Examples of opportunity costs in the following topics:
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- Opportunity cost - The opportunity cost of cloth production is defined as the amount of wine for example, that must be given up in order to produce one more unit of cloth.
- A country is said to have a comparative advantage in the production of a good (say cloth) if it can produce cloth at a lower opportunity cost than another country.
- The opportunity cost of cloth production is defined as the amount of wine that must be given up in order to produce one more unit of cloth.
- The 640GB drive has a competitive advantage over the 500GB drive in terms of both cost and value.
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- Organizations must carefully manage their cash flow statements to ensure appropriate liquidity to avoid missing investment opportunities.
- When an organization has an opportunity to fund, or a debt to pay, they need capital on hand (i.e. capital available now) to provide funding.
- Company C will capture the opportunity, as the capital they are using is more liquid.
- Conversely, having cash sitting without investment also incurs an opportunity cost.
- Consider the concept of liquidity as it pertains to an organization's available cash flow and overall ability to capture opportunities in the market
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- Active facilitation brings objectivity to group processes and results in shared understandings of potential opportunities and the costs of pursuing those opportunities.
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- For instance, reducing fixed costs (finding a building with cheaper rent), reducing variable costs (finding a cheaper supplier for table-making goods), and/or increasing the price of their tables.
- In Business Economics, specifically cost accounting, the break-even point (BEP) is the point at which cost (or expenses) and revenue are equal—there is no net loss or gain, i.e., one can "break even. " No profit is achieved nor loss incurred, although opportunity costs are reconciled, and capital receives the risk-adjusted, expected return.
- Try reducing their fixed costs (e.g., by renegotiating rent, or by better controlling utility telephone bills or other costs)
- To do this, draw the total cost curve (TC in the diagram), showing total cost associated with each possible level of output; the fixed cost curve (FC), showing costs that do not vary with output level; and finally, the various total revenue lines (R1, R2, and R3), showing the total amount of revenue received at each output level given the chosen price point.
- This graphs depicts an example of a break-even point based on sales and total costs.
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- Companies outsource to avoid certain types of costs.
- With reduced short run costs, executive management sees the opportunity for short run profits while the income growth of the consumers base is strained.
- This motivates companies to outsource for lower labor costs.
- However, the company may or may not incur unexpected costs to train these overseas workers.
- Lower regulatory costs are an addition to companies saving money when outsourcing.
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- The purpose of scheduling is to minimize production time and costs.
- In order to reduce costs, an airline may want to minimize the number of airport gates required for its aircraft.
- Production scheduling aims to maximize the efficiency of an operation and reduce its costs .
- Further, pattern recognition software reveals scheduling opportunities that might not be apparent without this view into the data.
- For example, in order to reduce costs, an airline may want to minimize the number of airport gates required for its aircraft.
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- What will it cost to make a sale to this customer?
- If there is a common pitfall for entrepreneur, it's greatly underestimating the cost to acquire and repeatedly sell to a customer.
- Is my timing right for this market opportunity?
- It costs you more than you make to sell your product or service.
- To help you decide when to move forward with and when to forego an opportunity, please see the "Stop and Go Signs for Assessing Market Opportunity Matrix."
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- The constant evolution of technology offers both considerable opportunity and risk to businesses across all industries.
- Technology is always changing, offering new opportunities and risks for business every single day.
- This type of technological opportunity is often referred to as a disruptive innovation.
- On the manufacturing floor, smarter machines can reduce production time, increase efficiency, and lower costs.
- Identifying technologies that could cut costs, improve productivity, capture new markets, or fulfill new needs for consumers is a constant focal point for technology specialists.
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- Start-up costs for new franchisees are in the range of $130,000 - $180,000.
- However, #2 on the list is Stratus Building Solutions, a cleaning company, with start-up costs of just $3,000 - $58,000.
- Thus, even among home based franchises, start up costs can vary greatly.
- In some cases, this franchise fee is actually dwarfed in size by the cost of the volume needed for the business area.
- Thorough and honest assessment should guide which opportunities you consider, and you should explore your weaknesses as well.
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- These opportunities have become even more frequent in recent years due to the increasing availability of venture capital, and of capital resources from initial public offerings (IPOs).
- Moreover, the opportunity for expansion via acquisition is particularly attractive in other countries, where it can be difficult to establish new businesses.
- Such a strategy can also offer the opportunity to go into related diversification, i.e. a start-up firm can acquire other products or services which are related to its original ones.
- Vertical integration can sometimes bring advantages of cost or differentiation.
- Cost advantages can arise either through buying or building up cheaper distribution channels (forward integration), or cheap inputs (backward integration).