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Managerial Economics L1Dr. Rashmi Ahuja
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.”
•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.
Managerial + Economics•Managerial Economics is economics applied in decision-making•Link between abstract theory and managerial practice.