Week 5 Problems
Applied Business and Research Statistics 561
1. SupplyCo. is a supplier to a number of firms in an industry. By carefully mining its customer data warehouse, SupplyCo. reveals a plausible new model for manufacturing and distributing industry products that would increase the overall efficiency of the industry system, reduce costs of production (leading to greater industry profits and more sales for SupplyCo.), and result in greater sales and profits for some of the industry's manufacturers (SupplyCo.'s customers). On the other hand, implementing the model would hurt the sales and profits of other firms that are also SupplyCo.'s customers but which are not in a position (due to manpower, plant, or equipment) to benefit from the new manufacturing/distribution model. These firms would lose sales, profits, and market share and potentially go out of business. Does SupplyCo. have an obligation to protect the interests of all its customers and to take no action that would harm any of them, since SupplyCo. had the data within its warehouse only because of its relationship with its customers? (It would betray some of its customers if it were to use the data in a manner that would cause these customers harm.) Or does it have a more powerful obligation to its stockholders and employees to aggressively pursue the new model that research reveals would substantially increase its sales, profits, and market share against competitors? a. What are the most prudent decisions SupplyCo. can make about its responsibilities to itself and others? The best decision is for SupplyCo to pursue the new model to increase sales, profits and market share against competitors. This decision is best for the company. To support this decision, SupplyCo must consider what would happen if it did not decide to pursue the new model. If they did nothing, they risk that another company will recognize the opportunity to make the changes and improvements to the industry. This could cost SupplyCo profits in the short run and employees in the long run. To protect their own footing in the industry, SupplyCo is better off being the leader even if it means that some smaller firms might be forced to reorganize as a result. SupplyCo’s primary obligation should be to its own employees and other stakeholders. The industry as a whole would benefit from the innovations, which would also be a positive side effect. If SupplyCo is a forward-thinking, profit-seeking firm, it should go ahead with the changes to how products are manufactured and distributed. b. What are the implications of those decisions even if there is no violation of law or regulation? There is no violation of law or regulation in this case, though the smaller customers will be financially hurt as a result of SupplyCo’s decision. If SupplyCo was a research or accounting firm, or some other independent 3rd party that the smaller customers contracted to study the industry, they could expect more protection but it is SupplyCo’s right to make decisions that best help support their own stakeholders and improve the efficiency of the industry as a whole. While not the most sympathetic-sounding argument, SupplyCo does not have an obligation to forgo future profits for the sake of other companies. One could argue that by improving efficiency in the industry as a whole that these smaller companies will be forced to innovate and find new niches. Even if some smaller companies went out of business, others could have a chance to grow and adapt to a more profitable industry.
2. The city council of Pine Bluffs is considering increasing the number of police in an effort to reduce crime. Before making a final decision, the council asks the chief of police to survey other cities of similar size to determine the relationship between the number of police and the number of crimes reported. The chief gathered the following sample information.
|City |Police |Crime Count...
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