Opportunity Costs and Increase in Demand - Assignment Example

Having settled on the opening of a new branch as the best option, I would like to suggest that the management would forgo a merger. To cope with the increased demand, the business would have opted for forming a merger with its competing firms. Through this, it would have saved some money that would be used for purchasing land and equipment, acquiring licenses, and constructing the new premises. If a new branch is formed from scratch, the business would have forgone the costs that would be associated with the formation of a merger. If the business decided to collaborate with an already existing one, it will not need to incur costs such as construction, buying of new equipment, and recruiting new staff. All these would be forgone if a new branch is opened in another location.

On the other hand, the business can opt for employing part-time employees instead of recruiting full-time workers. As the best alternative, having part-time workers will be cheaper than having full-time employees. First, since they will be on a part-time basis, they will need to be paid fewer wages and salaries. At the same time, they will not be entitled to lots of benefits such as pensions and insurance schemes. All these will be forgone if the business decides to recruit additional full-time workers to enable it to deal with the increased demand for its products. The costs of engaging additional full-time workers would be higher because, unlike their part-time counterparts, they would have to be paid higher salaries, and attractive allowances, and are entitled to lots of benefits such as pension schemes and medical covers.

However, all these would change if the increased demand was a temporary occurrence. In this situation, the management would need to come up with short-term measures. Of all the alternatives, I would like to suggest that the business should set up retail outlets and chain stores in different parts of the country. It can be the best alternative to adopt in case short-term measures are required. It qualifies as the best alternative since it would enable the business to minimize its expenses. It is not recommended to establish a new branch if the increase in demand is only expected to last for a short period.

In conclusion, all businesses should bring profit to the investors. This is the only way through which they can directly benefit from them. However, to attain this, well-thought and appropriate strategies need to be put in place. Read More