MSM 630 Case Study Analysis
• Baseline profit for 1986-1988
• Number of gas accounts in 1990
• How entry level salaries for management were
determined
• Number of gas accounts transferred to hedge fund
• Appropriate raise for female accountant
• Corporate management style
• Accounting practices
• Profit structure
• Lines of communication
Baseline profit for 1986-1988
• During 1986-1988, Resources Unlimited
Corporation reported quarterly profits of
(listed in millions):
• $342, 267, 321, 157, 33, 349, 132, 289
• From this available information, if accuracy
can be assumed, the baseline profit for these
years is:
• $200,000,000 (Taylor, 2013)
Number of Gas Accounts in 1990
• In 1988, Resources Unlimited Corporation
reported they held 32 gas accounts
• Based on the number of oil accounts
estimated for 1990 and the assumption of
direct variance between the numbers, the
number of gas accounts for 1990 should be:
43 (Cooper & Schindler, 2011)
How entry level management
salaries are determined
$60,000
$50,000
$40,000
Income
$30,000
Mean
Std Dev
$20,000
$10,000
$Male #1
Male #2
Male #3
Mean: $47,250
Standard Deviation: $8983
Female
Gas Accounts Transferred to Hedge Fund
• Accounting offered a guess that 500 gas accounts could
generate revenue to last 30 days
• After 6 days, the CEO transferred 100 gas accounts to a
dummy hedge fund (6 days = 20% of 30)
• Bankruptcy occurred in June 1994
Gas Accts
600
500
400
Gas Accts
300
30 days v. 6 days
200
100
0
1
2
Salaries
$60,000.00
$50,000.00
$40,000.00
$30,000.00
$20,000.00
$10,000.00
$Male #1
Male #2
Male #3
Mean
Stand deviation
Female
Raise for Female Accountant
• Male accountant salaries:
• $50,000
• $52,000
• $55,000
• Female Accountant salary:
• $32,000
• Appropriate raise for female accountant
would be:
• $20,128
Corporate management style
• Laissez-faire management style (Bolman & Deal,
2008)
• No action taken for memo’s received from
Accounting
• Potential inaccurate data sent out
• Discrimination suit for unequal pay
• Idea to transfer to hedge funds as a “best guess”
solution
• Bankruptcy
• Decisions seemed to be made on a whim
Accounting practices
• Accounting department attempted strategic
planning regarding changes in industry and
financial impact
• Ignored by CEO and didn’t seem to push the
issue
• Didn’t review mean salaries for like jobs:
shows non-involvement
• Plan for hedge funds was last ditch, desperate
attempt to stay afloat temporarily: was not a
strategic move
Profit Structure
• Profit structure based on industry
deregulation and unregulated pricing
• Entire process too complex and too variable:
• Price of one commodity expected to move
in opposition to the price of another
• Vicarious balance to this
• Dummy hedge fund attempted to lessen cash
demands, but wasn’t attempted soon enough
• Unrealistic, unverified, and potentially
falsified
Lines of communication
• Lines of communication flowed up form
Accounting to CEO, but not back down
• Lines travel out to Wall Street form
Accounting
• Lines appears to travel across equal channels
• Accounting and strategic planning division
talked across, but not up or down to CEO or
management
References
• Bolman, L. G. & Deal, T. E. (2008). Reframing
organizations: Artistry, choice and
leadership. San Francisco, CA: Jossey-Bass.
• Cooper, D. R. & Schindler, P. S. (2011). Business
Research Methods. New York, NY.
McGraw-Hill/Irwin.
• Taylor, C. (2013). How to Calculate a Baseline.
eHow Money. Retrieved from http://www.ehow. com/
how_7280431_calculate-baseline.html
• Unknown. (2008). Guidelines for Preparing PowerPoint Slide
Presentations. Retrieved from http://www.ismrm.org/
03/ppguide.htm