Part2/3 Discussion

Part2/3 Discussion

Part 1  – 400 words no introduction page

Additional Information: The board of directors at AutoEdge is actively discussing several options to address flagging revenue. One option continues to surface during each board meeting; that is, relocating the manufacturing operation back to the United States. Longtime Chief Financial Officer, Ingrid Adams, leads the group that is in favor of this option.

Ingrid Adams approaches you in the company break room.

“Hello,” she says. “I’m glad I saw you.”

“Hi,” you say. “What can I do for you?”

“I have a question about economics,” she says. “I think you can help me explain something to some shareholders on the board.”

“Economics! My favorite subject,” you say. “What’s your question?”

“If AutoEdge decided to increase its prices and return to the United States,” she says, “how would this action affect consumer demand? I want to know your opinion about elasticity.”

“Sure,” you say. “So you want to know if the elasticity for auto parts is considered to be relatively inelastic, relatively elastic, unitary elastic, perfectly elastic, or perfectly inelastic. Right?”

“Exactly,” she says.

“I have an opinion,” you say. “Do you want to talk about it now, or do you want something in writing?”

“Something in writing would be best,” she says. “Would you explain your opinion so that I can respond to questions from other members of the board, too?”

“I’d be glad to,” you say. “I’ll put something together this afternoon and get it to you before I leave today. Is that soon enough?”

“Perfect,” she says. “Thanks for your help.”

Part 2 – 400 words

Additional Information: Because the decision about relocating manufacturing operations to the United States is so important, the board of directors at AutoEdge continues to systematically discuss every aspect of the situation.

The following week, CEO Lester Scholl meets you for coffee to discuss next week’s board meeting.

“I’m hearing good things about you,” he says. “Ingrid and George tell me you’ve been very responsive and helpful.”

“That’s good to hear,” you say. “I’ve enjoyed working with them.”

“We’re both busy, so I’ll get right to the point,” he says. “One of the main objectives of any business is to be efficient. Without efficiency, the company is essentially losing money. Am I right?”

“Absolutely,” you say.

“What must AutoEdge do,” he says, “to obtain economies of scale with production? How do we know that it has achieved economies of scale? Conversely, how do we know if it is achieving diseconomies of scale?”

“That’s a good question,” you say. “I can understand why you ask.”

But before you can respond, Lester’s cell phone rings. After a minute, he ends the call and stands.

“I have to get back to the office to handle an emergency,” he says. “Would you send me an e-mail with an answer to my questions, please?”

“No problem,” you say. “I’ll get it to you before I leave work this afternoon.”

“I appreciate it,” he says. “Thanks.”


Part2/3 Discussion

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