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Ashford 2: - Week 1 - Discussion 1

Your initial discussion thread is due on Day 3 (Thursday) and you have until Day 7 (Monday) to respond to your classmates. Your grade will reflect both the quality of your initial post and the depth of your responses.

Firm Objectives

Read the articles Jessica Alba’s Triple Bottom startup raises $25 million and The bottom line of corporate good.

In reference to the articles, discuss how firms incorporate the triple bottom line concept into traditional business concerns over profitability. Respond to at least two of your classmates’ posts.

Guided Response:
In 300 words or more, please, provide your response to the above discussion question. Comment on how customers can influence firms to pay more attention to the preservation of the natural environment. Respond substantively to at least two of your classmates’ postings. Substantive responses use theory, research, and experience or examples to support ideas and further the class knowledge on the discussion topic.

Carefully review the Discussion Forum Grading Rubric for the criteria that will be used to evaluate this Discussion Thread.

(Here are 2 students to respond to)

Chatman_W1_D1

Rodney Chatman

3/29/2016 3:34:56 PM

The Triple Bottom Line, summed up, is when companies consider the three Ps (people, planet and profit) while making business decisions from an environmentally conscious state of mind. Jessica Alba, co-founder of The Honest Company, built this company out of concern for raising healthy children and families without having to use toxic based products (examples are diapers and skin care items). The company chose manufacturers and vendors that are environmental friendly. They also took it a step further and decided to work with companies in the UK and Australia because of more strict chemical regulations. Of course, profit is a concern and priority, and the owners are focusing on increasing profit by reaching consumers who want the eco-friendly products. Another key factor is that the products are affordable. The Honest Company has grown and now offer their products in a variety of stores. The demand is now present and that leads to an increase in sales which ultimately leads to an increase in profit. At the same time, there is a preservation of the environment.

Dell incorporated the triple bottom line by accepting social responsibility and being accountable for recycling computers that customers turn in. Initially, they recycled in Europe but only because the law required them to do so. They also charged a fee. After negative publicity, Dell offered the recycle service in the United States. The article does not state whether Dell charged a fee.

If a business doesn’t have customers (People), then they don’t Profit. When enough People demand a certain type of product, then businesses typically supply it. So, with that being said, People can influence businesses to supply them with Planet friendly products and in the end businesses benefit increased Profit. All of the three P’s are included which is why businesses should adopt the Triple Bottom Line

References:

Field, A. (2013). Jessica Alba’s Triple Bottom Line Startup Raises $25 Million. Retrieved from http://www.forbes.com/sites/annefield/2013/11/17/jessica-albas-triple-bottom-line-startup-raises-25-million/#5af6ad9a4007

Scott, R. (2012). The Bottom Line of Corporate Good. Retrieved from http://www.forbes.com/sites/causeintegration/2012/09/14/the-bottom-line-of-corporate-good/#19a700c51a7e

Respond:

Week 1 Discussion 1

Monique Miller

3/30/2016 6:29:32 PM

The triple bottom line theory according to Scott (2012) is one that supports the idea that there is more to business than making money and likewise more to making money than making money. The theory sees people, the planet and profitability all as equal components to a business’ corporate mission (Scott, 2012). This means that the importance of making money, pleasing customers and maintaining the environment are all equal. This impacts traditional business structures where the main focus and concern is around profitability because it forces organizations to take a look at ethical aspects regarding the safety and well-being of the people in the society around them and the environment that those people live in when making business decisions.

Famous actress Jessica Alba executed this theory in real life with her The Honest Company, an organization aimed at making and selling non-toxic, eco-friendly and affordable products for babies and young children (Field, 2013). Although the company is for profit, and thus like many others wants and succeeds by profit, its purpose is way more than just making a profit. Providing safe products for the environment and the people is an equal component to the company’s purpose to profitability.

References

Field, Anne. (17 November 2013) Jessica Alba’s Triple Bottom Line Startup Raises $25 Million. Retrieved at: http://www.forbes.com/sites/annefield/2013/11/17/jessica-albas-triple-bottom-line-startup-raises-25-million/#40e741a64007

Scott, Ryan. (14 September 2012) The Bottom Line of Corporate Good. Forbes for Business. Retrieved at: http://www.forbes.com/sites/causeintegration/2012/09/14/the-bottom-line-of-corporate-good/#3d653acb1a7e

Respond:

Ashford 2: - Week 1 - Discussion 2

Decision Making Under Uncertainty

To save on gasoline expenses, Edith and Mathew agreed to carpool together for traveling to and from work. Edith preferred to travel on I-20 highway as it was usually the fastest, taking 25 minutes in the absence of traffic delays. Mathew pointed out that traffic jams on the highway can lead to long delays making the trip 45 minutes. He preferred to travel along Shea Boulevard, which was longer (35 minutes), but rarely had traffic jams. Edith agreed that in case of traffic jams, Shea Boulevard was a reasonable alternative. Neither of them knows the state of the highway ahead of time. After driving to work on the I-20 highway for 1 month (20 workdays), they found the highway to be jammed 3 times. Assuming that this month is a good representation of all months ahead, should Edith and Mathew continue to use the highway for traveling to work?

How would you conclusion change for the winter months, if bad weather makes it likely for traffic jams on the highway to increase to 6 days per month?

How would your conclusion change if Mathew purchased a new smart-phone app that could show the status of the highway traffic prior to their drive each morning, thus reducing the probability of them getting into a jam down to only 1day per month (where on this day, the app showed no traffic jam, but a jam developed in the meantime as they were driving along the highway).

Guided Response:
In 300 words or more, please, provide your response to the above discussion question. Please, show all your calculations and explain your answers. Further, comment on how the conclusions of this problem will change if there was no uncertainty and the highway always had traffic jams, whereas Shea Blvd was always traffic jam free? Is this scenario realistic and why? Respond substantively to at least two of your classmates’ postings.

Carefully review the Discussion Forum Grading Rubric for the criteria that will be used to evaluate this Discussion Thread.

(here are 2 students to respond to)

Week 1 Discussion 2

Monique Miller

3/30/2016 8:36:31 PM

Assuming that the sample month is a good representation of all months ahead for the rest of the year Edith and Mathew would spend 6,720 minutes traveling to work for the entire year on the highway and 8,400 minutes on Shea Boulevard. Given these numbers, they should travel to work via the highway because despite the traffic the time spent traveling via this route is less overall. See the calculation below.

Travel time via highway = (25 minutes x 17 days) + (45 minutes x 3 days) x 12 months = 6,720 minutes

Travel time via Shea Boulevard = (35 minutes x 20 days) x 12 months = 8,400 minutes

Even with the increase of traffic due to the elements of the winter, the total travel time on the highway would be less at only 7,440 minutes for the year. See the calculation below.

Travel time via highway = (25 minutes x 14 days) + (45 minutes x 6 days) x 12 months = 7,440 minutes

With a smart phone app that predicts traffic, the travel time on the highway would be reduced to 6,240 minutes. This even further supports the idea to commute to work via the highway. Please see the calculation below.

Travel time via highway = (25 minutes x 19 days) + (45 minutes x 1 day) x 12 months = 6,240 minutes

If there instead was uncertainty on the highway and this commute had more traffic, the recommended commute may instead be Shea Boulevard. This would mean that the highway would have to have traffic at least 10 days a month each month of the year. See the calculation below.

Travel time via highway = (25 minutes x 10 days) + (45 minutes x 10 days) x 12 months = 8,400 minutes

This, as well as the highway having traffic all 20 days of the month is realistic if Edith and Mathew are traveling at the busiest times of the day. However, provided the variability in the details given above, it is fair to say that this is not very likely.

Respond:

Decision Making Under Uncertainty

Chad Small

3/30/2016 9:37:16 PM

The busy commute to work in the morning is important. In the low context culture that American workers exist, being punctual is important. Time is money. Edith and Mathew are trying to accommodate the drive time to get into the office on time. Totaling the amount of time saved between the two routes is the first step. In figure 1, a comparison and time total for the month is given.

Workday	I-20	Shea BLVD
1	45	35
2	45	35
3	45	35
4	25	35
5	25	35
6	25	35
7	25	35
8	25	35
9	25	35
10	25	35
11	25	35
12	25	35
13	25	35
14	25	35
15	25	35
16	25	35
17	25	35
18	25	35
19	25	35
20	25	35
Total Minutes	560	700

Over the course of the month, even with the extra days of drive time. It will take the team 140 less minutes if they take I-20. That is seven more minutes gained each day over the month.

How would you conclusion change for the winter months, if bad weather makes it likely for traffic jams on the highway to increase to 6 days per month?

The weather will be a factor in the winter months. The allocation of time is important for the individuals in this example. In Figure 2, the addition of the winter months is added on to I-20 and again a total amount of time for the work month is shown.

Winter Months
Workday	I-20	Shea BLVD
1	45	35
2	45	35
3	45	35
4	45	35
5	45	35
6	45	35
7	25	35
8	25	35
9	25	35
10	25	35
11	25	35
12	25	35
13	25	35
14	25	35
15	25	35
16	25	35
17	25	35
18	25	35
19	25	35
20	25	35
Total	620	700

In the figure you can see how there are six days of 45 minute delays. In totaling the work month, you can see how I-20 will take less time. The team will save 80 minutes over the course of the month which will give them four minutes saved over the month.

How would your conclusion change if Mathew purchased a new smart-phone app that could show the status of the highway traffic prior to their drive each morning, thus reducing the probability of them getting into a jam down to only 1day per month (where on this day, the app showed no traffic jam, but a jam developed in the meantime as they were driving along the highway).

Again, taking into account the worst case scenario is important for this case. There is a 30 percent chance of entering a traffic jam. With the new smart-phone app this will reduce percent to 25 percent. However, if the technology fails, then a traffic jam will still exist and that still makes the total driving time 620 minutes for the work month. There is no change. The potential for change with the smart phone is the independent variable in the equation. In figure 3 you can see the overall drive time equal 600 minutes with the new technology.

Smart Phone App
Workday	I-20	Shea BLVD
1	45	35
2	45	35
3	45	35
4	45	35
5	45	35
6	25	35
7	25	35
8	25	35
9	25	35
10	25	35
11	25	35
12	25	35
13	25	35
14	25	35
15	25	35
16	25	35
17	25	35
18	25	35
19	25	35
20	25	35
Total	600	700

This analysis is a simplistic glimpse at CEF, certainty equivalent factor. This is a ratio of perceived monetary value of a risk-free alternative, CE to a risky alternative ENPV, expected net present value. Understanding the proportion of risk helps influence monetary decisions (Douglas, 2012, p. 2.1). ENPV was not a part of this analysis but it could be in future ones. The one circumstance that shows no uncertainty where to account for the situation to which I-20 always had a traffic Jam. In Figure 4 we can see that during this, Shea BlVD is the faster route.

No Uncertainty
Workday	I-20	Shea BLVD
1	45	35
2	45	35
3	45	35
4	45	35
5	45	35
6	45	35
7	45	35
8	45	35
9	45	35
10	45	35
11	45	35
12	45	35
13	45	35
14	45	35
15	45	35
16	45	35
17	45	35
18	45	35
19	45	35
20	45	35
Total	900	700

Reference

Douglas, E. (2012). Managerial economics. San Diego, CA: Bridgepoint Education.

Respond:

Ashford 2: - Week 1 - Assignment

Economics of Risk and Uncertainty Applied Problems

Please complete the following two applied problems. Show all your calculations and explain your results.

Problem 1:

A generous university benefactor has agreed to donate a large amount of money for student scholarships. The money can be provided in one lump sum of $12 million in Year 0 (the current year), or in parts, in which $7 million can be provided at the end of Year 1, and another $7 million can be provided at the end of Year 2.

Describe your answer for each item below in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

Assuming the opportunity interest rate is 8%, what is the present value of the second alternative mentioned above? Which of the two alternatives should be chosen and why?
How would your decision change if the opportunity interest rate is 12%?
Provide a description of a scenario where this kind of decision between two types of payment streams applies in the “real-world” business setting.

Problem 2:

The San Diego LLC is considering a three-year project, Project A, involving an initial investment of $80 million and the following cash inflows and probabilities:

Year 0	Year 1		Year 2		Year 3
	Probability	Cash Flow ($ mil.)	Probability	Cash Flow ($mil.)	Probability	Cash Flow ($ mil.)
	0.2	50	0.1	60	0.3	70
	0.3	40	0.2	50	0.4	60
	0.4	30	0.3	40	0.1	50
	0.1	20	0.4	30	0.2	40
Initial Investment $80 mil.
Discount Rate 8%

Describe your answer for each question in complete sentences, whenever it is necessary. Show all of your calculations and processes for the following points:

Describe and calculate Project A’s expected net present value (ENPV) and standard deviation (SD), assuming the discount rate (or risk-free interest rate) to be 8%. What is the decision rule in terms of ENPV? What will be San Diego LLC’s decision regarding this project? Describe your answer.
The company is also considering another three-year project, Project B, which has an ENPV of $32 million and standard deviation of $10.5 million. Project A and B are mutually exclusive. Which of the two projects would you prefer if you do not consider the risk factor? Explain.
Describe the coefficient of variation (CV) and the standard deviation (SD) in connection with risk attitudes and decision making. If you now also consider your risk-aversion attitude, as the CEO of the San Diego LLC will you make a different decision between Project A and Project B? Why or why not?

Carefully review the Grading Rubric for the criteria that will be used to evaluate your assignment.