1. Baron Art Mart, Inc.
Team 1
BUS 302 #13159
October 21, 2015
Case Analysis
By
Aarti Khurana, Marlene Gonzalez, Alex Sanchez, Jose Morales, Marqus
Robinson, Mohammed Salaam, and Miles Steele
(Jamie, 2012)

2. Questions will be answered at the end of the
presentation.
If you are unable to hear the speaker, please
raise your hand and the presenter will speak
up.
uestionsQ
Miles 2

3. pecial AcknowledgementsS
“On the whole, human beings want to be
good, but not too good, and not quite all
the time” –George Orwell
Miles 3

4. T able of Contents
Executive Summary……………………………………………………………….5
Main Body…………………………………………………………………………….6
Facts and Issues…………………………………………………………………………………..6
Statistical Analysis……………………………………………….………………………………7
Regression Analysis……………………………………………………….....................10
Future Income……………………………………………………………….....................15
Legal Analysis…………………………………………………………..……………………….16
Assessing the Damages……………….……………………….……………….21
Ethical Considerations………………………………………………………...25
Strategic Considerations …………………………………………………….33
Recommendations ……………………………………………………………..42
Thank you ………………………………………………………………………….43
References………………………………………………………………………….44
Appendix…………………………………………………………………………….46 Miles 4

5. • Main Characters
• Baron Art Mart, Inc.
• Bruce Levin
• Jimmy Lee
• Susan Kim
• Donald West
• Jennifer Parker
• Kimberly Youseff
xecutive SummaryE
• Analysis
• Descriptive Statistics
• Regression Analysis
• Accounting
• Economics
• Legal
• Ethics
• Strategic
• Recommendations
• Terminate Jimmie Lee’s
employment
• Compensate Susan Kim
with the net real
income
• Consider ethical
training for employees
• Consider e-commerce
model
Miles 5

6. Susan Kim has asked Baron Art Mart Inc. to compensate her for
injuries she sustained while on company property. Her injuries have
left her permanently disabled and she seeks $765,000 for medical
expenses and $500,000 lost in future income”(Efrat & Gunther, 2007).
acts and IssuesF
Alex 6

7. tatistical Analysis:
Descriptive Statistics
S
➢Ms. Kim’s real income for the last fifteen years
What these numbers mean (Anderson,
Sweeney, & Williams, 2011):
• Mean
• Median
• Standard deviation
• Sample Variance
➢Can we use mean income to forecast future
earnings?
Alex 7

8. tatistical Analysis:
Descriptive Analysis
S
Number Year Gross Income Price Index Adjusted Price Index Real Income
1 1991 50,599 135.2 1.352 37425.30
2 1992 53,109 141.3 1.413 37585.99
3 1993 53,301 142.5 1.425 37404.21
4 1994 56,885 149.2 1.492 38126.68
5 1995 56,745 151.4 1.514 37480.18
6 1996 60,493 158.9 1.589 38069.86
7 1997 61,978 160.5 1.605 38615.58
8 1998 61,631 161.0 1.610 38280.12
9 1999 63,297 164.6 1.646 38455.04
10 2000 66,531 173.2 1.732 38412.82
11 2001 67,600 178.1 1.781 37956.20
12 2002 66,889 180.9 1.809 36975.68
13 2003 70,024 182.0 1.820 38474.73
14 2004 70,056 187.9 1.879 37283.66
15 2005 71,857 197.3 1.973 36420.17
Variance:
$403,900.03
Median:
$37,956.20
Standard Deviation:
$635.53
Mean:
$37,797.75
Total Real Income:
$566,966.21 Alex 8

9. efining A Price IndexD
What is a Price Index?
How is a Price Index
constructed?
1. Housing
2. Entertainment
3. Transportation
4. Food
5. Medical Care
6. Other Goods & Services (Schmidt, 2015)
Alex 9

10. egression Analysis(Anderson, Sweeney, & Williams, 2011)R
Adjusted
Price Index
1.352
1.413
1.425
1.492
1.514
1.589
1.605
1.610
1.646
1.732
1.781
1.809
1.820
1.879
1.973
Dependent Y
Variable
Independent X
Variable
Year
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005 Aarti 10

11. egression FindingsR
Coefficient of Determination (R-square) = 0.982
Graph 1. Regression Line
Aarti 11

12. egression FindingsR
P-value for Year
Null Hypotheses (Hₒ) = 0
Alternative Hypotheses (H₁) ≠ 0
Assuming α = 0.05
P Value = 7.395E-12
0.05 > 0.00000000000739
Reject Null
No Relationship
Some Relationship
Aarti 12

13. egression FindingsR
Regression Coefficient for Year = 0.041
❖ 4.1% yearly increase
❖ Slope of regression function
Graph 1. Regression Line
Aarti 13

14. y -80.33 0.041x
Price Index Intercept (Coefficient) x (Year)
egression FindingsR
Equation 1. Regression Equation
Aarti 14

15. Refer to Excel sheet.
uture IncomeF
Marlene 15

16. The merchant privilege would not relieve Baron
Art Mart, Inc. from liability under the cause of
action of false imprisonment.
egal AnalysisL
Mohammed 16

17. egal AnalysisL
What is Merchant’s Defense?
• According to the Case Library, “ A peace officer, a merchant,
or a specifically authorized employee of a merchant, may
use reasonable force to detain a person for questioning on
the merchant’s premises, for a reasonable length of time,
when he has reasonable cause to believe that the person
has committed theft of goods held for sale by the merchant,
regardless of the actual value of the goods. The detention
shall not constitute false imprisonment”(Efrat & Gunther,
2007).
Mohammed 17

18. egal AnalysisL
Requirements for authorized detention
1. The person effecting the detention must be a peace
officer, a merchant, or a specifically authorized
employee of a merchant
2. The party making the detention must have reasonable
cause to believe that the detained person has
committed theft.
3. The detention was conducted in a reasonable manner.
Determining facts:
4. The detention must occur on the merchant’s
premises
5. The detention may not last longer than a
reasonable period of time (Efrat & Gunther, 2007)
Mohammed 18

19. egal AnalysisL
Table. 1 Requirements for authorized detention
Requirements Were the requirements met?
Peace office, merchant, or
authorized employee
YES
Reasonable Cause YES
Reasonable Manner NO
Merchant’s Premise YES
Reasonable Time NO
Mohammed 19

20. ounterargumentC
Factors which may affect argument
•Reasonable Detention
- Store’s policy
Mohammed 20

21. Marqus 21

22. ssessing the DamagesA
➢Compensatory Damages- actual damages
awarded to the plaintiff due to a tort. Can
include physical harm, medical expenses, lost
wages, etc.(Mallor et al., 2001).
• “To make the person whole”
Marqus 22

23. ssessing the DamagesA
• Susan Kim is owed
compensatory damages,
but not the entire amount
she’s asking for.
• To pay for the damages,
we want to make sure
we’re not paying more
than we need to make
her whole again.
Marqus 23

24. ssessing the DamagesA
➢Punitive Damages- Damages awarded in addition to
compensatory remedy that are designed to punish a
defendant for particularly reprehensible behavior and to
deter the defendant and others from committing similar
behavior in the future (Mallor et al., 2001).
• Punishing flagrant wrongdoing
Marqus 24

25. Tucker’s Five
Questions
Approach
(Smith, 2015)
Is the decision profitable (shareholders)?
Is the decision legal (society at large)?
Is it fair?
What is the impact on the rights of
stakeholders?
What is the impact on sustainable
development (environment)?
thical ConsiderationsE
Marqus 25

26. Stakeholders Primary (Direct) Susan Kim
Jimmie Lee
Jennifer Parker
Kimberley Youseff
Customers
Other employees
Secondary
(Indirect)
Bruce Levin
Donald West
Susan Kim’s family
Competitors
Society
thical ConsiderationsE
Marqus 26

27. 1. Is the Decision
Profitable?
Utilitarianism: Firing Jimmie Lee
to prevent lawsuits
pertaining to him in
the future
Considering
settlement with
Susan Kim
Corporate Social
Responsibility
(CSR):
Ethical/Customer
service training
Considering shift to
e-commerce
thical ConsiderationsE
Marqus 27

28. 2. Is the
Decision Legal?
Utilitarianism: Firing Jimmie is legal
Justice Theory: Settlement with Susan is
legal because we would
make her whole, without
facing punitive damages
thical ConsiderationsE
Marqus 28

29. 3. Is it fair? Utilitarianism: Firing Jimmie is fair because he
committed a tortuous act
Settlement with Susan to pay
only her compensatory
damages is fair
Deontology: Training employees is fair
because we have an inherent
duty to provide the best
service
Corporate
Social
Responsibility
(CSR):
E-commerce is fair, even if it
means shutting down some of
our stores
thical ConsiderationsE
Marqus 29

30. 4. What is the
impact on the
rights of
stakeholders?
Utilitarianism: Compensating
Kim would be
best consequence
for stakeholders
Corporate Social
Responsibility
(CSR):
Ethical training
will create better
customer service
Rights Theory: Mrs. Kim has
right to be
treated equally
Nicomachean: Lee could have shown
moral virtues by
attending to Mrs. Kim’s
injuries
thical ConsiderationsE
Aarti 30

31. 5. What is the
impact on
sustainable
development?
Utilitarianism: If Baron Art Mart
settles, they could use
the money saved from
not entering lawsuit to
create jobs
Corporate Social
Responsibility
(CSR):
Society would
prefer employee’s
to be put in
ethical training
Deontology: Duty to make
shopping safe for
customers
thical ConsiderationsE
Aarti 31

32. Alternatives and
Consequences
Jimmie could sue for wrongful
termination
Susan Kim may not accept a
settlement
Ethical Training may not improve
employee’s customer service skills
E-Commerce may not take off
thical ConsiderationsE
Marqus 32

33. trategic ConsiderationsS
Using Michael Porter’s Five Forces Analysis
(Porter, 2008)
Jose & Marlene 33

34. POWER
OF
SUPPLIER
POWER
OF
BUYER
THREAT OF
ENTRY
THREAT OF
SUBSTITUTES
RIVALRY
AMONG
EXISTING
FIRMS
Jose & Marlene 34

35. he Stationary Supplies IndustryT
Jose & Marlene 35
Industry at a Glance
Overview of the Incumbent: BARON ART MART

36. ower of SupplierP
Jose & Marlene 36
POWER OF
SUPPLIER
• Solution posed
• Reason why?
• IBISWorld (IBISWorld,
2015)
• Porter's reasoning

37. ower of BuyersP
Jose & Marlene 37
• Solution posed
• Reason why?
• IBISWorld
• Porter's reasoning
POWER OF
BUYERS

38. hreat of EntrantsT
Jose & Marlene 38
THREAT OF ENTRANTS
• Solution posed
• Medium threat
(IBISWorld, 2015)
• Strong/High barriers
• And, their use in strategy
• Low/weak barriers
• And, their use in strategy
• Porter's reasoning

39. hreat of SubstituteT
Jose & Marlene 39
THREAT OF SUBSTITUTE
• Solutions
• Online sellers in the
industry
• Discount stores
• Any store willing to sell at
a profitable price with a
valuation that is high by
the customer for a
product originally
purchased at Baron

40. ivalry Among Existing FirmsR
Jose & Marlene 40
• Rivalry and competition is HIGH
• Improved staff training, reorganization of
operations for efficiency in order to compete in
the industry with little growth and small
margin of profit
• CEO should promote more interaction between
Marketing, Operations, and Finance to form
Strategical Planning and Thinking (Stevenson,
2007)
• Retraining of strategical formulation to avoid
the use of Price and instead use Strategies
that promote Higher Quality, Better Service,
cleanliness, and Flexibility among all
employees--sense of urgency and zeal in
everything.
• Firms competing online and offline
RIVALRY
AMONG
EXISTING
FIRMS

41. trategic ConsiderationsS
Jose & Marlene 41
Further Considerations

42. ecommendationsR
• Legal Recommendations
• By Jimmy being an employee of the company, his employers are also
liable.
• Settlement highly recommended, going to court possible PR nightmare.
• Also recommend terminating Jimmy’s employment.
• Statistical Analysis
• A regression equation was created that calculated the real value of Ms.
Kim’s income and projected her income for the next 10 years.
• In truth, Ms. Kim is only actually owed $416,203.34 rather than
$500,000 in lost wages
• Ethical recommendations
• The injury caused to Ms. Kim by Jimmy was an ethical violation and a
massive overstepping of boundaries on Jimmy’s part.
• From a utilitarian perspective, firing Jimmy prevents him from harming
other customers in the future.
• Highly recommend training Jimmy’s replacement/peers in ethical
practices and restraint.
Miles 42

43. hank You!T
We are grateful for the opportunity to work for you
on this case. Thank you for your time.
Sukria
Arigato
Shukran
Gracias
Merci
Kiitos
43
Thank
you

44. eferencesR
Anderson, D. R., Sweeney, D. J., & Williams, T. A. (2011). Hypothesis Tests.
Essentials of Statistics for Business and Economics (pp. 88-100, 485-551).
Ohio: South-Western Cengage Learning.
Efrat, R., & Gunther, R. (2007). Baron Art Mart, Inc. Csun. Retrieved October
15, 2015, from http://ocw.smithw.org/2015fall/bus302-
13159/outline.html
IBISWorld. (2015). Office Supply Store in the US April 2015. Retrieved from
file://http://clients1.ibisworld.com/reports/us/industry/default.aspx?ent
id= 1098
Investopedia LLC. (n.d.). Consumer Price Index - CPI. Retrieved October 18, 2015,
from Investopedia:
http://www.investopedia.com/terms/c/consumerpriceindex.asp
Jamie. (2012). When I Write. Retrieved October 20, 2015, from Through Two
Blue Eyes:
https://throughtwoblueeyes.wordpress.com/2012/05/21/when-i-write/
Mallor, J. P. (2001). Understand the Differences Between Compensatory and
Punitive Damages. Business Law and the Regulatory Environment. 44

45. eferencesR
Parrino, R. (2014). Level Cash Flows Annuites and Perpuites. In Fundamentals of
corporate finance (3nd ed., p. 165). Danvers, MA: John Wiley and Sons
Australia.
Porter, Michael E.(January 2008) . "The Five Competitive Forces That
Shape Strategy." Special Issue on HBS Centennial. Harvard Business
Review 86, no. 1 : 78–93.
Schmidt, P. (2015). Consumer Price Index See Biggest Drop In Six Years. World
Report Now. Retrieved October 18, 2015, from
http://www.worldreportnow.com/consumer-price-index-see-biggest-
drop-in-six-years/113/
Smith, W. (2015). Ethical Thinking WS [PowerPoint slides]. Retrieved from
http://ocw.smithw.org/2015fall/bus302-13159/outline.html
Stevenson, W. (2007). Competitiveness, Strategy, and Productivity. In Operations
management (Twelfth ed., Vol. 9E, pp. 27-56). New York, New York:
McGraw-Hill/Irwin.
45

46. ppendixA
46