Project 1: Applied Economics for ManagersStart HereTranscriptScenarioYou have recently been hired as an economic analyst by Maryland Creative Solutions LLC (MCS), a company specializing in mergers, acquisitions, and consulting. Prepare for your first day by reviewing your job description below: Job DescriptionPosition TitleEconomic AnalystReports ToFrank Marinara, Senior Partner FinanceJob OverviewThe Economic Analyst provides support to Maryland Creative Solutions by performing client assessments, financial reporting, and development models for economic analysis.Responsibilities and DutiesDevelops and maintains models to support economic analysis and investment decision making, long- and short-term planning, enterprise valuation, portfolio evaluation, mergers & acquisitions, strategy, and competitor analysis.Supports the assessment and recommendation of improvements to the financial and performance planning systems (including external and management reporting systems).Supports senior management in performing ad hoc analysis and supports the CFO to manage the company's financial framework.Prepares presentations to the board of directors and shareholders and supports preparation of internal presentations and financial analyses.Qualifications (Preferred but not required)Education: Bachelor’sExperience: 2–3 years’ experience preferred with business financesSkills include: financial reporting, presentation development, planning, and evaluationTeam player, creative thinker, fiscally responsibleMaryland Creative Solutions (MCS) is an equal opportunity employer and complies with all applicable federal and state laws regarding nondiscrimination. MCS is committed to a policy of equal opportunity for all persons and does not discriminate on the basis of race, color, national origin, age, marital status, sex, sexual orientation, gender identity, gender expression, disability, religion, ancestry, political affiliation or veteran status in employment, educational programs and activities, and admissions.You’ve been in your new analyst role with Maryland Creative Solutions, LLC for a few days and are finally getting used to the rapid workflows and office culture. After a competitive bidding process, MCS has signed a consulting contract with ExxonMobil. You receive an email from senior partner, Frank Marinara, tasking you with your first assignment to support the project.INBOX (1 NEW EMAIL)From: Frank Marinara, MCS Senior PartnerTo: YouNow that you've settled in, I need your help with an industry analysis. ExxonMobil accepted our consulting bid, and now the CFO needs us to assess its positioning within the oil and gas industry. I would like you to analyze the data provided. We need to know the price and quantity of crude oil where equilibrium exists, and it will be helpful to discover the market structure of the industry. I will need this done by the end of this week.If it goes well, I'll also need you to investigate price elasticity so we can advise the client on a pricing strategy for one of its local franchisee stations.Two weeks from now, I’d like you to attend a special project meeting with senior consultants from across MCS. Keep in mind, you will be the only employee in the meeting that is not on the senior consultant level, so please be as prepared as possible. The meeting has been called to discuss world oil price movements and their impact on ExxonMobil’s business. Come ready to discuss the world oil price movements expected within the next few weeks.Finally, I'll be asking you to develop an executive summary based on your work on this project.Follow the project steps to get started on the industry analysis for ExxonMobil.Best,FrankStep 1: Complete Skills Gap AnalysisAs you’re about to get started on your assignment, the Human Resources department at MCS sends you an email with an attachment requesting that you complete a self-evaluation of your skills.INBOX (1 NEW EMAIL)From: Jennifer Craylin, Human Resources GeneralistTo: YouI hope this email finds you well, and that you are settled in at Maryland Creative Solutions. It is Human Resource policy to request your completion of a performance self-evaluation. Please use the attached skills gap analysis file to self-evaluate your work-related knowledge and skills before beginning work on your assigned projects.The skills gap analysis will help you identify the skill areas you want to enhance. You will be completing another self-evaluation in Project 5 to measure the gains in competencies you have developed through working with MCS.Complete your preliminary skills gap analysis by the end of Week 1. Carefully follow the instructions below:Use the attached skills gap analysis file to self-evaluate your course-related knowledge and skills before beginning your work with MCS. Use the Week 1 worksheet to complete this step.From each major category, select a gap you would like to work on reducing during the next 10 weeks to help you achieve your long-term career goals.Decide what activities you will engage in to acquire the knowledge and hone the skills you have identified. Think creatively, and consider all appropriate resources, such as conferences, books, free online classes, mentorship, coaching, observation, professional associations and groups, networking, volunteering, and journaling.In the text box provided in the skills gap analysis file, include a summary of no more than 200 words describing the gaps you will work to reduce and the activities you will pursue to do so.Submit your updated skills gap analysis to the submission folder located in the final step of this project.Thank you,JenniferATTACHMENTSSkills Gap Analysis InstrumentWhen you have completed Step 1, proceed to Step 2, where you will examine supply and demand.Project 1: Applied Economics for ManagersStep 2: Analyze a Supply and Demand GraphFor the first assignment, Frank has given you data to analyze an illustrative supply and demand graph for the production of crude oil in the world. To analyze the graph, you will need to understand demand, supply, and equilibrium economics concepts. The graph is useful to know how prices are set for crude oil on a minute-by-minute basis in world commodity markets.Frank has passed along some data he has gathered to help you analyze a supply and demand graph for the oil and gas industry. View Frank’s data and read the instructions on the Supply and Demand Graph worksheet of the Project 1 Excel Workbook, which you will access below. You will use different sheets from this workbook in the subsequent steps of this project.To help you build a basic understanding, you must determine what economic model best describes the oil and gas industry. There are three basic economic models, and none fits the oil and gas industry perfectly. Is this industry in perfect competition? Is it an oligopoly? Or a monopoly? To make this determination, read about perfect competition, oligopoly, and monopoly. You should also read competition production and pricing decisions, monopoly production and pricing decisions, and price discrimination.The key point in deciding on the economic model is the number of sellers. If there is only one seller, the industry is likely a monopoly. On the other hand, if there are five or fewer sellers, the industry is expected to be an oligopoly. Finally, if there are a dozen or more sellers, the industry is closer to perfect competition.Here is an illustrated example of a supply and demand graph with the point of equilibrium:Equilibrium Price of CoffeeWhen we combine the demand and supply curves for a good in a single graph, the point at which they intersect identifies the equilibrium price and equilibrium quantity. Here, the equilibrium price is $6 per pound. Consumers demand, and suppliers supply, 25 million pounds of coffee per month at this price.Source: Demand, Supply, and Equilibrium is licensed under CC BY-NC-SA 4.0.When you have finished this step during Week 1 of the course, post the Project 1 Excel Workbook to the submission folder located in the final step of this project.When you have completed Step 2, proceed to Step 3, where you will examine costs, pricing, elasticity, and the production function.Licenses and AttributionsDemand, Supply, and Equilibrium is licensed under CC BY-Project 1: Applied Economics for ManagersStep 3: Analyze Cost, Pricing, Elasticity, and the Production FunctionIn your second week on the job, you’re beginning to realize the responsibilities and complexities of your job, and you’re glad to have analyzed the supply and demand graph you created. As you come into work, you see a voicemail from flashing on your office phone—it’s Frank: Voicemail from Frank“Good morning. I just wanted to say you really did a great job developing that supply and demand data. Now that you have some understanding of the industry, I would like you to apply the concepts of elasticity of demand and elasticity of supply. “Exxon is concerned about a franchisee store in Fitzhugh, Maryland. The owner is having trouble maintaining profits while managing price changes. They’d like MCS to offer advice on price adjustments for that franchise to achieve maximum profit.“I’ll provide with data that describes the gas station franchise operations and competition. You can find this data in the Profit Maximization worksheet of the Project 1 Excel Workbook you used in the last assignment (Step 2). Complete the tables in the worksheet and answer the client’s questions.“The tables in the worksheet show the quantity and price of oil sold by the franchisee. First you will need to calculate the elasticity of supply; the total revenue, total cost and profits at several levels of price and gallons sold (demand). Economists point out that maximum profit is achieved when Marginal Cost equals Marginal Revenue. Hence, you will need to solve for:marginal cost (MC)total revenue (TR) and marginal revenue (MR)profit To complete your calculations, it is important for you to understand average total cost, opportunity cost and the profit maximization formula. “Please reach out if you have any questions. Thanks so much.”Access the data and read the instructions within the Profit Maximization worksheet of the Project 1 Excel Workbook to complete this assignment. When you have finished answering the questions, post the workbook to the submission folder located in the final step of this project. Complete this task during Week 1.Now that you have completed Step 3, proceed to Step 4, where you will discuss world oil price movements.Project 1: Applied Economics for ManagersStep 4: Discuss World Oil Price MovementsThe days are passing quickly now. Week 2 starts slow, but an email from Maryland Creative Solutions’ Managing Director, Elisa Izuki, changes the pace.INBOX (1 NEW EMAIL)From: Elisa Izuki, Managing DirectorTo: You and Frank Marinara, MCS Senior Partner FinanceGood afternoon,I am requesting your attendance at the upcoming junior partner meeting. The primary objective of this meeting is to discuss the concerns held by ExxonMobil about world oil prices. Based on your analysis last week of the oil and gas industry’s economic model, I’d like you to contribute your insights to the project meeting. Looking forward to having a productive and informative working session.Sincerely,ElisaThis is a good moment for you, as you are the only employee in the meeting that is not at the executive level. This is your time to shine!As the meeting approaches, Frank briefs you on the key points of discussion:Exxon has been concerned about developments in the world supply of crude oil. Both Venezuela and Iran have very significant proven oil reserves. Both countries are under sanctions from the US to restrict or prevent them from selling oil.To put things into perspective, the world production of crude oil is just over 100 million barrels per day. The U.S. produces about 12 million barrels and all of OPEC about 30 million barrels. As of early 2019, Venezuela produces just over 1 million barrels down from a peak of 6 million barrels. Iran also produces over 1 million barrels.Both Venezuela and Iran need the “hard currency” that comes from the sale of crude oil and refined products. Russia and China have the technology and expertise to help these countries expand their production and sale of oil. However, Russia relies on the sale of its own oil and gas as a main source of income and has an incentive to avoid the decline of oil prices when Venezuela increases production.MCS has been tasked by ExxonMobil with looking at new research into the world price of oil. Find one current article about the price of crude oil and post it in the discussion. Discuss the likely price movements of oil over the next few weeks. What are the analyst’s main concerns? Please provide a link to any sources that you use.Before you participate in the discussion activity, see MBA discussion guidelines.When you have finished Step 4, proceed to Step 5, where you will present your recent findings from Steps 1 through 4 in an executive summary.Project 1: Applied Economics for ManagersStep 5: Prepare Executive SummaryYour busy second week on the job isn’t over yet. After a busy morning of ad hoc team meetings, you’re greeted in your office with a phone call from Frank.Phone Call from Frank“Hi again. I’ve got news about our client.“ExxonMobil is looking to send a report to all company franchised gasoline stations. I’m going to need an executive summary based on the analysis you’ve done for this client so far on Cal’s Exxon. Also, this executive summary, along with citations for any sources you use, should be about one page long.“Thanks again!”Post your executive summary in the submission folder located in the final step of this project.When you have completed Step 5, proceed to Step 6, where you will submit all work for Project 1.Project 1: Applied Economics for ManagersStep 6: Submit Your WorkThank you for all your work with Maryland Creative Solutions. Take note of the recommended delivery dates in the table below:Recommended Project Delivery Submission weekDeliverableFile-naming protocol Step 1Week 1Skills gap analysislastname_firstname_skills_gap_analysis.docx Step 2Week 1Supply and demand graph worksheetlastname_firstname_supply_and_demand graph.xlx Step 3Week 1Profit maximization worksheetlastname_firstname_profit maximization sheet.xlx Step 4Week 1World oil prices discussionSubmit discussion post in the world oil prices discussion section in Step 4 Step 5Week 1Executive summarylastname_firstname_executive summary.docx