Management and the Technology Professional – B302

Case study answer 3

After going through various articles (http://www.internetnews.com/bus-news/article.php/3675891) about the Microsoft Yahoo merge I have made the decision that there would be a probability of a merge and a completed project would be about .2 chance of happening. If the project is accepted and the merge does not occur the probability of that happening is .8. The problem with these two actions that can be taken is that there will either be a complete loss of revenue or no loss at all. There is a .05 chance that if the project was started before the merge began that it would fail. leaving .95 chance that a merger may or may not happen. If the project is accepted and the merger between Microsoft and yahoo happens there is a .1 percent chance of that event occurring. On the other hand if yahoo stays independent and the project is completed the probability is .9. I set the probabilities this way because this type of job for yahoo is fairly routines therefore have a high possibility of completion. The first probability event I assigned a .1 chance because of what I have read from the internetnews article and the chances of this type of project fail are very small. Following this course of action would result in expenditure of 45000 pounds if the merge happens. An expenditure of 25000 pounds would be made with no merge and the project is completed.
Start end
90000 -25000 -20000 = 45000
90000 -25000 = 65000 (path I would follow)

K = the discount interest will be .3/8.7 = .34
I went to the Barclays website to find a annual interest value of 8.7. The K value was found by first dividing the number of months by one year 12/4 = 3 3/8.7= .344 %
45000/(1.34) = present value = 3358 pounds (end 1)
65000/(1.34) = present value = 43656 pounds (end 2)
58600/(1.34) = present value = 43731 pounds (beginning)

NPV = 91753 (merge plus complete project)
NPV = 132051 (independent with project complete)

I feel that the best course of action that should be taken is that which will see the project completed without a merge and the largest possible opportunity and interest. From looking at the benefits of this merge there are not too many outstanding points as to why it would happen. Yahoo would boost the importance of Microsoft’s operating system whereas yahoo could only benefit from Microsoft’s web services and APIs. Therefore the weight is not in favor of Microsoft who is seeking to get its hand on our company for their own benefit. Further hurdles that would have to be crossed would be the culture clash that would happen. Leadership and roles would have to be completely reorganized and not to mention the entire ethos would have to be decided upon. These two companies have been competitor in the same mark and due to this I can see a few rocky months of headache and conferences if the merge were to occur. As an employee of Yahoo I would rather not see this merge happen however to cancel the project to make an impression about it would not be an action in the best interest of my position and the company. Also by the recent negotiations that have diffused I would continue the project knowing that chances would rule in favor of an independent Yahoo for a few more months. If someone would then propose what the difference between it happening then and now I would tell them at that given time the situation can be assessed again to find out what would most benefit the company.