Answer just part c) The question does not need to be updated, all the informatio
ID: 1107254 • Letter: A
Question
Answer just part c)
The question does not need to be updated, all the information is there..... if there's any information missing, then actually let me know what I need to add, because I'm struggling to find what's missing
Rafe is a python programmer with extremely unique and valuable skills. He has worked at TiltSoft Inc., a Silicon Valley startup firm, for five years. The firm, therefore, has very good information regarding the value of his unique skills. They know whether his skills are "extremely valuable or just "valuable." Because Rafe has worked at TiltSoft so long and knows their products so well, his productivity is higher at TiltSoft than elsewhere Rafe's employment contract is up for renewal and he and his employer are bargaining over his future salary. Assume Rafe must make a take-it-or-leave-it salary offer to the firm. If the firm refuses Rafe's offer, Rafe will leave TiltSoft and become an entrepreneur. Since Rafe's skills are so unique, TiltSoft cannot replace Rafe the value his skills would create at TiltSoft is simply lost. Rafe's productivity (per year, say) as a function of his job and the value of his skills is given in the table below. (Assume everyone knows all numbers in this table.) Rafe's Productivity Rafe's Productivity as an Entrepreneur at TiltSoft Valuable" Extremely Valuable" $100,000 S300,000 $150,000 $350,000Explanation / Answer
(C)
Rafe works for TiltSoft Inc.,since five years. He knows all the products of the company very well and he has extremely unique and valuable skills. The firm also very well knows about his unique skills and his productivity is much higher as compared to other employees due to his unique skills and experience.
Now, that his contract is up for renewal and they are bargaining for the future salary, Rafe has to take-it or leave-it salary offer. Since in the question it is said that this assumption of take-it or leave it offer is relaxed, the scenario is different now. Earlier due to that assumption, Rafe had the otpion of accepting the offer if it was take-it and the firm agreed to the salary he wanted or he had the option of leave-it offer if the firm did not agree to his salary expectation. Now, since this assumption is not there. The firm has the option left to calculate the salary as per his unique skills and valuable output and come to a point wherein both are happy. The company is not in a position to replace him also due to his extremely valuable skills, therefore it can retain him. Also Rafe has the option to quote for the salary as per his contribution from the company and decide on a salary wherein it is close or equal to his expectations of what he would have earned if he became an enterpreneur. Therefore, one more option is openend now. Earlier there was only two options, either this or that. But now the third door is also opened wherein the company and Rafe will have to mutually decide on the points and the company can take the benefits of his services and Rafe can also continue in the company and further grow.
The best outcome is that since the third option is open now both can be benefitted i.e, Rafe will be benefited by getting a reasonably well accepted salary and the company will be benefitted by retaning Rafe and can continue using his extremely valuable or valuable skills and in turn the company will be benefitted and it is also possible that the company's profits can be increased in this way.