Professional Documents
Culture Documents
Scholar Portfolio
Scholar Portfolio
Florian Zunino
TABLE OF CONTENTS
27
27
product.
28
v) Defective condition must be caused.
28
28
INDIVIDUAL MEMORANDUMS
MEMORANDUM
To: Joseph Lakatos
From: Florian Zunino
Date: 05/01/2014
Re: Biotech Final Project
______________________________________________________________________
EXECUTIVE SUMMARY
During their research for the University of Michigan, Dr. Lewis and Dr. Ortiz have developed
a breakthrough process and a new drug called MD-12 and proved its potential efficacy to cure
cancer.
Facing a couple of intellectual property and patent issues, the two doctors would like to get
the FDA approval to release this new drug on the market. For this, they will need to manage all the
intellectual property issues with the University of Michigan and Zurich & Fischer who claims the
patent of the process and MD-12. Then, they will have to choose the appropriate entity to create
their business, get funding and develop their medication research and development corporation.
I. Patent & Intellectual Property
A. General Patent
The development of new product, service or process can lead to significant money and time
investments. To make those investments profitable and support innovation, governments provide a
series of rights to give the exclusivity of making, using and selling the creation to its inventor for a
limited time.
To obtain those privileges, inventor must patent it. To be patentable, an innovation must be
non obvious, unique and not found in nature. The protection starts to be provided when the patent is
filled to the appropriate organization (Patent & Trademark Agency for an American patent or World
Intellectual Property Organization for an international patent for example). From the date of the
filling process, the innovation is protected for twenty (20) years.
However to approve the patent, the agency verifies that the organization/individual who is
asking for the patent actually invented the innovation. If not, a patent infringement occurs and the
exclusive rights disappear. Then, the agency verifies if the agent is the first to have invented it. If
someone invented it before (and did not patent it), the agency verifies if the demander did his
research independently or if he stole the idea from the first inventor. Patent infringement occurs if
the researches have not been done independently.
In the U.S., patent infringement is not a crime but a tort which can lead to severe financial
penalties. The final decision of the trial opposing Apple and Samsung, required the Korean company
to pay more than $290 million to its rival for patent infringement 1.
B. Orphan Status
In the case study, Dr. Lewis and Dr. Ortiz have developed a new drug called MD-12 that
has the potential of reducing macular degeneration in humans or in other words, help to cure cancer.
To protect the MD-12, the two scientists have to patent their drug but also have the Federal and Drug
Administrations approval before releasing the drug on the market.
The process to find any patent infringement is the same than for normal goods and process.
In this case, an infringement may be seen since Zurich and Fischer claim that they made the big
breakthrough in the concentration process of the MD-12 and patented the drug last year. However,
Dr. Lewis and Ortiz actually started their research at the University of Michigan before Zurich and
Fischers publication. Furthermore, they have been able to isolate the drug contrary to the two
scientists claiming the patent. We can so conclude that even Dr. Lewis and Ortiz discover the
MD-12 after Zurich and Fischer, their research were independent and so, there is not patent
infringement and they do not owe any royalties or money for the use of the MD-12 to Zurich and
Fischer.
To approve the drug, the FDA requires a specific process to test the safety and the efficacy of
the medication. Since this process may require up to 14 years, the Orphan Status extends the
exclusivity of drugs exploitation rights of seven (7) years (for a total of 27 years) to allow the
pharmaceutical corporations to make profit.
Dr. Lewis and Dr. Ortiz succeeded the pre trial tests during which they have experimented
the MD-12 on animals at the University of Michigan proving its potential efficacy. This is why they
want the FDA approval. This FDA process which is named drug review process is composed of
three (3) phases:
Phase I : Test on 20 to 50 people - requires between up to two years.
Phase II : Test on more than 100 people - requires between up to five years.
Phase III : Test on 1,066 people ideally - requires up to seven years.
During the different step, the FDA verifies the safety and the efficacy of the drug. If the
agency approves one phase, the scientists will be allow to start the next phase until the approval of
the phase III after which the drug is officially approved and can be released on the market. All those
tests cost a significant amount of money and time (up to 14 years) which is the main reason of the
Orphan Status and the extension of the patent rights for drugs.
Here, after their success in the pretrials test, Dr. Lewis and Dr. Ortiz are looking to start the
phase I. To start, they need to create a business entity, organize the new business and get funding.
1http://www.cnet.com/news/jury-reaches-verdict-in-apple-v-samsung-damages-retrial/
C. Intellectual Property
A last intellectual property problem that Dr. Lewis and Dr. Ortiz may face to is an issue with
the University of Michigan. In fact, since the pretrial test (during which they discover the
breakthrough process, the MD-12 and its potential efficacy) has been discovered during their
research for the University, we may expect that the University owes some intellectual property over
the drug. Looking at the University of Michigan Technology Transfer Policy 2, we can read that
Intellectual Property made by any person, regardless of employment status, with the direct or
indirect support of funds administered by the University (regardless of the source of such funds)
shall be the property of the University. Consequently, the breakthrough process as well as the
MD-12 would be property of the University of Michigan except if the two Doctors have signed
contracts protecting their discoveries intellectual property.
Since the university policies does not allow Lewis and Ortiz to continue the approval process
using its equipment and facilities, they should sign either a licensing agreement to be allowed to use
the MD-12 and the breakthrough process owed by the University of Michigan or a waiver agreement
stating that the University renounces to its intellectual property over the drug and its breakthrough
process. The first agreement will lead to a share of the profit made by the drug with the University
(probably through royalties).
To protect their discovery and continue the development of the MD-12, Dr. Lewis and Dr.
Ortiz should so patent the breakthrough process as well as the drug itself. They will probably have
to do this process with the University of Michigan since it owes their discovery because of its policy.
They should also sign a contract with the university to allow them to use the process and the drug for
their future development in exchange of royalties.
II. Choice of Entity
Once all the intellectual property issues will be solved, the next step will be to create a
business entity to get funding for the FDA phase I approval research as well as the future release of
the drug on the market. For that, they will need to choose between the different types of business
entity available in the United States (General Partnership, Limited Partnership, Limited Liability
Partnership, S or C corporation, or Limited Liability Company). This choice is crucial for the future
development of their research since they all come with different advantages, rights but also cost and
duties.
A. General Partnership
A General Partnership (GP) is a business entity composed by two or more partners. All
partners share profit, debt and loss and have unlimited personal liabilities. Since pharmaceutical
2
http://www.techtransfer.umich.edu/resources/policies.php
product can lead to important consequence (due to unexpected side effects on some patients for
example), the type of entity would not be appropriated for Dr. Lewis and Dr. Ortiz and the MD-12
development since it implies personal risks.
B. Limited Partnership
A Limited Partnership (LP) is a business entity composed of at least one general partner and
one limited partner. Even though the limited partner will have limited liability over the business, the
general partner will be personally and unlimitedly liable if a problem occurs with the drug. So, for
the same reasons as a General Partnership, this entity is not appropriated for the MD-12 development
C. Limited Liability Partnership
A Limited Liability Partnership (LLP) is a business entity composed by Limited Partners.
All the partners have so, limited liability and cannot be liable for more than they invest in the
business. Which is a excellent point for the two doctors. However, the phase I requires a minimum
of $1.7 million and then, more fund will be needed for the next phases. Since the development of
the drug requires a significant amount of investment, a partnership (limited or not) will not be an
appropriate type of business for Dr. Lewis and Dr. Ortiz.
D. S-Corporation
An S-Corporation has a maximum of 100 shareholders who are liable only on their
investments and can avoid the double taxation which reduce the cost. The protection of limited
liability required for this business is so fulfilled. However, C-corporations and non US citizens are
not allowed to invest in S-corporation and the limited amount of shareholders will make difficult to
raise the money necessary to pass through the FDA approval. Corporate governance and keeping the
control over the business may be difficult to manage too.
E. C-Corporation
A C-Corporation is the type of corporation traded on the stock market. They have to be filed
with the SEC and required a complicated process to be created (article of incorporation, filed to the
Secretary of State etc). Shareholders have limited liability and it would be easy to raise fund for the
development of the MD-12. It could be a appropriated choice of entity option for Dr. Lewis and Dr.
Ortiz. However, it may be difficult to keep the control over the business because of the agency
problem.
F. Limited Liability Company
A Limited Liability Company is a mix between a partnership and a corporation. Limited
liability is provided by this legal entity. It is also a tax pass through which will limit the cost of the
company. Furthermore, the organization of LLC is really flexible but required clear operating
agreements.
10
Dr. Lewis and Dr. Ortiz should create an Limited Liability Company. It will allow them to
pay less taxes and reduce their cost. It is easier to create than a C or S corporation and they will
keep the control over the business decision. Since LLCs are pretty flexible, they should be able to
find an appropriate structure to raise fund, keep the control over the business and limit the agency
problem. In future, it will be easy to switch to a C-corporation to raise more fund if needed and
invest in the research and development of new drugs and process.
G. Corporate Name
A last requirement for Lewis and Ortiz business creation is to choose a name which does not
infringe trademark regulation. LO Pharma would be an available name for their corporation. This
name has not been trademarked on May 1st, 2014 3 in the United States. Since they want to expand
overseas, it would be better to have a name which has not been trademarked internationally. After
register the name with the US Patent and Trademark Office (USPTO) they will need to register it
using the Madrid system of the World Intellectual Property Organization 4 (Wipo) to protect their
brand name internationally.
http://tess2.uspto.gov/bin/gate.exe?f=searchss&state=4810:etg056.1.1
http://www.wipo.int/madrid/en/
11
B. Conflict of Interest
Ortizs brother-in-law would like to enter in the Board of Director (BoD) in exchange of a
discount on a buildings lease he owes. This situation might lead to a conflict of interest. If Henry
Jenkins rises the price of the lease afterward, he will make profit on the business in which he has
responsibility. To protect the business and limit this risk, Lewis and Ortiz should sign a contract or
agreement to be sure that he will not raise the price for a certain period.
C. International Expansion
Since the investments to develop the MD-12 will be significant, they should definitely
expand their business overseas and sell the drug worldwide. To expand, they will have to get the
approval of internationals and nationals agencies in the countries they want to proceed. They should
also fill an international patent to be protected internationally.
To expand overseas, they will have to chose between different type of expansion such as
building a transnational (decision in the home country), multinational (decision taking in each
country) but also international licensing.
Since the products they will develop will required a important amount of time and
investment, the best would be to have all the research in the home country, protected their product
internationally through patents and then, either sell their products from the home country or license
their product to known business in each country they want to expand. Typically, a company which
develops new drug will be more willing to license its new drugs to cut all the production and selling
tasks and focus on the R&D of other medications. Consequently, the best for Dr. Lewis and Dr.
Ortiz would be to focus on the R&D and then license the MS-12 and future medication to another
business either in the US and other countries.
IV. Capital Funding
In healthcare and pharmaceutical business, the amount of money needed reach billions really
easily without any guaranty of return on investment if the FDA does not approved the new drugs.
Capital funding will consequently be a vital aspect of Dr. Lewis and Dr. Ortiz future business. To
raise fund, they can adopt different methods such as asking for grants, using debt and equity and
once the drugs will be approved by the FDA and sold, licensing agreements.
A. Grants
The building provided by Henry Jenkins is situated within the Research Triangle of North
Carolina. This geographic zone is best known for its research and development centers. Therefore,
and since their researches retain public interests, they might be able to get state or federal grants to
finance their research and develop the MD-12 as well as their future possible medication.
12
B. Equity
The advantage of a LLC is also that they will be able to issue shares or dissolve a part of their
shares to get more funding. Even C-corporation are allowed to buy shares of LLC which would
provide enough investments for their business. New shareholders will be more and more attracted
by their shares with the advancement of the FDA approval. Furthermore, if the FDA approval is
finally not issued, the shareholders will loose money but not the corporation which can be a security
while looking for fundings.
C. Debt
Another way to get funding is to issue debt. In fact, since the return on investment will be
important if the MD-12 is approved, it might be a solution to raise important capital. However, if the
FDA approval fails, it will be hard to reimburse the debt and so, to reinvest in other drugs
development which will be synonym of a bankruptcy and a shut down of the corporation.
D. Licensing Agreement
Once the MD-12 will be approved, Dr. Lewis and Dr. Ortiz will probably enter into licensing
agreements with other corporations, allowing them to use their drugs and process. In exchange of
their authorization, the LLC will earn a significant amount of cash which can be reinvest in new
research and development to increase the drug and breakthrough process portfolio of the LLC.
CONCLUSION
While Dr. Lewis and Dr. Ortiz do not have any issue of patent infringement with Zurich and
Fischer because of they have done their research independently, they will face intellectual property
issues with the University of Michigan which owes the process and MD-12 in view of its
Technology Transfer Policy. However, those issues can be solved using contracts and agreements
between the two scientists and the University.
To best fit the need of funding and flexibility of the corporation, they should create a Limited
Liability Company which will provide limited liability, flexibility of corporate governance to
compensate their lack of business knowledge as well as the capability to raise fund for actual and
future capital needs through debt, equity, or even grants.
Once the drug will be approved by the FDA, they should license the MD-12 to
pharmaceutical corporation to focus on the R&D of other drugs and cut all the business, production,
distribution etc. aspect of medication.
13
MEMORANDUM
To: Joseph Lakatos
From: Florian Zunino
Date: 02/18/2014
Re: Sexual Harassment
______________________________________________________________________
EXECUTIVE SUMMARY
In the movie Disclosure (1994), Tom is sexually harassed by his manager highlighting one of
the problem that managers have to face in the current employment world. Sexual harassment is a
complicated affair to resolve and it might not be a real solution because of catch 22 occurrences. In
this memorandum, we will discuss the possible solutions facing sexual harassment in a cooperation
and the consequences that might be implied by this kind of problem.
I.
The attorney defines sexual harassment as a game. For her, it is not about sex but about
power. The one who has more power over the other wins. It is about proving who is the most
powerful. I understand in it in the sense that sexual harassment is a proof of power. It is quite hard
to prove if sexual harassment really occurred. In fact, even though you say no, it does not mean
no all the time in private relation since love and sexual relationship are based on a kind of
seduction game. Then, it can be viewed as a game of who has the most power.
At the opposite, for the EEOC it is some unwelcome sexual advances, requests for sexual
favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when
this conduct explicitly or implicitly affects an individuals employment, unreasonably interferes with
an individuals work performance, or creates an intimidating, hostile, or offensive work
environment 5. For the EEOC, it is though, all about sex and behavior of one over another.
http://www.eeoc.gov/eeoc/publications/fs-sex.cfm
14
IV. Scenarios
As a manager, you co-supervise an administrative assistant in a firm that has a guys locker
room type mentality. Other staff and managers repeatedly make comments of a sexual nature to
your administrative assistant, who after 6 months of tolerating such behavior, comes to you for help.
A. What do you do?
At fisrt, I will speak to her to know exactly the situation, the comments which have been
made by who etc. Then, I will speak to her to reassure her and let her know that I will do my best to
resolve the situation by myself. I will try to convince her to not use outsource help such as her
lawyer etc. yet.
Then, I will speak to the staff and managers which I know made the comments and ask the
about what is happening. To be honest in real life I would probably trying to integrate myself to the
group making the harassment to know exactly how it is. If a manager come to see you asking what
did you say exactly, most people will lie and since it is a whole group, they will be more credible
than the assistant. So I will probably see this group making false comments to know their reaction
and if they are used to have this kind of conversation too.
https://www.youtube.com/watch?v=FHlYx3NaMzk
15
Once I will have a sufficient knowledge of the situation, I will speak to the assistant again to
let her know that I have the confirmation (or not) of the what she reported to me. To make her trust
me and know that I am on her side. After that, I will speak to the group during a formal meeting and
tell them that if I have made the comments on the assistant it was only to know their reaction and
that they are screwed. I will let them understand that I do not tolerate such behavior and ask them to
stop and present their excuse to my assistant.
Additionally, and for the following months I will check on the situation really closely to
know if the work environment is impacted by the situation. If the situation has not stop, I would
contact the Human Resource department, advise my assistant to hire a lawyer or report to the EEOC.
If the situation is totally obstructed, I will use my personal connexion to find a new position
in another corporation to my actual assistant since it is the only viable solution in the kind of
circumstances. And then, I will hire a male assistant !
The catch 22 would be that the group harassing my assistant has more credibility but also that
even if they stop the harassment itself, the work environment would be altered. Except changing my
assistant there is not effective solution to solve this problem.
B. What should your administrative assistant do?
She should try to speak to the group and then, if it does not work see me to report it since I
am her closest manager. Then, if I cannot resolve the situation, she could speak to a higher manager,
a lawyer, the human resource department or the EEOC for an official complain.
Whatever she does, a catch 22 will occur and she will meet difficulty. If she does not do
anything, they will continue, if she tries to solve the problem by herself, she could make the situation
worse. Finally, if she reports to her manager, either he might not believe her (since a group has more
credibility) or he will solve the situation but her work environment will be altered.
V. Human Resource Department
In reality, is the HRD in a company there to help the staff or management or both? What do
you think would happen if the administrative assistant reported the matter to HR first? At what point
in time should you report the matter to HR if at all?
The Human Resource Department is here to help both management and staff. In fact, its
main purpose is to solve all potential situation internally to avoid any external and inadequate
publicity. Consequently, the human resource should help both management and staff on a case-tocase basis. We never know what could happen in an organization. Staff may use sexual harassment
as a vengeance against a manager, or a manager can be harassed by an employee etc. Human
Resource has to be effective enough to clarify the situation and solve it ethically.
16
If she have had report directly to the HR, the manager would have been in trouble since it is
his duty and responsibility to be aware of this kind of problems and manage/solve them. However, if
he is not able to solve it, it is also his duty to report it to the HR.
VI. Human Resource Procedure
What procedure should HR follow in this situation?
HR should follow its internal procedures and if it is not working, apply the law by filling a
suit under the EEOC.
VII. Harassment and rainmaker
What do you think would happen if the person who is commenting the harassment is a
rainmaker for the firm and is at the same levee or higher than you as a manager? How would this
affect your role as the manager or what you should do in this scenario?
If the person committing the harassment is a rainmaker and at the same of higher level than
me it will not change anything. Sexual harassment is not acceptable for me even if you have
outstanding work results. Consequently, I will resolve the situation anyway. However, I would take
more precautions while trying to figure it out what is happening exactly. If I am convinced of the
sexual harassment, I will speak to the rainmaker or even report to the HR depending of the situation.
Adaptivity is key is this kind of circumstances but the situation has to be resolved.
VIII. Ethical Theories
How do the ethical theories come into play?
administrative assistant?
I care about this kind of problem and I think that such behaviors are not tolerable at work or
outside. I would so, go as far is I have to to solve the situation because it what we all should do !
IX. Tom's wife support
As a spouse how would you respond to what happened to Tom? Would you be supportive or
not? Discuss
I do not know Tom personally so I do not know his relationship with his wife. However, if I
marry someone one day, it will be because I am sure that she will love me and that I can trust her.
So, if this situation occur, I will be supportive whatever happens. However, I am aware that some
17
husband/wife relationships are broken and though, I can understand that a wife/husband might not be
supportive when sexual harassment occurs since it can be only an excuse to have cheated.
For me the reaction of the wife/husband facing sexual harassment only depend on the actual
relationship. I would like to be with my wife because of real love and trust but if some unsolvable
issues occur I will not stay with her since it will be a waste of time for both of us. Better be two
happy single persons than two unhappy married ones.
CONCLUSION
Sexual harassment is unfortunately a preoccupation that can be met by everyone, managers,
employees, clients or even business owners. Those situations (as others) are difficult to manager and
might not have any real solutions. However, they must be cleared up in one way or another. We
would just have to think outside the box to find the best solution possible.
18
MEMORANDUM
To: James Ullmer
From: Florian Zunino
Date: 04/24/2014
Re: Consulting Project - Harding Silicon Enterprises, Inc
____________________________________________________________________________________
EXECUTIVE SUMMARY
Harding Silicon Enterprises, Inc is a corporation producing RAM chips for electronic devices
such as computers, tablets, phones etc. This corporation produces less than 1% of the worlds supply
of the 32 MB RAM chips. Harding Silicon Enterprises, Inc would like some advice concerning
short-run production costs, an statistical analysis of its fixed and variables costs and production
advices.
I.
Cost analysis
A. Costs Analysis
Materials expenses, Energy expenses and Wage expenses are the only Variable costs for Harding
Silicon Enterprises, Inc.
See table for Total Variable Cost and Average Variable Cost.
B. Total Variable Cost Scatter Diagram
The scatter diagram of Total Variable Cost and Quantity is (supposed to be) S-shaped. So the
equation form is
TVC = aQ + bQ2 + cQ3
TVC
400000
300000
200000
100000
2000
4000
6000
8000
19
33
22
11
2000
4000
6000
8000
20
35 = TVC
35 = 32.0448 - 0.00216 Q + 0.00000093 Q2
Q* = 3,298
Forecasted profit:
P = 94,605 - 84,849 - 6,500 = $3,872
If the price sets by the market raises $35 per chips, Harding Silicon Enterprises should
produce 6,954 chips per month which will lead to a profit of $3,298.
III. Short-Run Production Shut Down
To compute the price for which Harding Silicon Enterprises should shut down his production,
we have to find the price and the quality for which the corporation will cover its Total Variable Cost.
On the short run, the firm will only break-even. Even if it will not be profitable, it should however
not shut down to keep their actual customers. To find those two values we have first to compute the
quantity of chips they have to produce to balance their minimum Average Variable Cost (AVC):
AVC = 0
0.00108 + 0.00000062 Q = 0
Q* = - 0.00108 / 0.00000062 = 1,741.93
Then, we have to find the price for which the firm will cover its Total Variable Cost producing
1,741.93 chips
P = 32.0448 - 0.00216 * 1,741.93 + 0.000,000,93 * 1,741.93 2
P = 32.0448 - 3.76 + 2.82
P = $31.10
In the short run, if the price is $31.10 or less, Harding should shut down. If the price raise
$31.10, the company should continue to produce on the short-run in order to keep its actual
customers.
21
MEMORANDUM
To: James Ullmer
From: Florian Zunino
Date: 04/03/2014
Re: Consulting Project - Estimating Industry Demand for Fresh Market Carrots
____________________________________________________________________________________
EXECUTIVE SUMMARY
In this consulting project, we are going to analyze the Fresh Market carrots from the real data
of this market between 1983 and 2000. Those data include Price, Quantity sold and a Weather index.
The main goal is to study the relation between the weather, its consequences on the production of
carrots and its price.
I.
Farmers are price takers. They do not set the price but take the price set by the market
(depending of the demand and supply). Consequently, we should use the two-stage least-squares
method (2SLS).
Since Q and P are specific to our model, they are endogenous variables. t and W are
exogenous since they depends of factors outside our model. The equation of the demand is Qd = a +
bP +ct and Qs = d + eP + fW. Since the exogenous variable W is contained in Qd but not in Qs, the
Demand is considered as identified.
II. Demand Equation & Parameters Analysis
Qd = - 1,848,628 545.782P + 938.443t
B and c are statistically significant at 13.57% (since P of P = 0.1357) or higher so, they are
statistically significant at a 15% level of significance. b = - 545.782, since b is negative, its sign
respects the law of demand. Looking at the data, we can notice that the quantity demanded increases
from 7,242 in 1983 up to 17,992 in 2000, c is so supposed to be positive. In our equation we have
found a c equal to 935.443 which is positive. Both algebraic signs of the parameter estimates are so,
reasonable.
III. Elasticity Analysis
Carrot is a basic product/vegetable, relatively cheap, we do not consume a large amount of
carrot. Consequently, I would expect its demand to be inelastic since we (consumers) will not be
willing to substitute carrot by something else.
Average t = 1991.5
22
Average Q = 12,405
Average P = 14.43
Average W = 102.4
Qd = - 1,848,628 545.782 (14.43) + 938.443 (1991.5) = 12,405.600
(calculation correct since the result is close to the Average of Q it is not equal because we rounded
some numbers).
Ed= %deltaP / %deltaQ = b * P/Q = -545.782 * 14.43 / 12,405.6 = -0.6348
< 0 so the demand of carrot is inelastic for this sample.
Ed
23
GROUP MEMORANDUMS
24
____________________________________________________________________________________
Throughout the semester, we have worked on a business project that we named Flo
Service. It is a new technology tool, mix of smartphones/tablets applications and computer
softwares to improve waiters and managers efficiency in restaurants, bars, nightclubs or hotel room
services.