Question

Scenario: You are a CEO of well-established and profitable software technology firm that has a choice to invest in one of two new software technologies; one that promises modest profit with very little risk and another that may yield a very high profit but at considerable risk. Keeping in mind cultural factors (social values/priorities, politics, economy, technology, regulation, etc.) Answer the following: 1. What would your choice be? 2. Who in your company might support the first technology and who might support the second? 3. Think about individuals from all levels of the company, from the CEO and board members down to R&D personnel. What considerations of your decision need to be made from a societal perspective? 4. Consider individuals outside of the company itself. How might the type of industry affect this type of decision?

Answer 1

1. What would your choice be?

My choice would be the little risk, modest profit option, because the company is well-established, and at that point, it is not necessary to take on huge risks.

2. Who in your company might support the first technology and who might support the second?

Younger employees would probably support the second technology, while older, more established and secure employees like senior managers would be more likely to support the first technology.

3. Think about individuals from all levels of the company, from the CEO and board members down to R&D personnel. What considerations of your decision need to be made from a societal perspective?

How the investment decision will affect the different departments of the company, both at the department level, and at the individual level.

4. Consider individuals outside of the company itself. How might the type of industry affect this type of decision?

The type of industry affects the decision greatly because different industries have varying degrees of market risk. This market risk is often measured by a "beta", which is a measure or the deviation of an industry from the average market risk.