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MSM 630: 9.1 Case Study Analysis

MSM 630: 9.1 Case Study Analysis. Kelly Jenkins. Overview Company Overview Senior Management Style Accounting Practices Salary Structure Profit Structure Baseline Profits Accounts Hedge fund Transfers Communication Structure Concluding Thoughts. Company Overview.

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MSM 630: 9.1 Case Study Analysis

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  1. MSM 630: 9.1 Case Study Analysis Kelly Jenkins

  2. Overview • Company Overview • Senior Management Style • Accounting Practices • Salary Structure • Profit Structure • Baseline Profits • Accounts • Hedge fund Transfers • Communication Structure • Concluding Thoughts

  3. Company Overview • Formed in 1985 via merger • Largest gas distribution network in the U.S. • 38,000 miles of pipeline • Serving industrial and residential customers • Began as heavily regulated industry, steady and certain profits. • Deregulated shortly after merger

  4. Senior Management Style • Complex financial strategy in effort to minimize deregulation risks. • Unrealistic profit goals • Ignore advice of experts • Gaps in reporting of information • Incomplete projections /lack of data justification

  5. Accounting Practices Financial Practices • Derivative Financial Model (CEO Guided) • Hedge Funds • Inability to provide complete data due to lack of model effectiveness • Recommendations to rethink financial model • Staff concerned with ability to reach projected “unrealistic” profits. • Incomplete data projections and estimates • Inconsistencies amongst actual reported data • Wall Street’s ability to grade future earnings

  6. Accounting Practices Salary Restructure • Inconsistencies amongst male and female accountant salaries • Threat of lawsuit • Male accountant salary range • $50.000 • $52,000 • $55,000 • Female accountant salary • $32,000 • Compensation restructure required to bring within two standard deviations of the male accountant salary mean

  7. Accounting Practices: Salary Restructure

  8. Profit Structure Reported Profits in Millions

  9. Profit Structure Gas and Oil Account Data

  10. Profit StructureHedge Fund Transfer Data

  11. Communication Structure • No clear full circle communication method • Missing checks and balances to ensure maximum efficiency • Code of Conduct/Ethics? • CEO all powerful

  12. Concluding Thoughts • Abuse of power • Disengagement with actual profit potential • Lack of regard for true bottom line • Misaligned vision and strategy in order to achieve maximum longevity and actual profitability within the industry

  13. References Cooper, D. R., & Schindler, P. S. (2011). Business Research Methods, Eleventh Edition. New York: McGrawhill-Hill,Irwin.

  14. Questions?

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