Analyzing Managerial Decisions: Leaving New York City for the Farmlands of Illinois
Analyzing Managerial Decisions: Leaving New York City for the Farmlands of Illinois
The colleague’s advice is good but it is not enough to make a decision. They are not experts and the decision should not be based on their advice. To make this decision the opportunity needs thought based on more data. I would need to determine what the start up costs for farming 80 acres would be. Purchasing the land would be $800,000, which is what was saved from bonuses, but how much more will be needed to start farming? Machinery, insurance, labor costs, seed, and fertilizer (Duffy, 2013) are all fixed costs (Brickley, Zimmerman, & Smith, 2009, pp.158-159) that must be considered to start corn farming. Considering I do not know anything about corn farming and that it will cost more than I have saved to start farming, I don’t think I would take the colleague’s advice. I would determine the opportunity costs (Brickley, Zimmerman, & Smith, 2009, p.19) of giving up my current job to start corn farming. I would be giving up a secure job, with a salary to start a business that would cost more money than I currently have to start, with no guarantee of it being profitable. The whole goal of the investment banker was to move from the populated cities to a more peaceful environment. An investment banker can still find job opportunities in a city less busy than New York City. I would still buy the property since that is what he has saved enough for. The land can then be leased or rented to someone else who can farm the land. The money earned from the land would help increase the person’s income should he have to work for a lower salary. When the land becomes more valuable, it could still be sold for a profit.
Brickley, Smith, & Zimmerman. (2009). Managerial Economics and Organizational Architecture. New York: McGraw-Hill/Irwin
The colleague’s advice is good but it is not enough to make a decision. They are not experts and the decision should not be based on their advice. To make this decision the opportunity needs thought based on more data. I would need to determine what the start up costs for farming 80 acres would be. Purchasing the land would be $800,000, which is what was saved from bonuses, but how much more will be needed to start farming? Machinery, insurance, labor costs, seed, and fertilizer (Duffy, 2013) are all fixed costs (Brickley, Zimmerman, & Smith, 2009, pp.158-159) that must be considered to start corn farming. Considering I do not know anything about corn farming and that it will cost more than I have saved to start farming, I don’t think I would take the colleague’s advice. I would determine the opportunity costs (Brickley, Zimmerman, & Smith, 2009, p.19) of giving up my current job to start corn farming. I would be giving up a secure job, with a salary to start a business that would cost more money than I currently have to start, with no guarantee of it being profitable. The whole goal of the investment banker was to move from the populated cities to a more peaceful environment. An investment banker can still find job opportunities in a city less busy than New York City. I would still buy the property since that is what he has saved enough for. The land can then be leased or rented to someone else who can farm the land. The money earned from the land would help increase the person’s income should he have to work for a lower salary. When the land becomes more valuable, it could still be sold for a profit.
Brickley, Smith, & Zimmerman. (2009). Managerial Economics and Organizational Architecture. New York: McGraw-Hill/Irwin