Mba 540 Essay

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MBA 540 Mid-term Exam 1. (10 pts.) Stella Ann Freeman is having a difficult time deciding whether or not to purchase a new car. How would understanding the concept of opportunity costs help her make a decision? Opportunity cost is the value of a resource for a given purpose and its value in its alternative. The opportunity cost of purchasing a new vehicle is the value of possibly taking a luxury vacation, home renovations, or a down payment on a home. Stella would need to decide what type of car she could afford to purchase and if she needs to make this purchase at this time. She would need to maximize her utility by being resourceful with her funds. Depending on the car she is looking at the she would need consider factors of her current vehicle: Does she still owe a balance on her current vehicle? How many miles does it have? How much money has she invested in to maintaining it? Is she considering new or used car? 2. (10 pts.) Referring to the table below, hiring a driver costs $10. Each machine costs $100. Which method should he use and why? Method 4,for every machine he purchases he can have 1.5 driver. Any other method will not give him a gain. 2. (10 pts.) Enron will be an example of a dysfunctional company for many years to come. It was clearly a company riddled with fraud and excess and its conduct drove it into bankruptcy. The text argues that individual behavior was not at the core of Enron’s problems. What were the problems with this corporation from an organizational architecture point of view? Enron allowed people to make decisions that were lower level employees, who did not possess adequate knowledge. The company rewarded high performers with a generous bonus structure, which made the decisions to proceed into a cautious manner non-existent. The organizational architecture did not have a corporate system in place to check the

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