Reference no: EM132769903
MPME 7113 Managerial Economics - City University Malaysia
Amcott Loses $3.5 Million; Manager Fired
On Tuesday, software giant Amcott posted a year end operating loss of 3.5 million. Reportedly, $1.7million of the loss stemmed from its foreign language division.
At a time when Amcott was paying First National a hefty 7 percent rate to borrow short- term funds, Amcott decided to use a $20million of its retained earnings to purchase three -year rights to Magicword, a software package that converts generic word processor files saved as French text into English.
First year sales revenue from the software was $7million, but thereafter sales were halted pending a copyright infringement suit filed by Foreign Incorporation. Amcott lost the suit and paid damages of $1.7 million.
Industry insiders say that the copyright violation pertained to a very small component of Magicword.
Ralph, the Amcott manager who was fired over the incident was quoted as saying, "I'm a scapegoat for the attorneys who didn't do their homework before buying the rights to the Magicword. I projected annual sales of $7 million per year for three years. My sales forecasts were right on target.
Do you know why Ralph was fired? Explain your answer.
Samsung and Hynix Semiconductor to Cut Chip Production
Sam Robbins, owner and CEO of PC solutions, arrived at the office and glanced at the front page of The Wall Street Journal waiting on his desk.
One of the articles contained statements from executives of two South Korea's largest semiconductor manufacturers Samsung Electronics Company and Hynix semiconductor, indicating that they would suspend all their memory chip production for one week. The article went on to say that another large semiconductor manufacturer was likely to follow the suit. Collectively, these three chip manufacturers produce about 30 percent of the world basic semiconductor chips.
PC solutions is a small but growing company that assembles PCs and sells them in the highly competitive market for "clones". PC solutions experienced 100 percent growth last year and is in the process of interviewing recent graduates in an attempt to double its workforce.
After reading the article, Sam picked up the phone and called a few of his business contacts to verify himself the information contained in the journal. Satisfied that the information was correct, he called the director personnel, Jane Remak.
What do you think Sam and Jane discussed? Explain your answer.
Boeing Loses the Battle but Wins the War
After nearly eight weeks, Boeing and its International Association of Machinist and Aerospace Workers Union (IAM) reached an agreement that ended a strike involving 27,000 workers. The striker followed days of "last minute", around the clocks talks that began when management and union negotiators failed to reach an agreement over compensation and job protection issues.
As a result of the agreement, IAM workers won benefits in areas that include healthcare, pensions, wages, and job security for 2.900 workers in inventory management and delivery categories. Boeing also agreed to retrain workers who are laid off or displaced.
Despite these concessions, a spokesman for Boeing was quoted as saying that the agreement "gives us the flexibility we need to run the company". The four-year agreement allows Boeing to retain critical subcontracting provisions it won in past struggles with the union.
Commenting on all this, one analysis concluded that "the union probably won the battle and Boeing probably wins he war". Can you explain what this analyst means?
AT&T Puts Halt to T-Mobile Merger
A few years ago, the U.S. Justice Department filed suit to block the merger between AT&T share of the wireless subscription market at 32 percent, while T -mobile ‘s share was 10 percent. This market had two other major competitors: Verizon with a 34 percent share and Sprint with a 17 percent share. After spending million on merger plans, AT&T decided to call off the deal. The impact on AT&T bottom line was so significant that its CEO saw his pay cut by $2million as a result.
Do you think AT&T should have spent millions on merger plans in the first place? Explain your answer.
McDonald's New Buzz: Specialty Coffee
Not long ago, McDonald's unveiled plans to roll out McCafe in the United Stated, a premium line of coffee that includes cappuccino, latte and iced mocha. The recession during the late 2000s in the United States left some analyst questioning whether it was the right time for McDonald's to roll out its line of new specialty drinks. However, McDonald's quickly saw a tripling of its share of U.S. coffee sales.
Why do you think McDonald's embarked on that program, and related, what do you think was the source of its success? Do you think this new product line will sustain its impact on the company's bottom line? Explain your answer.
Mickey Mouse Lets You Ride "for Free" at Disney World
Walt Disney World Theme Parks offer visitors a wide variety of ticket choices. The one thing these tickets options have in common is that they entail a fixed entrance fee and allow customers to take as many rides as they want at no additional charge. For instance, by purchasing a 1- day ticket for about $105, a customer gains unlimited access to the park of her choice for one day.
Wouldn't Disney earn higher profits if it charged visitors, say $10.50 each time they went on a ride? Explain your answer.
Attachment:- Managerial Economics.rar