Production Facility At $ 2 Million Essay
On the other hand, if the company drops the product, the company will be able earn a profit of $8M ($6M 2yr profit + $2M production facility) and mitigate the risk by -500k, losing a net of $2M than $2.5M if it chooses to continue the product.
What about you? Describe a situation where you have confronted the sunk cost fallacy -- either in your personal life or in the business setting.
People and organizations often consider past investment decisions when choosing how to move forward. Individuals, in particular, tend to continue engaging in activities in which they have made prior investments despite delivering consistently poor results in the hopes of achieving a successful turnaround (Roberto, M., 2009).
An example of this is with my previous organization, we are encouraged to offer customized products for high profile customers with an expectation to reap sales profits. An example of this would be…