QUESTION 1 [20 MARKS]

Theranos whistleblower Erika Cheung discusses ethics in tech at Rackham

About 60 University of Michigan students and community members gathered inside Palmer Commons Friday afternoon to hear from Erika Cheung about her experience at Theranos, a health care start-up company whose fraudulent activity was exposed when Cheung leaked reports about the company to authorities and to the Wall Street Journal investigative team in 2015.

Cheung helped reveal Theranos founder Elizabeth Holmes’ false claims about the accuracy of her company’s blood testing technology. Holmes exaggerated the efficacy of the machines Theranos used to test blood samples and also inflated revenue on financial reports. Holmes was charged with fraud in 2018 and convicted in January 2022, before being sentenced to more than 11 years in federal prison.

Cheung began the keynote lecture by discussing the first signs she noticed of the company’s questionable ethical behavior, which included falsified data from blood samples in order to maintain an image of success. Cheung recounted raising her concerns to former Theranos president Ramesh “Sunny” Balwani, who she said belittled her for questioning the validity of the data.

“At that point, I was a bit naïve in thinking that there was some sort of chasm between what was happening at the operational floor and what was happening at upper management,” Cheung said. “But this tipped me off to the fact there was something nefarious.”

Cheung said she resigned from Theranos and reported the falsified data to the Centers for Medicare
& Medicaid Services in 2015 because she felt she could no longer work for a company that lied to their clients, especially about something as important as their health. “The fundamental thing was about responsibility,” Cheung said. “It was about understanding that even though it was a tiny vial of blood, every vial was a person … It was so clear to me that whoever this was could have been someone I knew.”

Cheung said as technology continues to advance, she believes it is more important than ever to know how to identify and prevent corporate misconduct.

“Really thinking about how we instill ethical culture within these innovations is going to be crucially important especially because (of) the stake at which each of these new innovations have in all of our lives,” Cheung said.

• Kop, E. (October 2, 2023). Theranos whistleblower Erika Cheung discusses ethics in tech at Rackham. Michigan Daily. https://www.michigandaily.com/campus-life/theranos- whistleblower-erika-cheung-discusses-ethics-in-tech-at-rackham/ (Retrieved February 19,
2024).
Discuss the role of corporate social investment (CSI) in fostering ethical entrepreneurship. How can entrepreneurs use CSI initiatives to demonstrate social responsibility and build trust with stakeholders, as exemplified by Cheung’s commitment to transparency and accountability?

QUESTION 2 [40 MARKS]

You have the task of assessing the viability of a new venture of your choice, considering capital requirements and exploring various funding options. Address the following in a PowerPoint presentation:

A. Business concept and market analysis (10 Marks)

• Describe the new venture’s business concept and target market.
• Conduct a comprehensive market analysis, including an assessment of market size, trends, competition, and potential growth opportunities.

B. Capital requirements and financial projections (15 Marks)

• Estimate the initial capital requirements for launching the venture, considering factors such as equipment, inventory, marketing, and operational expenses.
• Develop financial projections for the first three years of operation, including income statements, cash flow statements, and balance sheets.

C. Evaluation of funding options (15 Marks)

• Identify and evaluate various funding options available to entrepreneurs, such as bootstrapping, bank loans, angel investors, venture capital, and crowdfunding.
• Assess the advantages, disadvantages, and suitability of each funding option based on the specific needs and characteristics of your venture.

QUESTION 3 [40 MARKS]

Based on your viability assessment (in you answer to Question 2), design a
comprehensive business plan for the new venture. Your business plan should address the following:

A. Executive Summary (5 Marks)

• Provide a brief overview of the venture, highlighting its unique value proposition, market opportunity, and financial projections.

B. Business Description and Mission Statement (5 Marks)

• Describe the nature of the business, its objectives, and its mission statement.

C. Market Analysis and Target Market Identification (10 Marks)

• Present a detailed analysis of the target market, including customer demographics, needs, and preferences.
• Identify key competitors and analyse their strengths, weaknesses, opportunities, and threats (SWOT analysis).

D. Marketing and Sales Strategy (10 Marks)

• Outline your marketing and sales strategies for acquiring and retaining customers.
• Specify the marketing channels, promotional tactics, and pricing strategies you will use.

E. Operations Plan (5 Marks)

• Describe the operational processes involved in running the venture, including production, distribution, and customer service.

F. Financial Projections and Budget (5 Marks)

• Provide detailed financial projections for the first three years of operation, including revenue forecasts, expenses, and profitability metrics.
• Present a budget for start-up costs and ongoing expenses.

Answers to Above Questions on Ethics

Answer 1: The role of Corporate Social investment is significant in fostering ethical entrepreneurship as it requires commitment to social responsibility and accountability. There are different important ways in which corporate social investment can be utilised by entrepreneurs in order to promote ethical entrepreneurship and some of these include aligning with values, building trust, enhancing reputation and driving innovation.