MBA 540 Mid-term Exam
1. (10 pts.) Stella Ann Freeman is having a difficult time deciding whether or not to purchase a new car. How would understanding the concept of opportunity costs help her make a decision? According to Brickley, et al. (2016), the “opportunity cost of using a resource for a given purpose is its value in its best alternative use.” To help Stella make a decision on purchasing a new car, she would need to make a marginal analysis as to narrow down what her best option for her current situation. With the marginal analysis, Stella can weigh the costs and benefits of her decision. “An action should be taken whenever the incremental benefits of that action exceed its incremental costs” (Brickley et al., 2016). If she …show more content…
Among the various accounting issues Enron experienced, one problem stemmed from “delegating decision-making authority to the lower-level employees without retaining an appropriate degree of oversight” (Brickley et al., 2016). Another problem was a result of rewarding individuals based on the “near-term earnings growth and success in closing deals” (Brickly et al., 2016). Finally, top performers received generous rewards which motivated them to take high risks more frequently. These factors directly go against what is required to maintain an organizational architecture. “Successful firms assign decision rights in ways that effectively link decision-making authority with the relevant information for making good decisions” (Brickley et al., 2016). Therefore, it will apply this method of assigning decision-making rights to its performance evaluation …show more content…
The rental car industry would be a great example of an oligopolistic market. There are a few major players in the industry with a few smaller brands. Their products and services do not have a distinction in differentiation yet they earn economic profits. With these smaller brands, market entry can be difficult and may take some time to develop. Nevertheless, these larger companies like Hertz, Enterprise, and Avis are unaffected by the lesser competition. These competitors will review rates to understand where the other’s pricing structure may stand. They may even adjust those rates based on those
1. (10 pts.) Stella Ann Freeman is having a difficult time deciding whether or not to purchase a new car. How would understanding the concept of opportunity costs help her make a decision? According to Brickley, et al. (2016), the “opportunity cost of using a resource for a given purpose is its value in its best alternative use.” To help Stella make a decision on purchasing a new car, she would need to make a marginal analysis as to narrow down what her best option for her current situation. With the marginal analysis, Stella can weigh the costs and benefits of her decision. “An action should be taken whenever the incremental benefits of that action exceed its incremental costs” (Brickley et al., 2016). If she …show more content…
Among the various accounting issues Enron experienced, one problem stemmed from “delegating decision-making authority to the lower-level employees without retaining an appropriate degree of oversight” (Brickley et al., 2016). Another problem was a result of rewarding individuals based on the “near-term earnings growth and success in closing deals” (Brickly et al., 2016). Finally, top performers received generous rewards which motivated them to take high risks more frequently. These factors directly go against what is required to maintain an organizational architecture. “Successful firms assign decision rights in ways that effectively link decision-making authority with the relevant information for making good decisions” (Brickley et al., 2016). Therefore, it will apply this method of assigning decision-making rights to its performance evaluation …show more content…
The rental car industry would be a great example of an oligopolistic market. There are a few major players in the industry with a few smaller brands. Their products and services do not have a distinction in differentiation yet they earn economic profits. With these smaller brands, market entry can be difficult and may take some time to develop. Nevertheless, these larger companies like Hertz, Enterprise, and Avis are unaffected by the lesser competition. These competitors will review rates to understand where the other’s pricing structure may stand. They may even adjust those rates based on those