Elaine Shumate has been working for GSM, a pharmaceutical research company for more than seven years. It is her first job since finishing her graduate work in molecular biology and her performance evaluations have been exemplary. Unfortunately, she is not prepared for the situation facing her now. GSM has invested heavily in a molecular identification process (MIP) that top management believes has great promise for the future.
If all goes well, the company plans to patent the process and license it to pharmaceutical companies to use in medication production. Elaine is the lead manager on MIP, and she fears that latest research results are not as promising as appeared earlier. Blake Walton, Vice President of Research, is to meet Elaine to discuss results. After a brief discussion, Blake suggests that Elaine should take another look at the latest results. He does not believe that her interpretation of the data is correct.
Elaine looks over the company's earlier cost estimates and operating income projections. At that time the estimated research and development costs were $140 Million and annual operating income was expected to be $25 million. However, the latest results indicate that MIP may have fewer pharmaceutical applications than was originally believed.
Elaine speaks with Richard Lawrence, Vice President Sales, who suggests that MIP is likely to generate operating income of $17.5 million a year if the recent results continue after further testing. Elaine knows that Blake will not be pleased.
Blake is scheduled to meet with the board of directors next week to discuss the need for additional investment capital in the next year, and the company's plans for a public stock offering in the next several years. Elaine stands to benefit substantially from stock options if the company goes public. GSM's future may ride on the outcome of that meeting.
Question: Elaine has to decide what stance she is going to take and how strongly she will support that stance. What should she decide? Why?
Attachment:- gb519 madm assessment 1.pdf