The Economics of Global Business Challenges Assessment Authentic tasks - Case study analysis report
CASE STUDY ANALYSIS - Hana: Financial Analyst or Pineapple Grower?
1. Statement of the Case Study
The present case study is of particular relevance for people willing to run a small business in the real world. Hana was a financial analyst earning $78,000 per year but she decided to take advantage of the globalization of the world economy. She was residing in a tax heaven country with tax rate on profits equal zero. To this end, she undertook activities as a pineapple grower attracted by the fact that a pineapple grower could sell any quantity of pineapples at $5.00 per kilo. She decided to produce 44 tonnes of pineapples.
The costs of production incurred for this level of output were as follows: payments for land and equipment rental and for other supplies $36,000 per year; labour costs $44,000 per year; transportation costs $ 30,000; and administrative costs $10,000 per year. The only two inputs she supplied to her new business were her savings ($20,000) withdrawn from a special account paying a rate of interest of 10% per year and her own labour. Hana wanted $20,000 as a return for risk-taking. By mid-year, she took out $25,000 from the firm for her living expenses but she never returned a single cent. At the end of the year, she was uncertain about the profit earned and decided to consult an accountant and an economist. When she received the reports from the accountant and the economist she was confused and asked them whether it would make sense for her to remain in business. As to the responses, the accountant assumed no change in the economic circumstances for next year, but the economist predicted a jump in the price of pineapples from $5.00 to $10.00 per kilo with everything else remaining constant.
2. Your task
You have to write a Business Report where you address the following issues:
(a) Profit figure that the accountant arrived at;
(b) Profit figure that the economist arrived at;
(c) Price elasticity of the demand curve facing Hana's firm; and
(d) Whether or not it is a good idea for Hana to remain in business.
3. Compulsory Format
The compulsory format for your Business Report will be posted on Moodle.
Attachment:- Assignment Files.rar