We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Business Economics for the World Market - Essay Example

Comments (0) Cite this document
Summary
1a) The managers of Brand Name Foods are looking at the current business proposition from too narrow of a perspective. The managers are assuming that the only way to analyze the situation is based on cost-benefit that does not consider all possible solutions…
Download full paper
GRAB THE BEST PAPER
Business Economics for the World Market
Read TextPreview

Extract of sample
Business Economics for the World Market

Download file to see previous pages... Based on this analysis the total costs of the project exceed the present value of future sales. It is true that the total costs of the project exceed the present value of future sales, but we have to consider the R&D costs were already incurred. If the company were to decide to reject the project the R&D expenses would become a sunk cost. A sunk cost can be defined as cost that has been incurred that cannot be reversed (Investopedia). If the firm decided to forfeit the project the accumulated sunk cost would lead to a project loss of $8 million. On the hand if the firm decided to invest an additional $4 million dollars the firm would end up with a final project loss of $2 million. It is better to lose $2 million than to lose $8 million. Another possibility of continuing the project is for the company to create extension products or other related product lines in the future. These products could help improve the total performance of the project in order to reach profitability. Another consideration for the company is that producing this product can help the firm improve its overall market share in the industry. The firm should have performed a better analysis of the potential returns of the project much earlier in the project life cycle. Since the firm already invested $8 in research and development the best decision is to continue with the project. I do not agree with the recommendation of canceling the project. The firm made bad decision in the past to undertake the project and invest $8 million in R&D without having a good estimate of the potential returns of the project. Right now rejecting the project at its current development stage would compound the original problem. 1b) The new information given that the marketing and overhead expenses associated with continuing the project amount to $4 million does not change my opinion about the best solution for the firm. Based on the new figures the company would lose $6 million if they continue with the project. If the firm decides to discontinue the project the overall loses for the project would be $8 million. The company should continue with the project in order to learn from their experiences. Based on the new information I would be more willing to reject the project if the financial conditions are not correct. For instances if the company does not have the $8 million dollars readily available I would recommend the company does not go out of their way to incurred in moves such as selling common stocks to finance this project. The firm should implement changes in its risk assessment protocols for new products or capital projects in order to incorporate the utilization of methods such NPV to assess the viability of a project prior to investing money in research and development initiatives. 2) The video rental store owner would have benefited a lot from having more knowledge about economic concepts. It is possible that the owner made a decision based on the law of demand and supply which stipulates that by lowering the price of an item the volumes of sales will go up as a consequence. The error the video rental owner made is that he did not consider the implications of having a price of elasticity of -0.45. The price elasticity of demand is an economic variable that measures the responsiveness of the quantity demanded of a good or service to a change in its price (Absoluteastronomy). The price elasticity of the firm can be categorized as relative elastic since the value of -0.45 which is between cero and -1. This implies ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Business Economics for the World Market Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1424391-business-economics-for-the-world-market
(Business Economics for the World Market Essay Example | Topics and Well Written Essays - 750 Words)
https://studentshare.org/macro-microeconomics/1424391-business-economics-for-the-world-market.
“Business Economics for the World Market Essay Example | Topics and Well Written Essays - 750 Words”, n.d. https://studentshare.org/macro-microeconomics/1424391-business-economics-for-the-world-market.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Business Economics
Standard has already have taken back the ‘AAA’ status that it had once given to the US economy. Predictions of OECD OECD has predicted more trouble for the US economy in the near future. The organization has forecasted shrinkage of the world economy owing to the recent financial crisis that led many US companies to bankruptcy.
6 Pages(1500 words)Essay
Business Economics
Introduction The very recent outburst of the housing price bubble in the most advanced and developed economies of the world has raised in serious concerns about the management of the macroeconomic tools, measures to combat the inflationary pressures especially by the public authorities, as that led to a financial crisis, and the consequences of the financial crisis had to be faced by the global financial economy.
12 Pages(3000 words)Essay
Business Economics
According to Koos and Granata 2008, unemployment is one of the world’s most difficult agenda as it seeks to deter economic growth of a specific country or state and the entire world. Of importance to note is that, countries with a high level of unemployment have the worst economic growth while those that have a low rate of unemployment experience better economic growth (Lange 1998).
6 Pages(1500 words)Essay
Business Economics
As a result, unlike perfect competition where all units can be sold at the same market price, here the firm has to gradually lower the price to ensure increase in sales. So, here the MR curve shall lie below the demand curve. However being the sole firm in
6 Pages(1500 words)Essay
Business Economics
fe insurance or life assurance is a contract between the policy owner and the insurer, where the insurer agrees to pay a sum of money upon the occurrence of the insured individuals or individuals death or other event, such as terminal illness or critical illness and in return,
8 Pages(2000 words)Essay
Business Economics
Real goods refer to market goods, while services refers to payment of interest on loans borrowed, royalties on intellectual property, income earned on international investments, etc. Transfer of payments on the other hand, refers to
15 Pages(3750 words)Essay
Business Economics
s changing its hegemony in manufacturing to service industry or gearing itself to the new economic environment that the global economics is gradually taking shape. Gradually the image of UK’s manufacturing sector became poor because of uncompetitive nature and that lost many
10 Pages(2500 words)Essay
Business Economics
Moynihan and Titley (2001) have said that United Kingdom was the first country to revolutionize. It is the first industrialized country. However, these days the same country has been undergoing de industrialization. These days it has been
10 Pages(2500 words)Essay
Business Economics
However this period of growth stagnated from the 1970s and 1980s with marked decline [See Appendix 2]. Conversely the decline in the manufacturing industry saw the rise in the service industry
10 Pages(2500 words)Essay
Business economics
Oil experiences derived demand1. In this respect, its demand refers to the quantity that buyers will desire to buy at various prices. On the other hand, the supply of oil denotes the quantity that producers are willing to take to
12 Pages(3000 words)Essay
Let us find you another Essay on topic Business Economics for the World Market for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us