ME1.ppt - Managerial Economics L1 Dr Rashmi Ahuja CASE 1 Amcott Loses $3.5 Million Manager Fired \u2022 On Tuesday software giant Amcott posted a year-end

ME1.ppt - Managerial Economics L1 Dr Rashmi Ahuja CASE 1...

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Managerial Economics L1 Dr. Rashmi Ahuja
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CASE 1 : Amcott Loses $3.5 Million; Manager Fired On Tuesday software giant Amcott posted a year-end operating loss of $3.5 million. Reportedly, $1.7 million 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 $20 million 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 $7 million, but thereafter sales were halted pending a copyright infringement suit filed by Foreign, Inc. 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.”
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Ralph, the Amcott manager who was fired over the incident, was quoted as saying, “I’m a scapegoat for the attorneys [at Amcott] who didn’t do their homework before buying the rights to 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?
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Manager ?????? A manager is a person who directs resources to achieve a stated goal.
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Managerial + Economics Managerial Economics is economics applied in decision- making Link between abstract theory and managerial practice.
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