Management and the Technology Professional – B302

Case study answer 3

With the research i found that Yahoo ,a 30 billion dollar company failed to do a project in the near past which resulted in a big loss as they had to cut down their employees by 7% and had to downsize by 1000 employees and so are desperate to get support. Microsoft at first bidding at 31 billion dollars and raising it to 44.6 billion dollars which is nearly 1.5 % more then what yahoo is actually worth on the stock market raising the probability to 80% that it does acquire yahoo.
If I were the yahoo software engineer where my primary goal should be maximizing the profits, I would choose to go ahead with the project as with the help of the decision tree it was obvious that if I choose to start the project the value is 26800 after considering the fact whether Microsoft acquires it or not and keeping the probability in mind that 80 % chances are that Microsoft will acquire it because of the high bid and then the circumstances Yahoo itself is in.
I further broke down the values to monthly scale showing if Microsoft acquires yahoo we gain £21626 per month as gross gain investing £11,250 per month and if it doesn’t the gross gain is £22500 per month investing £6250 per month.
if Microsoft acquires it and the project is cancelled there will not be any loss but if it doesn’t acquires, yahoo has to bare the loss of £90,000 which makes it very easy to decide and conclude that I would certainly go for the project.
From the net present value i calculated if Microsoft acquires Yahoo and the project is a success we get a gross amount of £86505 which is the biggest amongst the rest so i would definitely choose to go with the project and would in no case let it fail. Moreover Yahoo is a big company itself and so i keep the failure factor probability as 30% that even if we fail to do the project the loss will be the initial cost of £25,000 and still would choose to go ahead and do the project for if Microsoft doesn’t acquires it and we cancel the project Yahoo would actually lose out on £86505 which is worst then losing out on £25,000.So the risk factor is involved and after evaluating all these factors if I were the yahoo software engineer will definitely do this project.