StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

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 paperFile format: .doc, available for editing
GRAB THE BEST PAPER93.3% of users find it useful
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 OF Business Economics for the World Market

Starbucks in Chinese Market

In the year 1996, the coffee giant marked its global presence. Up until 2004, the Chinese government prohibited Starbucks to operate its own stores in China. As a result, the coffee giant enters the Chinese market by joint-venturing with Chinese food and beverage companies and licensing other companies to own and operate its stores--differs from its domestic approach. But the company was able to easily overcome its initial obstacles and marked its presence in China very quickly and successfully with great brand recognition and customer satisfaction. The company also tailors its stores to match the local atmosphere. This is a transnational strategy. “For example, the Starbucks strategy in Shanghai is to attract middle to high...
7 Pages(1750 words)Case Study

The Management, Leadership and Teamwork Competencies Required by a Small Business Owner

On the other hand organizational leadership is defined as the ability based on the specific skill of an individual to lead his/her subordinates in a manner that pre-planned organizational goals could be achieved within the defined time-frame.

According to Burns (1978) and Bass (1985), transformational leadership has a set of category constructs such as values, morals, farsightedness, long term goals, principles, acute awareness about the dividing line between causes and symptoms, mission statements, strategic perspectives, and human resources. Similarly, they identify a set of category constructs in the transactional leadership also. For instance concentration on the task at hand, short term goals and tactics, confusion co...
6 Pages(1500 words)Coursework

The Effects of Financial Crisis on Supplier Selection Criteria of the Oil and Gas Industry Equipment Market

It is a difficult task to find those vendors who not only have the adequate quality and quantity of the needed raw materials but who also have an attitude of efficiency and display commitment to customer service (Sonmat, 2006). Further, organizations also strive to locate and select vendors who can be depended upon for long term relationship.

The number of factors or attributes desired from the vendor is vast, and different organizations and different industries place different importance on the attributes (Sonmat, 2006). Some of the vendor attributes may gain importance owing to the nature of the industry, for example, in the case of consumer perishables suppliers, like fresh vegetables or fruits, the buying firm would...
20 Pages(5000 words)Literature review

The Origins of the Second World War

The accord at present is that it was Hitler's resolve to change the basis of European society that took the war to Europe in 1939. It was not essentially the war he was planning for; the facts propose that Hitler was intending to set up Germany for a huge conflict with Russia in the early 1940s. However, indisputably it was a war forced by his persistent pursuit of strategies that stood on race and on space (Henig, 1997).

The Second World War was originated due to the Fascist attack and the failure of democratic powers to prevent this assault. There seem to be a number of reasons for the Second World War to occur. German rearmament started after Hitler left 1932-34 Geneva Disarmament Conference, declaring that as the po...
7 Pages(1750 words)Article

Business Plan Real Estate Agency

re representing our company as their business consultants and our responsibilities are limited to the knowledge of the client’s business and information provided by the client.
The company Of-Fit has been operating as office supplies and equipment supplier since 1998. Their corporate office is in Aberdeen and it has excellent industry relations. The company is a sole proprietorship and its owner is Mr. Andrew Schwatz who has been working in the industry for more than 20 years. The company current staff is 8 and its revenues are £115,690 and £156,178 in 2008. The company aims to expand its operations in other business areas and regions of the UK.
The detailed business plan developed for this report incor...
12 Pages(3000 words)Business Plan

Business Sustainability and Society: Coca-Cola Company

... association with them. For instance, by the year 2007, the company did not own more than 75% of its bottling partners that manufactured beverages and other products to the customers and consumers globally (Coca-Cola, 2008). Scrutiny of the company’s reports has indicated that it has been very concerned about its ethical image in the world, and it has been endeavoring enormously to market its image as an ethical and sustainable company. Despite of such efforts, a huge number of individuals and organizations (Coke Justice, 2010) have been carrying out protests against the company that it is involved in unsustainable business practices, as well as unethical ones that are damaging a huge number of stakeholders associated...
10 Pages(2500 words)Case Study

International Business: World Economic Forum and Davos 2010

...Introduction Globalization, one of the most hotly debated issues means global capitalism to some while others consider it to be the continuation of modernism with the forces of wealth, progress, democracy and happiness at play (Kellner, 2002). Globalization is considered to be beneficial which promotes economic prosperity, cultural diversity and technological advancement. According to the critical social theory, technology and capital work together to create a new globalized and interconnected world. While each force of globalization is important, technological revolution has impacted the business models, value creation and differentiation (Spelman, 2010). The cloud computing technologies that have made the popular social networking...
7 Pages(1750 words)Coursework

Globalization and World Economic Forum at Davos 2010

...Globalization and World Economic Forum at Davos Forces Driving Globalization Globalization has resulted in enhanced interdependencies among thenations of unprecedented scale. This augmented interdependence has caused the dismantling of trade barriers and liberalization of markets. The forces of globalization have impacted the nations, the firms and the individuals alike with the prerequisite of liberalization of trade (Awuah, 2009). The seven forces of globalization are; Markets, Production, Culture, Labor, Technology, Environment and Liberalization. Of these factors, the globalization of markets has engaged substantial attention of the firms and the academia. Some markets are highly globalized, while some are not. The scale of market...
7 Pages(1750 words)Coursework

Foreign Market Entry and Diversification

... was a major problem for exportation. However in 19th century situation started to change as national market began to get consolidated. Local companies were becoming stronger than they were ever before. In 1990 a completely new trend was found as the domestic companies began to expand their business in foreign market. Belgian company would be a great example as the company acquired breweries in 20 different countries. In 2004 two of the biggest breweries in the world, Interbrew and AmBev decided merge with each other and the largest brewery in the world was created. This merger and acquisition strategy became popular trend and it is reflected from the list of the top breweries which include SABMiller, Anheuser-Bush and InBev. However...
7 Pages(1750 words)Assignment

Comparing the Brave New World and Todays World

... A Brave New World 26 February Introduction Man has always wondered since time immemorial about his ultimate place in the big universe. He had attempted to find meaning in this scheme of things without much success. A key repeated theme is seeming failure to find that true meaning that will justify his existence. What usually happens is that the more Man goes deeper into the search for ultimate meaning, the more he finds nothing. This is confounding, to say the least, and goes to show how useless the search could be. Many people had been doing this search several times and came up with nothing. Out of this seeming hopelessness and uselessness came the philosophical idea of the absurd – that Mans search for individual meaning is bound...
8 Pages(2000 words)Term Paper
sponsored ads
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.

Let us find you another Essay on topic Business Economics for the World Market for FREE!

Contact Us