Information Megastar Software recently developed new spreadsheet software, Ad-So
ID: 2590019 • Letter: I
Question
Information
Megastar Software recently developed new spreadsheet software, Ad-Soon, which it intends to market by mail through ads in computer magazines. Just prior to introducing Ad-Soon, Megastar received an unexpected offer from Vision Computer Company to buy all rights to the software for £4 million cash.
* it is important to consider that Megastar got the offer from Vision without any advertisement and selling and distribution costs
Question :-
1- Might there be any other opportunity costs to consider at the time of the making this decision? If so, explain briefly.
Plase answer Question 1 in a paragraph by critical thinking .
Explanation / Answer
Question 1)
The opportunity costs which are to be considered while making the decision to sell the spreadsheet software to the Vision computer company could be:
a) Improvement opportunity missed : Magastar Software missed the opportunity to do any improvement in the spreadsheet software whose all the rights are being sold out to the Vision Computer.
b) Selling the software at higher rate : Magastar Software has to suffer the opportunity of selling the software at the higher price .
c) Future subscription revenue : The Magastar could have higher annual revenues through the renting the software and getting the subscription revenues. So, the company losses the opportunity cost of skipping the higher revenues in future.
d) Expansion through product-wise : The company losses the opportunity to expand through increasing the product range as all the rights of the spreadsheet software are being sold out.
e) Competition edge : The company also losses the opprotunity to have a competitive edge in the industry on selling the software to Vision. Thus, it losses the leadership and has to incure the opportunity cost of being competitive.
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