Master in Business Administration: Managerial Economics (MPME 7113) Assignment 2

MASTER IN BUSINESS ADMINISTRATION
MANAGERIAL ECONOMICS
(MPME 7113)
ASSIGNMENT 2
PREPARED FOR
AIN FARHA BINTI SALAHUDDIN
PREPARED BY
[STUDENT NAME]
[STUDENT ID]
SUBMISSION DATE
21 NOVEMBER 2020
MANUAL OF ASSIGNMENT
MPME 7113 – ASSIGNMENT 2
WRITING FORMAT;
1. This assignment is to be completed INDIVIDUALLY.
2. This assignment is accordingly by chapters in the syllabus.
3. Answer ALL questions accordingly.
4. Reading and revising of slides, books and internet will help you to answer those questions.
Submission: Softcopy: share in google classroom
REMINDER : TOTAL MARKS 20% will be given upon completion and submission. 1%
per day will be deducted for the late submission after due date.
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.

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MASTER IN BUSINESS ADMINISTRATION

MPME 7113 – ASSIGNMENT 2

Do you know why Ralph was fired? Explain your answer.

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