Group Exercises

2-1. A technological revolution is occurring throughout business. Technology is changing the way work is being performed. Microprocessor-controlled manufacturing is changing blue-collar work on the shop floor, and more recently, advanced information technology has begun to change white-collar work.

1. How is technology transforming your intended profession, be it accounting, engineering, manufacturing, management, marketing, or some other profession?
2. How are these changes affecting the skills and /or knowledge necessary for a person entering the profession.
3. What impact is technology having on the following industries: automobile manufacturers like General Motors, large comprehensive hospitals like St. Joseph's Hospital, financial institutions like the Royal Bank, retail firms like Canadian Tire, airlines like Air Canada, and universities/colleges like Sheridan College?
4. What impact are these changes having on the mix of costs between fixed and variable costs ? How do these changes affect the profitability of these industries?

2-2. Technological change in Canadian industry has had a major impact on the way business is conducted. Major shifts in business cost structure are taking place. Your group should discuss the effects of these changes on the future of Canadian corporations. Answer the following questions:

1. Which type of business will be most likely to respond successfully to technological changes: large or small corporations? Why?
2. What will be the effect on the profitability of businesses of these changes? Will business become more or less profitable and why?
3. Given the large fixed costs of technology-will corporations become more marketing oriented? (With large fixed costs each sale will result in a larger marginal profit per unit. The marginal profit is the marginal revenue minus the marginal or extra costs of producing or purchasing the product. Thus a small increase in sales will result in a larger percentage increase in profits. More marketing should result in more sales).

2-3. Each member of the group should obtain an annual report of a publicly traded company. Each person should select a company in a different industry. For each company calculate for the two most recent years the following:

1. cost of sales as a percentage of sales
2. general and administrative costs as a percentage of sales
3. other costs as a percentage of sales
4. net income as a percentage of total sales

For each company - tell what lessons you learned in reviewing the annual report. What was the most surprising matter you found in the financial numbers about your company? Examples of different industries would include manufacturing, retail, and financial services.