An E-Commerce Organization Is in Its Sixth Month of Online

question 11

Essay

An e-commerce organization is in its sixth month of online operations selling academic regalia for graduation. The founders had long had their own personal web pages, and had stumbled upon an inexpensive source for the sewing of gowns. They invested all their savings and took out a loan in order to finance the inventory and equipment needed to go into business. By March of its first year of operations, an unexpectedly large number of orders reached the company. The founders devoted their full energies to getting the product where it needed to be in time for graduation. At odd hours of day and night, they could be found doing anything from the job of the information systems specialist they had recently hired, to the job of the mail clerks. As this company grows and takes on related product lines, what would you expect to happen as they go through the stages of development?

Appreciate the ethical considerations in managing quality of products and services.

Understand the characteristics and limitations of different capital investment evaluation techniques such as NPV, IRR, AAR, and Payback Period.

Apply NPV and PI criteria to investment decision-making.

Analyze the effect of discount rates on the NPV and IRR of projects.

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Definitions:

Marginal Private Benefits

The additional satisfaction or utility gained by a consumer or firm from consuming or producing one more unit of a good.

Positive Externalities

Benefits that are enjoyed by a third-party or the society at large, as a result of an economic transaction.

Socially Optimal Level

The socially optimal level is the quantity of production or consumption where the marginal social cost equals the marginal social benefit, maximizing overall welfare.

Policymakers

Individuals or groups responsible for making decisions and establishing regulations that guide the economic, social, and political governance of a society.