Compare the sunk or opportunity cost

Assignment Help Business Management

Reference no: EM134013863

Case Study:

In business, as in life, making choices among alternatives result in different consequences with the hopes of a favorable outcome (Franklin, Graybeal, & Cooper, 2019). With any organization, consistent good financial decisions assist with maintaining a successful organization. ABC Companies had a choice as to which IT company could develop a software application that would allow its employees ease of doing business and their external users. External users such as reinsurers allow them limited access to the software to perform quotes, authorize and send and receive final lines of participation to support the company's client to remain solvent. There were many bids to develop the application.

Several IT developers presented their capabilities to management. Some were expensive, offering several functionalities requiring less manual input, and others offered less functionality but required more or the same manual input. One developer claimed they could develop a companion software application that could work with the company's existing platform allowing the system to talk to each other. The company chose the latter and paid for the software development, believing the IT development company could build the software application to work with its existing application. It is the belief that the money available is finite, and making tradeoffs amongst many needs is necessary (Hultman, 2021).

The build and testing of the new companion application worked as a standalone application. However, during the development and testing, the developers learned after several attempts to introduce software to ensure the existing application could establish two-communication with the new software failed. The expected rollout was set for the company's busiest time, and with this failure, management had to decide what to do next. The company realized quickly that this project was a sunk cost.

The cost of this project would remain the same regardless of any alternatives management chooses and is not relevant now in the decision-making.

At this point, and since it was now their busy season, management had to review quantitative factors such as the number of hours employees would work, training hours for workarounds to use the new software application, and what manual inputs will be required to relay the information from the new application to the existing application. As a result of the decision to go with this developer, the long-term consequences were costly. Eventually, the company contracted with another developer hoping for a favorable outcome. However, the results of that investment is not yet available. In the meantime, the company continues to use the antiquated system with a workaround to incorporate the recently deployed companion system.

As a manager, I consider a short-term solution with reduced short-term losses (Franklin, Graybeal, & Cooper, 2019). This business aims to maximize revenue and create ease of business functionality. Then identify any obstacles that would hinder the goal's success (Franklin, Graybeal, & Cooper, 2019). In this instance, recognize that the existing application was much older than the new software application, and the possibility of them speaking to each other could be a problem.

Questions:

1. Compare the sunk or opportunity cost example that the case study described to your own professional experience.

2. Provide an insight you gained from the case study analysis of how the cost impacted the organization and the stakeholders.

3. Propose an additional way to address the scenario that the case study described.

Reference no: EM134013863

Questions Cloud

Describe why you feel this would be the best service : Describe why you feel this would be the best service to choose to support the fitness needs of an individual you might support.

Describe setting the project is planned to be implemented : What information will you be/are you collecting to be able to evaluate the project - In preparation for/OR if implementation of your project is underway

Treatment of dengue patients in local health facilities : Establish protocols and guidelines for the timely and effective treatment of dengue patients in local health facilities.

Create a mystery character in the short story dangerous game : Create a mystery character in the short story Dangerous game and explain there story of survival. It's based on a Pod cast assignment for Dangerous Game.

Compare the sunk or opportunity cost : Compare the sunk or opportunity cost example that the case study described to your own professional experience.

What is happening in the moment for each literary device : Find 2 similes, 2 metaphors, 2 imagery, 2 repetitions. What's happening in the moment for each literary device. What effect does it have on reader?

Describe benefit of being curious and critical in business : Describe the benefit of being curious and critical in business. Also discuss the importance of mindset as it relates to success in business.

Monitor and assess progress of operational plan : Monitor and assess progress of operational plan This is a continuation of the scenario in Assessment 3.

Your records system has just been taken hostage through : Your records system has just been taken hostage through ransomware for bitcoin worth about 5 million dollars what is your response and who do you alert?

User Account

All Pages