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"take the big tech giants like Google, Microsoft and Apple. To them, if it is not an x $billion opportunity, it isn't worth expending resources on it." ...? Sur
by jknupp 14y ago
"take the big tech giants like Google, Microsoft and Apple. To them, if it is not an x $billion opportunity, it isn't worth expending resources on it." ...? Surely it's worth them spending x $billion - $1 (or some similarly small but less pedantic amount).
- dmckeon 14y agoThe question is not "is this opportunity capable of making a profit at cost X?" but "if BigCorp could spend X on this opportunity, or spend X on a different opportunity, which one (or neither) should they choose?" Consider the chances of getting a larger share of a different market, the opportunity cost of one investment over another, the possible synergy with other investments, total returns on total investment, and "if we spend X, how much will that move the needle?"
- jknupp 14y agoThat would be their opportunity cost, which falls under the general umbrella term "cost".