List of managerial economics cases

Case 1:Amcott loses $3.5M;Manager Fired

On Tuesday software giant Amcott posted a year-end operating loss of $3.5M.

Reportedly, $1.7M of the loss stemmed from its foreign language division. At a time
when Amcott was paying First National a hefty 7% rate to borrow short-term funds,
Amcott decided to use $20M of its retained earnings to purchase three-year rights to
Magic word, a software package that converts generic word processor files saved as
French text into English. First year sales revenue from the software was $7M, but
thereafter sales were halted pending a copyright infringement suit filed by Foreign,
Inc..Amcott lost the suit and paid damages of $17M. Industry insiders says 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 of Magicword. I projected annual sales of $7M per year for three years. My
sales forecast were right on target”.

Question: Do you know why Ralf was fired?

Case 2: 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 Electronic 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
suit. Collectively, these three chip manufacturers produce about 30% of the world’s
basic semiconductor chips.
PC Solution is a small but growing company that assembles PC’s and sells them in
the highly competitive market for “clones”. PC Solutions experienced 100% 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 of personnel, Jane
Remak.
Question: What do you think Sam and Jane discussed?

Case 3: Walmart hoping for another big holiday showing

In October of every year, Walmart’s national sales director knows the calls are
coming for his holiday forecasts. This year, the firms holiday performance is
especially important after disappointing sales to date. While the directors has no
problem expressing his hope for strong holiday sales, investors and reporters as well
as local managers are seeking a prediction that has evidence to back it., Consequently
he turns to his analytics department which has been collecting wide swaths of data for
Walmart over many years across the 381 metropolitan statistical areas(MSA’s) in the
United States. Some variables of particular interest include holiday sales, average
prices, and consumer confidence. Using these data, the analyst arrive at the following
equation, designed to predict holiday sales measured as revenues.

In(Holiday sales) = 25.8 - 0.8 In(Price) + 0.9 In(Consumer Confidence)

The director note that most MSA’s saw a decrease in consumer confidence of
approximately 4%.

Question: 1.Base on this information does the evidence support optimism for holiday
sales if prices remains unchanged?
2. Could a change in price help to bolster revenues?

Case 4: Packaging Firms uses overtime pay to overcome labor shortage

Boxes Ltd. Produces corrugated paper containers at a small plant in Sunrise Beach,
Texas. Sunrise Beach is a retirement community with an aging population and over
the past decade the size of its working population has shrunk. In 2016, this labor
shortage hampered Boxes Ltd.’s ability to hire enough workers to meet its growing
demand and production targets. This is despite the fact that it pays $16 per hour
almost 30% more than local average to its workers.
Last year, Boxes Ltd. Hired a new manager who instituted an overtime wage plan at
the firm. Under her plan, workers earn $16 per hour for the first eight hours worked
each day and a $24 per hour for each hour worked in a day in excess of eight hours.
This plan eliminated the firms problem, as the firms production level and profits are
up by 20% this year.

Question: Why did the new ,manager institute the overtime plan instead of simply
raining the wage rate in an attempt to attract more workers to the firm?

Case 5: Boeing losses the battle but wins the war

After nearly eight weeks, Boeing and its International Association of Machinist and
Aerospace Workers Union(IAM) reach an agreement that ended a strike involving
27,000 workers. The strike followed several days of “last minute”, around the clock
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, pension, 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 of Boeing was quoted saying that “the agreement gives us the flexibility
we need to run the company”. The four years agreement allows Boeing to retain
critical subcontracting provisions it won in past struggles with the union.

Question: Commenting on all this, one analysis conclude that “the union probably
won the battle and Boeing probably wins the war”. can you explain what this analyst
means?