch Departmental Rate. Direct Materials Costs plus Direct Labor Costs divided by Each Department Hour Maxiflow: 135 plus 75 equal $210 Radiator Parts Fabrication: 210 divided by 28 equal $7. 50 per batch Radiator Assembly, Weld, and Test equal 210 divided by 30 equal $7 per batch Compressor Parts Fabrication: 210 divided by 32 equal $6. 60 per batch Compressor Assembly and Test: 210 divided by 26 equal $8. 10 per batch Alaska: 110 plus 95 equal 205 Radiator Parts Fabrication: 205 divided by 16 equal $12. 80 per batch Radiator Assembly, Weld, and Test: 205 divided by 74 equal $2. 0 per batch Compressor Parts Fabrication: 205 divided by 8 equal $25. 60 per batch Compressor Assembly and Test: 205 divided by 66 equal $3. 10 per batch. There was only a $100 difference between Maxiflow and Alaska when it came to company-wide rates per batch. On other hand, the departmental rates between Maxiflow and Alaska were significantly different. Maxiflow had the cheaper departmental costs per batch with an average of $7. 30 per batch compared to $11. 05 per batch with Alaska. to determine the companywide and departmental costs per unit of Maxiflow and Alaska. Company-Wide Rate: Total Cost per Unit equal direct material Costs plus Direct Labor Costs divided by Number of Units Maxiflow. Direct Materials equal Alaska: 135 Direct Labor Costs equal 75 210 $415 plus $480,000 divided by 40 equal $12,010. 38 per unit 110 plus 95 equal 205 210 plus 205 equal $415 Departmental Rate: Radiator Parts Fabrication: $80,000 plus $415 divided by 40 equal $2010. 38 per unit Radiator Assembly, Weld, and Test: $100,000 plus 415 divided by 40 equal $2510. 38. Compressor Parts Fabrication: $120,000 plus 415 divided by 40 equal $3010. 8 Compressor Assembly and Test: $180,000 plus 415 divided by 40 equal $4510. 38. So, it seems that the total costs per unit for the company-wide rate is slightly less per unit. The company-wide rate for total cost per unit is $12,010. 38, while the total cost per unit for each department is $12, 041. 52. â€Å"Auerbach Enterprises manufactures air conditioners for automobiles and trucks manufactured throughout North America. The company designs its products with flexibility to accommodate many makes and models of automobiles and trucks. The company’s two main products are MaxiFlow and Alaska. †(Schneider, 2012). The reduction of overhead expenses is one of the sparse areas of corporate cost control that receives few to no attention from management. However the savings and profit improvement can be surprising. Reviewing the data for Auerbach management would be better suited to continue using company-wide rates. The perception by managers of the relative importance of costs may be determined by the nature.

How Inclusion Came to Be :: essays papers

How Inclusion Came to Be When children have a learning disability there are two different ways for them to be taught. One is an out of the classroom approach where children with disabilities receive extra help with a specialist separate from the regular classroom. There are also schools that only have children that are disabled and cater to only the different needs of a child with a disability. In the approach where children with disabilities are separated from non-disabled children, the child spends half the day in the mainstream classroom and half of the day separated and excluded from the mainstream classroom (Odom 2002). As a result of this approach schools did not have the appropriate funding for the extra teachers needed to provide a separate learning classroom. This problem leads to public schools denying children with disabilities access to the facilities that are offered in a regular classroom, hence segregating the children with disabilities from the mainstream children (Lewis, 1999). In 1975 the Education for all Handicapped Children’s Act (later renamed Individuals with Disabilities Education Act abbreviated IDEA) was passed in reaction the problem of students being segregated. This act was written to make sure that all handicapped children would have access to free education including special education. The law emphasizes that children with disabilities be educated with non-disabled children (Daniel 1997). The act gave parents the right to choose how their disabled child will be educated whether it be a pull out program or and inclusive program with non-disabled children (Become 2003). This act gave way to inclusion, which is the second approach to educating children with disabilities. Inclusion is the "integration of a disabled student in a regular classroom with the necessary aids and services" (Daniel 1997). Student Views on Inclusion Since inclusion started there has been controversy on whether or not inclusion helps the children more than the pull-out program. There have been many different experiments that have studied the effects of student’s performances in inclusion programs and in pull out programs. In one specific study done in Iowa by the Council for Exceptional Children, students with a specific learning disability were sent to two different middle schools to participate in an 8th grade classroom. The two schools differed in only one way, and that was one was an inclusive school, the Enterprise, and one was a regular mainstream school, the Voyager.

Mba Spring2011 Merck Sample Group Project

DELAWARE STATE UNIVERSITY (MBA – Spring 2011) Strategic Management Case Study Executive Summary:3 Current Vision4 Current Mission4 Values5 Current Strategies:6 Developed Vision7 Developed Mission7 Reason for new mission8 SWOT Analysis9 External opportunities:9 External Threats:10 Financial and Operating Performance Analysis11 Close Competitors11 Ratio Analysis11 Key Industry Ratios14 Operating Profit margin14 Net Profit margin14 Current Ratio14 Return on Assets15 Debt/Equity Ratio15 Inventory Turnover Ratio15 Revenue Growth16 Market Share16 Internal Strengths16Internal Weakness20 External Factor Evaluation Matrix21 Competitive Profile Matrix23 Internal Factor Evaluation24 Space Matrix27 SWOT Matrix29 Grand Strategy Matrix31 Recommended Strategies31 Recommended strategy No. 1:31 Recommended strategy No. 2:32 Projected Financial Statements33 Projected Ratios34 Company worth Analysis34 Annual Objectives:35 Strategic Review and Evaluation Procedures:35 Bibliography:36 Executive Su mmary: Merck & Co. is a research driven pharmaceutical company involved in manufacturing of pharmaceuticals and drugs.Merck's products are not limited to preventive and therapeutic vaccines. Merck merged with Schering-Plough in November of 2009 for $41billion. Merck is based in Whitehouse Station, New Jersey and has more than 110000 employees. The company has a annual revenue of $45billion during the year ending December 2010. The increase in revenues was mainly due to the incremental sales resulting from the inclusion of the post-merger results of Schering-Plough products. The operating profit of the company was $1,653. 0 million during FY2010, a decrease of 90% over 2009.The net profit was $859 million in FY2010, an increase of 93% over 2009. Merck’s products include preventive and therapeutic vaccines sold by prescription to treat human disorders and to also treat animal health. The company manages many products in different segments. Human health pharmaceutical produc ts consist of prescription therapeutic and preventive agents for the treatment of human disorders. Merck distributes its human health pharmaceutical products to retailers, government, drug companies, health and wellness organizations, and others.Merck's vaccine products are primarily managed and administered at physician offices. These products include preventive vaccines. The US Centers for Disease Control and Prevention Vaccines for Children program is a major customer for some of these vaccines. Merck also manages a clinical pipeline that has products in many different disease domains not limited to diabetes, heart strokes, hyper-tension, inflammatory problems, neurology related diseases, osteoporosis, respiratory, female health and many other prominent and new domains.This pipeline is managed in phases followed by a few ready for registration. Majority of these are subject to FDA approval before commercial manufacturing commences. Merck also manages vaccines for animal health an d this is a growing segment where there is more need for research for prevention of many diseases in animals. In addition to the above many different segments, Merck also manages a portfolio of regular consumer healthcare and manufactures many OTC products, foot and sun care products not just in the USA but also in Canada. Current VisionWe make a difference in the lives of people globally through our innovative medicines, vaccines, and consumer health and animal products. We aspire to be the best healthcare company in the world and are dedicated to providing leading innovations and solutions for tomorrow. (1) Current Mission To provide innovative, distinctive products and services that save and improve lives and satisfy customer needs, to be recognized as a great place to work, and to provide investors with a superior rate of return. (1) | Mission Component| Accomplished? | 1| Customers| No| | Products or Services| Yes| 3| Markets| No| 4| Technology| No| 5| Concern for survival, gro wth and profitability| No| 6| Philosophy| No| 7| Self-Concept| No| 8| Concern for public image| Yes| 9| Concern for employees| Yes| Values Our business is preserving and improving human life. We also work to improve animal health. All of our actions must be measured by our success in achieving these goals. We value, above all, our ability to serve everyone who can benefit from the appropriate use of our products and services, thereby providing lasting consumer satisfaction.We are committed to the highest standards of ethics and integrity. We are responsible to our customers, to Merck employees and their families, to the environments we inhabit, and to the societies we serve worldwide. In discharging our responsibilities, we do not take professional or ethical shortcuts. We are dedicated to the highest level of scientific excellence and commit our research to improving human and animal health and the quality of life. We strive to identify the most critical needs of consumers and cust omers, and we devote our resources to meeting those needs.We expect profits, but only from work that satisfies customer needs and benefits humanity. This depends on maintaining a financial position that invites investment in leading-edge research and that makes it possible to effectively deliver the results of that research. Our ability to excel depends on the integrity, knowledge, imagination, skill, diversity and teamwork of our employees. To this end, we strive to create an environment of mutual respect, encouragement and teamwork. We also strive to reward commitment and performance and be responsive to the needs of our employees and their families. 1) Current Strategies: * The Access Strategy aims at increasing access to medicines, vaccines, and healthcare in the emerging and developed countries. * To ensure safety and quality of products, Merck introduced a ‘Anti-counterfeiting’ strategy to prevent counterfeits across the world. Merck has setup an advanced laborato ry to implement this strategy.* To restore confidence as a quality producer of global vaccines, Merck continues to implement vaccine supply manufacturing strategy. * Merck continues to implement its global diversity strategy. * Merck’s research strategy is designed to mprove productivity and the probability of success and this is monitored by a Research Strategy Review Committee. * The most popular MRL strategy i. e. Merck Research Laboratory strategy is designed to manage the pipeline that uses the expertise to treat many unsolved diseases and health issues. MRL scientists are passionate about resolving and meeting unmet medical needs. * Merck established External Basic Research (EBR) and an EBR strategy are formulated to expand the scope and size of Merck’s early pipeline through partnerships with external partners. * Merck follows a responsible pricing policy thru its worldwide tiered pricing strategy. To foster health literacy in Switzerland, Merck follows the Swis s e-health strategy and as part of this strategy, they work with universities around the world. * Merck formed a Global Labor Relations Strategy to include global labor guidelines and principles and monitoring tools worldwide.* Merck energy management strategy serves as a useful framework in measuring current performance resulting in Merck receiving the Energy Star sustained excellence award. * Merck’s corporate strategy is â€Å"Plan to win†. * Merck has a supply strategy that combines the skills of internal and external manufacturers. (1) Developed Vision Our vision is to be an outstanding and most trusted company in the world’s healthcare and pharmaceutical industry. † Developed Mission We are passionately committed to providing creative, comprehensive and effective health solutions (2) that will improve the health, wellness and quality of life of our customers (1), consumers and partners around the globe for today, tomorrow and forever thru our continu ed superior performance, intelligent and creative employees (9), innovative and qualitative safe products, sustainable and profitable partnerships and by building increased shareholder returns thru this process.We will focus on increasing healthcare access (6) in the local and emerging markets (3) and will strive to use modern environment friendly technology(4) for our scientific innovation to improve productivity and to reduce costs to make our products more affordable. We will serve the society and the eligible people (8) with programs that will provide free and cost effective health solutions. We will collaborate with global research companies to lead and contribute to the resolution of global health issues (7) and we will position ourselves as the best in the industry with sustainable prosperity(5). Mission Component| Accomplished ? | 1| Customers| Yes| 2| Products or Services| Yes| 3| Markets| Yes| 4| Technology| Yes| 5| Concern for survival, growth and profitability| Yes| 6| P hilosophy| Yes| 7| Self-Concept| Yes| 8| Concern for public image| Yes| 9| Concern for employees| Yes| Reason for new mission The current mission is not exciting and does not emphasize on all the key components of an effective mission. The new mission emphasizes on health solutions as a whole versus products and services only. The new mission is targeted towards the wellbeing of the end consumer and not just to save the life.The focus is specifically mentioned to be in all markets including the emerging markets. Modern environment friendly technology will be used to develop safe products that are not counterproductive to the wellbeing of the end consumer. The needy people will be served with effective solutions and the new mission passionately suggests sustainable prosperity while engaging creative and intelligent people building profitable shareholder returns thru the whole process. SWOT Analysis External opportunities: O1 – The recent agreement with Schering-Plough opens mo re avenues for potential growth in the fields of respiratory and infectious disease herapeutic segments. (1) O2 – Possible Cost savings of $3. 5 Billon from internal restructuring efforts beyond 2011. (1) O3 – There is a lot of potential for growth in the Diabetes and Oncology markets and Merck has made its entry into this market thru the product Januvia. O4 – Merck can add core strength to its portfolio by expanding research and innovation in the biological markets thru partners, acquisitions and joint ventures. O5 – Rapidly expanding market share in emerging markets proves to be a high potential opportunity for Merck.Emerging Markets in the Pharma Industry will take 50% Growth Credit by 2013. (2) O6- Increased opportunity for new Generic Drug products. Healthcare reform suggests cost savings and insurance industries emphasize usage of generic drugs and the expiring patents on a lot of drugs opens up opportunity for Merck to pioneer the generic drug mark et leveraging its world-class research capabilities. The total market share of the patents that will expire over 2010-2015 is 17% with a market share of $142billion. (17) O7- Pfizer’s animal health business returned a profit of $2. billion which is second to Merck and with the cancelled joint venture of Merck and Sanofi-Aventis, Merck should further pursue their concept with Novartis who are No. 5 in animal health business. This will strengthen their No. 1 position in the light of Pfizer's growing sales and the merger between J;amp;J and Eli Lilly Co in this segment. (3) External Threats: T1 – At least five of the patents are expiring in the next two years and competition is ready to introduce generic products backed by healthcare reform and this can pose a serious threat to Merck’s products and profitability.T2 – The consumer is not the one that usually makes the choice of using a particular drug. Mostly, drugs are prescribed by physicians, who sometimes lack the necessary information about relative prices. (4) T3 – The recent housing market problem, the oil prices problem and the global recession has a cascading effect on the job market and many people are unemployed losing their health insurance and forced to not being able to use medical or pharmaceutical products.If there is no sales in the pharmaceutical products, Merck can suffer financial losses and reduced returns to shareholders. T4 – The HealthCare Reform enacted in 2010 caused unanticipated losses for Merck and the effects of this Act will continue into future. These new provisions will decrease revenue and increase costs. (5) * 2010 – Costs incurred due to increased Medicaid rebates. With respect to the effect of the law on the pharmaceutical industry, the law increased the mandated Medicaid rebate from 15. 1% to 23. 1%. 2011 – An annual health care reform fee on all branded prescription drug manufacturers and importers and the requirement th at drug manufacturers pay a 50% discount on Medicare Part D utilization incurred by beneficiaries when they are in the Medicare Part D coverage also known as the ‘Donut hole’.T5 – Although not included in the health care reform law, Congress has also considered, and may consider again, proposals to increase the government’s role in pharmaceutical pricing in the Medicare program. (5) T6 –    Congress may again consider proposals to allow, under certain conditions, the importation of medicines from other countries. 5) T7 – Merck is experiencing delay in manufacturing some of its vaccines and this delay can cause a competitor to launch a product that can be manufactured quickly. Financial and Operating Performance Analysis Close Competitors Pfizer Inc. Eli Lilly and Company Ratio Analysis | 2006| 2007| 2008| 2009| 2010| Margins (% of Sales)| | | | | | Revenue| 100. 00%| 100. 00%| 100. 00%| 100. 00%| 100. 00%| COGS| 26. 50%| 25. 40%| 23. 40%| 3 2. 90%| 40. 00%| Gross Margin| 73. 50%| 74. 60%| 76. 60%| 67. 10%| 60. 00%| SG;amp;A| 36. 10%| 31. 20%| 30. 90%| 31. 10%| 28. 80%| R;amp;D| 21. 10%| 20. 20%| 20. 10%| 21. 30%| 23. 90%|Other| 0. 60%| 1. 40%| 4. 30%| 6. 00%| 2. 10%| Operating Margin| 15. 70%| 21. 90%| 21. 20%| 8. 70%| 5. 20%| Net Int Inc ;amp; Other| 12. 40%| -7. 40%| 20. 50%| 47. 00%| -1. 60%| EBT Margin| 27. 50%| 13. 90%| 41. 10%| 55. 80%| 3. 60%| Profitability| | | | | | Tax Rate| 28. 70%| 2. 80%| 20. 40%| 14. 80%| 40. 60%| Net Margin| 19. 59%| 13. 54%| 32. 74%| 47. 03%| 1. 87%| Asset Turnover| 0. 51| 0. 52| 0. 5| 0. 34| 0. 42| (Average)| | | | | | Return on Assets| 9. 92%| 7. 05%| 16. 34%| 16. 20%| 0. 79%| Financial Leverage (Average)| 2. 54| 2. 66| 2. 52| 1. 9| 1. 95| Return on Equity| 25. 00%| 18. 33%| 42. 27%| 33. 15%| 1. 1%| Growth| | | | | | Revenue Growth| | | | | | Year over Year| 2. 80%| 6. 90%| -1. 40%| 15. 00%| 67. 70%| 3-Year Average| 0. 20%| 1. 80%| 2. 70%| 6. 60%| 23. 90%| 5-Year Average| -13. 90%| -1 4. 10%| 1. 20%| 3. 60%| 15. 90%| 10-Year Average| 1. 30%| 0. 20%| -1. 20%| -1. 80%| 1. 30%| Operating Income| | | | | | Year over Year| -36. 00%| 49. 30%| -4. 50%| -52. 80%| -0. 70%| 3-Year Average| -24. 90%| -7. 20%| -3. 00%| -12. 30%| -23. 50%| 5-Year Average| -18. 30%| -11. 40%| -9. 60%| -18. 50%| -15. 60%| 10-Year Average| -3. 40%| -0. 70%| -2. 30%| -10. 90%| -12. 60%| EPS| | | | | | Year over Year| -3. 30%| -26. 60%| 144. 0%| 55. 20%| -95. 00%| 3-Year Average| -11. 40%| -17. 00%| 20. 10%| 40. 70%| -42. 70%| 5-Year Average| -8. 40%| -13. 90%| 4. 50%| 16. 70%| -33. 20%| 10-Year Average| 2. 60%| -2. 30%| 5. 40%| 8. 70%| -20. 90%| Cash Flow Ratios| | | | | | Operating Cash Flow Growth-YOY| -11. 10%| 3. 50%| -6. 10%| -48. 40%| 219. 00%| Free Cash Flow Growth-YOY| -6. 80%| 3. 50%| -11. 90%| -63. 40%| 373. 40%| Cap Ex as a % of Sales| 4. 30%| 4. 20%| 5. 40%| 5. 30%| 3. 60%| Free Cash Flow/Sales| 25. 56%| 24. 75%| 22. 11%| 7. 04%| 19. 88%| Free Cash Flow/Net Income| 1. 3| 1. 83| 0. 68| 0. 15| 10. 64| Liquidity/Financial Health| | | | | |Current Ratio| 1. 2| 1. 23| 1. 35| 1. 8| 1. 86| Quick Ratio| 0. 95| 0. 97| 0. 65| 1. 03| 1. 25| Financial Leverage| 2. 54| 2. 66| 2. 52| 1. 9| 1. 95| Debt/Equity| 0. 32| 0. 22| 0. 21| 0. 27| 0. 28| Efficiency| | | | | | Days Sales Outstanding| 50. 3| 52. 4| 56. 7| 69. 1| 55. 4| Days Inventory| 104. 2| 108. 5| 136. 1| 209. 2| 138. 1| Payables Period| 29. 4| 33. 3| 40. 6| 57. 8| 45. 1| Cash Conversion Cycle| 125. 1| 127. 6| 152. 3| 220. 5| 148. 4| Receivables Turnover| 7. 3| 7| 6. 4| 5. 3| 6. 6| Inventory Turnover| 3. 5| 3. 4| 2. 7| 1. 7| 2. 6| Fixed Asset Turnover| 1. 6| 1. 9| 2| 1. 8| 2. 6| Asset Turnover| 0. 5| 0. 5| 0. | 0. 3| 0. 4| Reference – (6) Key Industry Ratios Operating Profit margin 2010| MERCK| PFIZER| Eli Lilly and Company | Operating Profit margin| 5. 2| 20. 3| 28. 3| Merck had Operating Profit margin of 5. 2 OPM%. Merck Operating profit margin is low when compared to competitors; this indicates that there is scope for improving the cost structure. Net Profit margin 2010| MERCK| PFIZER| Eli Lilly and Company | Net Profit margin| 1. 87| 12. 18| 21. 97| Merck had a Net Profit margin i. e. , 1. 87 NPM%. Merck NPM is lower than its competitors. A net profit margin indicates that there is scope for improving the capital structure.Huge percentage drop when compared to 2009 (47%). Current Ratio 2010| MERCK| PFIZER| Eli Lilly and Company | Current Ratio| 1. 86| 2. 11| 2. 09| Current Ratio: Merck has Current Ratio of 1. 8, which shows that Merck may meet short-term obligations. Current Ratio 2. 0 is considered good to meet short-term financial obligations. Return on Assets 2010| MERCK| PFIZER| Eli Lilly and Company | Return on Assets| 0. 79| 4. 05| 17. 34| Return on Assets (ROA): Merck has ROA of 0. 79%, which indicates its assets are NOT at optimum their utilization. Debt/Equity Ratio 2010| MERCK| PFIZER| Eli Lilly and Company |Debt/Equity Ratio| 0. 28| 0. 44| 0. 55| Debt/equity ratio (D/E ratio ): Merck had D/E ratio of . 27, which is good. Inventory Turnover Ratio 2010| MERCK| PFIZER| Eli Lilly and Company | Inventory Turnover Ratio| 2. 6| 1. 6| 1. 6| Inventory Turnover Ratio: Merck has a 2. 6 times turnover ratio, which is good when compare to competitors. It also suggests that loss of sales as it will not have sufficient stock in hand. Revenue Growth 2010| MERCK| PFIZER| Eli Lilly and Company | Revenue Growth| 67. 7| 35. 6| 5. 7| Revenue growth: Merck Sales growth rate is 67%, Revenue growth is very good when compared to competitors.New products Isentress and Januvia  sales boosted revenue. Market Share Market share: – Total Pharmacy industry share is $836 billion and Merck has $46 billion, stands one of the largest company in 2010 – 5. 5 % of Global Market. Internal Strengths S1 – Merck maintains strong financial health despite the $8. 5 billion debt needed for the acquisition. Analysts are predicting that the combined company will generate a $12 billion cash flow in 2011 which should help repay the debt quickly. (7) S2 – Majority of the blockbuster products introduced recently showed very strong sales.Especially, Januvia (diabetes), Isentress (HIV), and Gardasil. (7) S3 – Merck has strong earnings when compared to the industry. | Stock| Industry| S;amp;P 500 | Stock's 5Yr Average*| Price/Earnings| 122. 0| 17. 7| 16. 6| 40. 7| Price/Book| 1. 9| 2. 6| 2. 2| 4. 0| Price/Sales| 2. 3| 2. 6| 1. 4| 3. 5| Price/Cash Flow| 9. 8| 10. 1| 8. 5| 19. 9| Dividend Yield %| 4. 5| 3. 4| 1. 7| —| S4 – Merck’s latest acquisition of Schering results in a $6 billion pipeline of drugs with the potential of multiple blockbusters and very few patent losses are expected over the next couple of years.It is predicted that the combination of the two entities should generate $3 billion plus in annual cost savings before 2011. (8) S5 – Global market presence along with production facilities. Merck operates in 120 countries with 31 factories worldwide. (9) Merck follows a unique strategy of integrated markets as below. (10) S6 – Merck is well positioned in some Emerging Markets and is showing robust growth in China and is actively searching for a partner in India. Merck has developed a separate strategy for positioning itself as numero uno in emerging markets. 11) & (12) S7- A vast diversified product portfolio in Medicines, Vaccines, Biologics, Consumer Care and Animal Health. (12) S8 – It has various  patient assistance programs  in U. S. to help the people who are unable to afford the medical treatment in terms of medicine if household income is less than 400% of Federal Poverty Level. (13) S9 – The firm has robust in-house research capabilities that also make it a leader in designing new medical products. Internal Weakness W1 – EPS dropped from $0. 28 from $5. 7 mainly due which reflect a net unfavorable impact resulting from the amortization of purcha se accounting adjustments, in-process research and development (â€Å"IPR&D†) impairment charges, including a charge related to the vorapaxar clinical development program, restructuring and merger-related costs, as well as a legal reserve relating to Vioxx (the â€Å"Vioxx Liability Reserve†) discussed below, partially offset by the gain recognized on AstraZeneca’s exercise of its option to acquire certain assets. (5) W2 – Singulair is Merck’s largest volume selling pharmacy product with a annual sales of $3. billion as of 2010 and this is expiring in Aug 2012. (5) On top of this, FDA announced that a potential link exists between this product and suicidal behavior. (14) W3 – Few of Merck’s late-stage pipeline products did not get approved by FDA. Following drugs did not get FDA approvals anacetrapib for atherosclerosis, cholesterol drug Tredaptive, Rolofylline for heart disease and Telcagepant for migraines. W4 – The firm faced lawsuits on Vioxx product on increased chances of heart attack and Merck Agreement Provides for $4. 85 Billion Vioxx Settlement Payment. 15) W5 – Merck settled a lawsuit with J&J for $500 million over a dispute on two anti-inflammatory records. Merck also looses marketing rights in some areas. (16) W6 – Merck’s Current ratio is 1. 8, has a limited liquidity position as compared to its competitors. W7 – Merck has minimal presence in the Generic Drug Market. External Factor Evaluation Matrix | External Factor Evaluation Matrix (EFE)|   |   |   |   | Opportunities| Weight| Rating| Weighted Score| 1. | O1 – The recent agreement with Schering-Plough opens more avenues for potential growth in the fields of respiratory and infectious disease therapeutic segments | 0. 8| 4| 0. 32| 2. | O2 – Possible Cost savings of $3. 5 Billon from internal restructuring efforts beyond 2011. | 0. 10| 3| 0. 30| 3. | O3 – There is a lot of po tential for growth in the Diabetes and Oncology markets and Merck has made its entry into this market thru the product Januvia | 0. 05| 3| 0. 15| 4. | O4 – Merck can add core strength to its portfolio by expanding research and innovation in the biological markets thru partners, acquisitions and joint ventures| 0. 05| 1| 0. 05| 5. | O5 – Rapidly expanding market share in emerging markets proves to be a high potential opportunity for Merck.Emerging Markets in Pharma Industry to take 50% Growth Credit by 2013 | 0. 10| 3| 0. 30| 6. | O6- Increased opportunity for new Generic Drug products through more focus on quality R&D. Healthcare reform suggests cost savings and insurance industries emphasize usage of generic drugs and the expiring patents on a lot of drugs opens up opportunity for Merck to pioneer the generic drug market leveraging its world-class research capabilities. The total market share of the patents that will expire over 2010-2015 is 17% with a market shar e of $142billion. | 0. 15| 2| 0. 30| 7. | O7- Pfizer’s animal health business returned a profit of $2. billion which is second to Merck and with the cancelled joint venture of Merck and Sanofi-Aventis, Merck should further pursue their concept with Novartis who are No. 5 in animal health business. This will strengthen their No. 1 position in the light of Pfizer's growing sales and the merger between J;amp;J and Eli Lilly Co in this segment| 0. 02| 3| 0. 06| | | | | | | Threats| Weight| Rating| Weighted Score| 1. | T1 – At least five of the patents are expiring in the next two years and competition is ready to introduce generic products backed by healthcare reform and this can pose a serious threat to Merck’s products and profitability| 0. 5| 2| 0. 30| 2. | T2 – The consumer is not the one that usually makes the choice of using a particular drug. Mostly, drugs are prescribed by physicians, who sometimes lack the necessary information about relative prices. | 0. 05| 3| 0. 15| 3. | T3 – The recent housing market problem, the oil prices problem and the global recession has a cascading effect on the job market and many people are unemployed losing their health insurance and forced to not being able to use medical or pharmaceutical products. If there is no sales in the pharmaceutical products, Merck can suffer financial losses and reduced returns to shareholders. 0. 08| 3| 0. 24| 4. | T4 – The HealthCare Reform enacted in 2010 caused unanticipated losses for Merck and the effects of this Act will continue into future. These new provisions will decrease revenue and increase costs. | 0. 08| 2| 0. 16| 5. | T5 – Although not included in the health care reform law, Congress has also considered, and may consider again, proposals to increase the government’s role in pharmaceutical pricing in the Medicare program. | 0. 03| 3| 0. 09| 6. | T6 – Congress may again consider proposals to allow, under certain conditio ns, the importation of medicines from other countries. 0. 03| 3| 0. 09| 7. | T7 – Merck is experiencing delay in manufacturing some of its vaccines and this delay can cause a competitor to launch a product that can be manufactured quickly. | 0. 03| 2| 0. 06|   | TOTALS| 1. 00|   | 2. 57| Competitive Profile Matrix Competitive Profile Matrix (CPM)| | Merck| Pfizer| Eli Lilly and Company | Critical Success Factors| Weight | Rating| Score| Rating| Score| Rating| Score| Global Expansion| 0. 10| 3| 0. 30| 3| 0. 30| 4| 0. 40| Market Penetration| 0. 06| 4| 0. 24| 4| 0. 24| 2| 0. 12| Pipeline| 0. 15| 3| 0. 45| 4| 0. 60| 2| 0. 30| Patents| 0. 8| 4| 0. 72| 3| 0. 54| 2| 0. 36| R;amp;D| 0. 17| 3| 0. 51| 4| 0. 68| 2| 0. 34| Financial Profit| 0. 05| 2| 0. 10| 3| 0. 15| 4| 0. 20| Customer Loyalty| 0. 00| 3| 0. 00| 3| 0. 00| 2| 0. 00| Market Share| 0. 08| 4| 0. 32| 4| 0. 32| 3| 0. 24| Product Quality| 0. 06| 1| 0. 06| 2| 0. 12| 2| 0. 12| Generic Drugs| 0. 15| 2| 0. 30| 3| 0. 45| 2| 0. 30 | Totals| 1. 00|   | 3. 00|   | 3. 40|   | 2. 38| * Global Expansion: Merck is in 121 countries Pfizer is in 150 countries Eli Lily is in 143 countries. * Pipeline: 94 in Pipeline for Pfizer, Lilly has 15 and 57 in Merck Pipeline excluding registration. Patents: Pfizer has 11 basic patent products and Lily has 8 basic patent products and Merck has 29 basic patent products. * Financial Profit : EPS – Lilly has EPS 4. 58 Merck has 0. 28 Pfizer has 1. 02. * Market Share : Merck has $45 billion and Pfizer has $67 and Lilly has $23 billion. * Product quality : Merck has two major lawsuits whereas Pfizer has one and Lilly has one. * Generic Drugs : Pfizer has 59 generic drugs which is more than what Merck has and what Lilly has Merck is still entering into different JVS with SUN and other pharma companies. Internal Factor Evaluation Internal Factor Evaluation Matrix (IFE)|   |   |   |   | Strengths| Weight| Rating| Weighted Score| 1. | S1 – Merck maintains stro ng financial health despite the $8. 5 billion debt needed for the acquisition. Analysts are predicting that the combined company will generate a $12billion cash flow in 2011 which should help repay the debt quickly. | 0. 05| 4| 0. 20| 2. | S2 – Majority of the blockbuster products introduced recently showed very strong sales. Especially, Januvia(diabetes), Isentress(HIV), and Gardasil. | 0. 08| 4| 0. 32| 3. | S3 – Merck has strong earnings when compared to the industry. | 0. 04| 3| 0. 12| 4. S4 Merck’s latest acquisition of Schering results in a $6 billion pipeline of drugs with the potential of multiple blockbusters and very few patent losses are expected over the next couple of years. It is predicted that the combination of the two entities should generate $3 billion plus in annual cost savings before 2011. | 0. 15| 4| 0. 60| 5. | S5 Global market presence along with production facilities. Merck operates in 120 countries with 31 factories worldwide. | 0. 06| 3 | 0. 18| 6. | S6 Merck is well positioned in some Emerging Markets and is showing robust growth in China and is actively searching for a partner in India.Merck has developed a separate strategy for positioning itself as numero uno in emerging markets. | 0. 15| 3| 0. 45| 7. | S7 A vast diversified product portfolio in Medicines, Vaccines, Biologics, Consumer Care and Animal Health. | 0. 05| 3| 0. 15| | | | | | | Weaknesses| Weight| Rating| Weighted Score| 1. | W1 EPS dropped from $0. 28 from $5. 67 mainly due which reflect a net unfavorable impact resulting from the amortization of purchase accounting adjustments| 0. 04| 2| 0. 08| 2. | W2 Singulair is Merck’s largest volume selling pharma product with a annual sales of $3. 2 billion as of 2010 and this is expiring in Aug 2012. 0. 10| 1| 0. 10| 3. | W3 Few of Merck’s late-stage pipeline products did not get approved by FDA. Following drugs did not get FDA approvals anacetrapib for atherosclerosis, cholesterol drug Tredap tive ,Rolofylline for heart disease ,Telcagepant for migraines| 0. 10| 1| 0. 10| 4. | W4 The firm faced lawsuits on Vioxx product on increased chances of heart attack and Merck Agreement Provides for $4. 85 Billion Vioxx Settlement Payment. | 0. 04| 2| 0. 08| 5. | W5 Merck settled a lawsuit with J;amp;J for $500 million over a dispute on two anti-inflammatory records. Merck also looses marketing rights in some areas. 0. 04| 2| 0. 08| 6. | W6 Merck Current ratio is 1. 8, has a limited liquidity position as compared to its competitors. | 0. 05| 2| 0. 10| 7. | W7 Merck has minimal presence in Generic Drug Market. | 0. 05| 1| 0. 05|   | TOTALS| 1. 00|   | 2. 61| Space Matrix Financial Position: * Return on Investment is Average when compare to Industry. * Leverage: Compared to the industry standard, leverage or debt equity ratio of Merck is more industry is whereas Merck is 0. 27. * Liquidity: Current Ratio is around 1. 8. Above 2. 0 is preferred to meeting Short-term obligations. * Working Capital: Working Capital is low. Cash Flow: Cash Flows for 2010 is very good which is around $9 billion. Industrial Position: * Growth Potential: Revenues are up by 67% and successful new product launches. And successful merger with Schering Plough * Financial Stability: After M;amp;A, company financially is in difficult position, but in long-term it will do better. * Ease of Entry into Market: As Merck already exists in multiple markets and different pharma domains, ease of entry into market is considered high for Merck * Resource Utilization: Merck has ROA of 0. 79%, which indicates its assets are NOT at optimum their utilization. Profit Potential: As free cash flows are high, profit potential is more. Competitive Position: * Market Share: Second in global position * Product Quality: Two products have litigations. * Customer Loyalty: Due to Voixx and other products side effects, customer loyalty became average. * Technological know-how: Getting new biotechnology and bio-p harma industry. * Control over Suppliers and Distributors: Merck has control on Suppliers and Distributors. Sustainability Position: * Rate of Inflation: Same as like other products * Technological Changes: Minimal * Price Elasticity of Demand: As more are patent products, the effect will be less. Competitive Pressure: Yes, there is lot of competition with pharma and other generic drug products. * Barriers to Entry into Market: Minimum Barriers. SWOT Matrix SO Strategies: * S5O5O6: Healthcare reform emphasizes a paradigm shift to generic drugs from branded drugs and 17% of the patented drugs are going to expire by 2015 and this is an opportunity of $142 billion and there are not a lot of market players in this segment yet. Merck can take advantage of this upcoming situation and start working on generic drugs in the pipeline to be released in the established and emerging markets.We believe Merck should be able to tap into at least $50billion by this strategy. * S4O4O1: Merck’s merger with Schering results in a $6billion of pipeline of drugs and not many patents are expiring in this set. This strategy will result in $3billion of savings before 2011. Merck should further expand their research and innovation thru joint ventures and innovations in the current, biogenetics and other potential domains and follow a market penetration strategy in current and emerging markets.Merck should further expand their research and innovation thru joint ventures and innovations in the current, biogenerics and other potential domains and follow a market penetration strategy in current and emerging markets. ST Strategies: * S6T4T1: Healthcare reform can cause major losses in the domestic market and many laws of healthcare are not yet in implementation and the result of this will continue thru 2014 and so, Merck should start expanding globally beyond its current footprint and should focus on generic drugs as a majority of the emerging markets prefer inexpensive drugs compared to branded expensive drugs.The savings here are double-edged as we minimize the effect of healthcare reform oriented costs and we expand globally and earn more before competition takes over. The potential savings by this strategy is estimated to be a minimum of $4billion in the next one year considering we have a good presence in many established and emerging markets. * S7T2: Merck should start implementing a pharmacy management program by working closely with physicians and customers to deliver a one-of-a-kind integrated specialty pharmacy in every national segment that is part of Merck's client advisory board.This pharmacy management program specifically targets specialty medications for a number of chronic conditions and helps them better understand their condition, medication side effects, and the importance of adherence. WO Strategies: * W2O6O5W7: Singuliar is a branded product of Merck the patent of which is going to expire in 2012 and Merck should equip itself by penetrating into the generic drugs market that will substitute Singuliar and Merck should rapidly expand in emerging markets and focus on improving in existing markets to position itself better for the post patent expiration loss of sale. W3O4: FDA's denial of products in research and development can setback the product development lifecycle timeline during which competition can catch up and release their own branded or generic drug and so Merck should expand its research and innovation to adopt latest technologies for quicker innovation and also use joint ventures or partners or possible acquisitions to quickly supplement its lacunae in the research areas and thereby position itself for success. WT Strategies: * T1W2: More than six of Merck's patents are expiring in the near term.The additional capacity realized upon the cessation of Singuliar manufacturing should be used for high potential drugs which will face limited competition. The high potential drugs in the pipeline approved by FDA sho uld be made ready for use for the additional capacity. * W3T3: The current recession caused by multiple problems can hit Merck's profitability and the failure of FDA approvals can cause further sunk losses in the research and development area. Merck should look into outsourcing research and development to places where it is inexpensive for research.Grand Strategy Matrix The extensive analysis of Merck suggests the first quadrant of the Grand Strategy Matrix. Merck is in a good long term strategy and should continue to pursue its strategic plans and the recommended strategies. Recommended Strategies Recommended strategy No. 1: Healthcare reform emphasizes a paradigm shift to generic drugs from branded drugs in an effort to save money for the consumers and to eliminate undue profits for the healthcare or pharma industries. 7% of the patented drugs are going to expire by 2015 and this is an opportunity of $142 billion and there are not a lot of market players in this segment yet. Merck can take advantage of this upcoming situation and start working on generic drugs in the pipeline to be released in the established and emerging markets. We believe Merck should be able to tap into at least $50billion by this strategy over the next five years with an immediate return of $15billion in the upcoming fiscal year.More research and development can be leveraged by outsourcing research and development into areas where it’s more productive for the investment. A more detailed vision of this strategy in monetary terms is presented in the next section to give the audience a perspective of how this strategy is beneficial in making Merck the number one in the industry with sustainable prosperity laying the foundation to diversify into pharmacy management program in light of the healthcare reform. Recommended strategy No. 2:Merck should start implementing a pharmacy management program by working closely with physicians and customers to deliver a one-of-a-kind integrated spe cialty pharmacy in every national segment that is part of Merck's client advisory board. This pharmacy management program specifically targets specialty medications for a number of chronic conditions and helps them better understand their condition, medication side effects, and the importance of adherence. More research and development is suggested in areas that Merck can improve upon and the excess capacity that will be obtained after Singular should be used for pipeline products.This will position Merck as a differentiator in not just health but the health and wellness industry and will form a close nexus with physicians and customers while pursuing research in the most needed areas to improve life and wellbeing as visualized in the revised mission. Projected Financial Statements Projected Income Statement| | | | | 2010| 2011| | Revenue| 45,987. 00| 62832| Around $17 bln increase due to new strategies| COGS| 18,396. 00| 21991. 2| 35% of revenue| Gross Profit| 27,591. 00| 40840. 8| | | | | | Operating Expenses $Mil| | | | SG&A| 13,245. 00| 15708| 25% of sales | R&D| 10,991. 0| 13991| allocated $3 billion more| Other| 985| 985| | Pharmacy Management| | 200| | New Market Development expense| | 300| | Operating Income| 2,370. 00| 9656. 8| | Other Income and Expense $Mil| | | | Net Int Inc & Other| -717| -717| | Earnings Before Taxes| 1,653. 00| 8939. 8| | Income Taxes| 671| 3575. 92| 40% tax| Earnings After Taxes| 982| 5543. 88| | Acctg Changes| —| | | Disc Operations| —| | | Ext Items| -123| -123| | Net Income| 859| 5420. 88| | Diluted EPS, Cont Ops$| 0. 28| 0. 37| | Diluted EPS$| 0. 28| 0. 37| | Shares| 3,120. 00| 3208| | | | | | Project Balance Statement| | | |Assets $Mil| | | | | 2010| 2011| | Cash and Equiv| 10,900. 00| 11500| | Short-Term Investments| 1,301. 00| 1320| | Accts Rec| 7,344. 00| 11016| 50% increase| Inventory| 5,868. 00| 7335| 25% increase| Other Current Assets| 3,651. 00| 4250| | Total Current Assets| 29,064. 00| 354 21| | Net PP&E| 17,082. 00| 19555| | Intangibles| 51,834. 00| 52544| | Other Long-Term Assets| 7,801. 00| 8022| | Total Assets| 105,781. 00| 150963| | | | | | Liabilities and Stockholders' Equity $Mil| | | | | 2010| 2011| | Accts Payable| 2,308. 00| 2828| | Short-Term Debt| 2,400. 00| 2605| | Taxes Payable| 1,243. 0| 1300| | Accrued Liabilities| 8,514. 00| 8914| | Other Short-Term Liabilities| 1,176. 00| 1220| | Total Current Liabilities| 15,641. 00| 16867| | Long-Term Debt| 15,482. 00| 18282| | Other Long-Term Liabilities| 20,282. 00| 30455| | Total Liabilities| 51,405. 00| 55604| | Total Equity| 54,376. 00| 85359| | Total Liabilities ;amp; Equity| 105,781. 00| 150963| | Projected Ratios | 2010| 2011| Debt/Equity Ratio| 0. 28| 0. 65| Return on Assets| 0. 79| 3. 59| Net Profit margin| 1. 87| 8. 6| EPS| . 28| 1. 49| Company worth Analysis Net Worth Analysis |   | |   | Stockholders Equity| $66,754,000,000 |Net Income x 5| $4,295,000,000 | (Share Price/EPS) x Net Income| $104, 429,857,143 | Number of Shares Outstanding x Share Price| $104,948,066,926 | Method Average| $70,106,731,017 | Annual Objectives: * A projected increase in sales of $18bn is to be expected for 2011 and reduction of Singuliar sales will be $3bn resulting in $15bn. * An additional expense of $3bn for research and development is assumed for 2011 as part of recommendation 2. * A new category of expenses called â€Å"Pharmacy management expenses† will appear in statement for the amortization expenses of the start up of pharmacy management. A spike in interest of $200mn should be planned for due to the loan required for pharmacy management. * The pharmacy management program is expected to yield $2bn in profits in the first year. * New market development expenses should be planned for $300mn. * Merck should plan on generating equity to the tune of $30bn in the year 2011 to meet the expenses related to increased sales. Strategic Review and Evaluation Procedures: * At the end of the y ear, Merck should compare the stated objectives with the actual data.A re-evaluation of IFE and EFE should be implemented and should be checked for variance against the current IFE and EFE. * If no major variance is observed, the same strategies can be continued thru the following year. At the same time, if the result of these strategies position Merck in a better place, few more aggressive quadrant strategies should be evaluated and considered at that moment. * In the case of a situation where a wide variance is observed from the planned strategies, corrective actions are recommended after careful evaluation of factors from all relevant dimensions to check the main cause/s of the variance.A revised vision, mission and objectives may be needed at that moment in light of the new changes in external and internal factors. * We would also like to recommend usage of a balanced scorecard to evaluate the firm from multiple dimensions and ensure the overall progress of the firm follows the trajectory. * Key performance indicators should be evaluated from time to time internally against the plans or annual objectives and with industry standards for averages to identify any needed changes to the strategy.

ESL Beginner Dialogue Comparing the City and the Country

In English, the comparative is the form of an adjective or adverb that involves a comparison between greater or lesser, more or less. The comparative form changes depending on the adjective you use, but almost all  one-syllable  adjectives, along with some two-syllable adjectives, add  -er  to the  base  to form the comparative. Its important to learn a wide range of adjectives for the sake of description. A good way to practice this is by comparing the city and the country in a conversation. To describe physical locations as well as the character of the people and places, youll need to use the comparative form. Use the sample dialogue below to describe the city and the country. Then have your own conversations with others in your class. The City and the Country David: How do you like living in a big city? Maria: I like it so much more than living in the country. There are many things that make it better. David: Oh, really? Can you give me some examples? Maria:  Well, it certainly is more interesting out in the city than it is in the country. There is so much more to do and see! David: Yes, but the city is more dangerous than the country. Maria: Thats true. People in the city arent as open and friendly as those in the countryside, and the streets arent as safe. David: Im sure that the country is more relaxed, too! Maria: Yes, the city is busier than the country. However, the country feels much slower than the city. David: I think thats a good thing! Maria: Oh, I dont. The country is so boring! Being in the country is much more boring than being in the city. David: How about the cost of living? Is the country cheaper than the city? Maria: Oh, yes. Living in the city is more expensive than in the country. David: Life in the country is also much healthier than in the city. Maria: Yes, its cleaner and less dangerous in the country. But, the city is so much more exciting. Its faster, crazier and more fun. David: I think you are crazy for moving to the city. Maria: Well, Im young now. Maybe when Im married and have children Ill move back to the country. More Dialogue Practice - Includes level and target structures/language functions for each dialogue.