Changing HTML On the FlyCase StudyKGB (Killer Green Blasts) L

Changing HTML On the Fly
Case Study:
KGB (Killer Green Blasts) Lazer Spy Adventure has been a
laser tag park for many years, but business is not as good as it
once was. Its owner, Ken GB, is worried. He realizes that laser
tag is losing popularity due to all the new technologies that
have emerged recently.
KGB Adventure has had a Web site for some time, but Ken
hadn't seen any need for the site to provide much more than
location, hours, and prices for the park... until now. He decides
it's time for an update, so he calls his Web Developer, Cindy.
Ken tells Cindy that he wants the site to be interactive and he
wants feedback. He wants visitors to be able to take surveys, as
well as rate the experience they had at the park. Ken is hoping
to gain some insight into how he can grow his business again.
"And while you're at it," he tells Cindy, "let's add some sly
effects."
Cindy is on a mission. She crafts a wily Web persona fit for a
spy. She makes a clever game where the user can follow clues
and discover the undercover location of the park. She places
hints for cunning visitors to pilfer top-secret information about
park events. And she creates stealthy characters to guide the
user through the site — if he can trust them.
She also posts interrogations for the site visitors: Quizzes that
assess their detective work, surveys that prod for their interests,
and a covert ratings page that allows them to say what they
really think about the laser tag park — if they dare.
Cindy shows Ken the shrewd new site demo, and Ken gives a
furtive smile. "It's great," he says as his smile fades, "but you
should not have made it more fun than the park... "
Discussion Points:
Consider this scenario and answer the following questions.
· Many new technologies are available to make Web sites fun,
but Cindy wants to use JavaScript to develop more robust

content for the KGB Adventure site, and to keep it low -key, not
flashy. How does JavaScript compare with some other
technologies when it comes to making a site both fun and
interactive?
· How could Cindy change HTML on the fly to simulate a
character guiding the user through steps in the site?
· Ratings are important to businesses. How would a JavaScript
form be able to help? How would on-the-fly updates make it
more interesting for the visitor?
250 words minimum
Introduction to Corporate Finance
Chapter 1
Copyright © 2019 McGraw-Hill Education. All rights reserved.
No reproduction or distribution without the prior written
consent of McGraw-Hill Education.
1-‹#›
1.1
Define the basic types of financial management decisions and

the role of the financial manager
Explain the goal of financial management
Articulate the financial implications of the different forms of
business organization
Explain the conflicts of interest that can arise between managers
and owners
Key Concepts and Skills
1-‹#›
Corporate Finance and the Financial Manager
Forms of Business Organization
The Goal of Financial Management
The Agency Problem and Control of the Corporation
Financial Markets and the Corporation
Chapter Outline

1-‹#›
1.3
Some important questions that are answered using finance:
What long-term investments should the firm take on?
Where will we get the long-term financing to pay for the
investment?
How will we manage the everyday financial activities of the
firm?
Corporate Finance
1-‹#›
1.4
Section 1.1 (A)
Emphasize that “business finance” is just another name for
“corporate finance” mentioned under the four basic types.
Students often get confused by the terminology, especially when
different terms are used to refer to the same thing.
Financial managers try to answer some or all of these questions.

The top financial manager within a firm is usually the Chief
Financial Officer (CFO).
Other financial managers include:
Treasurer – oversees cash management, credit management,
capital expenditures, and financial planning
Controller – oversees taxes, cost accounting, financial
accounting and data processing
Financial Manager
1-‹#›
1.5
Section 1.1 (B)
Capital budgeting
What long-term investments or projects should the business take
on?
Capital structure
How should we pay for our assets?
Should we use debt or equity?
Working capital management
How do we manage the day-to-day finances of the firm?

Financial Management Decisions
1-‹#›
1.6
Provide some examples of capital budgeting decisions: what
product or service will the firm sell, should we replace old
equipment with newer, more advanced equipment, etc.
Be sure to define debt and equity.
Provide some examples of working capital management: who
should we sell to on credit, how much inventory should we
carry, when should we pay our suppliers, etc.
Three major forms in the United States (See: Nolo)
Sole Proprietorship
Partnership
General
Limited
Corporation
Limited Liability Company
Forms of Business Organization

1-‹#›
1.7
Section 1.2
www.nolo.com provides a discussion about which form of
business may be appropriate for an entrepreneur.
Advantages
Easiest to start
Least regulated
Single owner keeps all the profits
Taxed once as personal income
Disadvantages
Limited to life
of owner
Equity capital limited to owner’s personal wealth
Unlimited liability
Difficult to sell ownership interest
Sole Proprietorship
1-‹#›
1.8
Section 1.2 (A)

With the new Tax Cuts and Jobs Act, up to 20 percent of
business income may be exempt from taxation.
Advantages
Two or more owners
More capital available
Relatively easy to start
Income taxed once as personal income
Disadvantages
Unlimited liability
General partnership
Limited partnership
Partnership dissolves when one partner dies or wishes to sell
Difficult to transfer ownership
Partnership
1-‹#›
1.9
Section 1.2 (B)
Note that unlimited liability applies to all partners in a general
partnership but only to the general partners in a limited
partnership.
Written agreements are essential due to the unlimited liability.
Limited partners cannot be involved in the business or else they
may be deemed as general partners.

Like sole proprietorships, with the new Tax Cuts and Jobs Act,
up to 20 percent of business income may be exempt from
taxation.
Advantages
Limited liability
Unlimited life
Separation of ownership and management
Transfer of ownership is easy
Easier to raise capital
Disadvantages
Double taxation (income taxed at the corporate rate and then
dividends taxed at the personal rate)
Corporation
1-‹#›
1.10
Section 1.2 (C)
Discuss how separation of ownership and management can be
both an advantage and a disadvantage:
Advantages
You can benefit from ownership in several different businesses
(diversification)
You can take advantage of the expertise of others (comparative
advantage)
Easier to transfer ownership

Disadvantage
Agency problems if management goals and owner goals are not
aligned
A pertinent discussion is the implementation of Sarbanes-Oxley
and the effect it has had. Although increased information flow
is good for shareholders, it has come at a cost. In fact, some
firms have chosen to “go dark,” while others have avoided
going public altogether.
What should be the goal of a corporation?
Maximize profit?
Minimize costs?
Maximize market share?
Maximize the current value of the company’s stock?
Does this mean we should do anything and everything to
maximize owner wealth?
Goal of Financial Management
1-‹#›
1.11
Section 1.3
Try to have the students discuss each of the goals above and the
inherent problems of the first three goals:
Maximize profit – Are we talking about long-run or short-run
profits? Do we mean accounting profits or some measure of

cash flow?
Minimize costs – We can minimize costs today by not
purchasing new equipment or delaying maintenance, but this
may not be in the best interest of the firm or its owners.
Maximize market share – This was a strategy of many of the
“dot.com” companies. They issued stock and then used it
primarily for advertising to increase the number of “hits” to
their web sites. Even though many of the companies had a huge
market share, they still did not have positive earnings and their
owners were not happy.
Maximize the current value of the company’s stock
There is no short run vs. long run here. The stock price should
incorporate expectations about the future of the company and
consider the trade-off between short-run profits and long-run
profits.
The purpose of a for-profit business should be to make money
for its owners. Maximizing the current stock price increases the
wealth of the owners of the firm.
This is analogous to maximizing owners’ equity for firms that
do not have publicly traded stock.
Non-profits can also follow the same principle, but their
“owners” are the constituencies that they were created to help.
Also be sure to note that this goal is not specific to
corporations, but is generally applied to any form of business,
including not-for-profits.
Agency relationship
Principal hires an agent to represent his/her interests
Stockholders (principals) hire managers (agents) to run the
company
Agency problem
Conflict of interest between principal and agent

The Agency Problem
1-‹#›
1.12
Section 1.4
A common example of an agency relationship is a real estate
broker – in particular if you break it down between a buyer’s
agent and a seller’s agent. A classic conflict of interest is when
the agent is paid on commission, so they may be less willing to
let the buyer know that a lower price might be accepted or they
may elect to only show the buyer homes that are listed at the
high end of the buyer’s price range.
Direct agency costs – the purchase of something by management
that can’t be justified from a risk-return standpoint, and
monitoring costs.
Indirect agency costs – management’s tendency to forgo risky
or expensive projects that could be justified from a risk-return
standpoint.
Managerial compensation
Incentives can be used to align management and stockholder
interests.
The incentives need to be structured carefully to make sure that
they achieve their goal.

Corporate control
The threat of a takeover may result in better management.
Other stakeholders
Managing Managers
1-‹#›
1.13
Section 1.4
Incentives – discuss how incentives must be carefully
structured. For example, tying bonuses to profits might
encourage management to pursue short-run profits and forego
projects that require a large initial outlay. Stock options may
work, but there may be an optimal level of insider ownership.
Beyond that level, management may be in too much control and
may not act in the best interest of all stockholders. The type of
stock can also influence the effectiveness of the incentive. A
relatively recent issue with the backdating of options also seems
to run counter to the purpose of aligning incentives.
Corporate control – ask the students why the threat of a
takeover might make managers work toward the goals of
stockholders.
Other groups also have a financial stake in the firm. They can
provide a valuable monitoring tool, but they can also try to

force the firm to do things that are not in the owners’ best
interests.
The Internet provides a wealth of information about individual
companies.
One excellent site is Yahoo! Finance.
Go to the site, choose a company and see what information you
can find!
Work the Web Example
1-‹#›
Section 1.5
1.14
Firm Cash Flows
1-‹#›
Section 1.5 (A)

Discuss the cash flows to and from the firm. The main point is
that cash comes into the firm from the sale of debt and equity.
The money is used to purchase assets. Those assets generate
cash that is used to pay stakeholders, reinvest in additional
assets, repay debtholders, and pay dividends to stockholders.
1.15
Cash flows to and from the firm
Primary vs. secondary markets
Dealer vs. auction markets
Listed vs. over-the-counter securities
NYSE
NASDAQ
Financial Markets
1-‹#›
1.16
Section 1.5 (B)
Students are often confused by the fact that the NASDAQ is an
OTC market. Explain that the NASDAQ market site is just a
convenient place for reporters to show how stocks are moving,
but that trading does not actually take place there.
You may wish to note the evolution of these particular markets,
e.g., moving to publicly traded firms, emergence of electronic
trading, and increased industry consolidation.

www: Click on the NYSE and NASDAQ hyperlinks to go to
their respective web sites
What are the three types of financial management decisions and
what questions are they designed to answer?
What are the three major forms of business organization?
What is the goal of financial management?
What are agency problems and why do they exist within a
corporation?
What is the difference between a primary market and a
secondary market?
Quick Quiz
1-‹#›
Is it ethical for tobacco companies to sell a product that is
known to be addictive and a danger to the health of the user? Is
it relevant that the product is legal?
Should boards of directors consider only price when faced with
a buyout offer?
Is it ethical to concentrate only on shareholder wealth, or should

stakeholders as a whole be considered?
Should firms be penalized for attempting to improve returns by
stifling competition (e.g., Microsoft)?
Ethics Issues
1-‹#›
1.18
These Ethics Issues can be addressed throughout the chapter or
as a dedicated discussion as given here.
The second issue relates to the buyout offer for Gillette that was
rejected due to information regarding the launch of the highly
successful “Sensor” razor.
End of chapter
Chapter 1
1-‹#›

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