1) Economics uses the concept of opportunity costs. Apply the concept to decisions to hire a few super high rank executives against hiring a group of young professionals, but less costly. What are things at stake in your considering the two options? What will you lose by taking one decision or the other?
“An opportunity cost is the evaluation placed on the most highly valued of the rejected alternatives or opportunities or the loss of other alternatives when one alternative is chosen.” (P. 595)
When we have to choose between hiring a group of young professionals over a few high rank executives (or viceversa), examining opportunity cost is a crucial strategy to knowledgeably decide what you are getting and what you are sacrificing instead.
If we were to choose the group of young professionals, the opportunity cost for not choosing the high rank executive group would be losing out on the vast experience that these executives bring to the table. Moreover, this experience provides them with a lot of knowledge they can apply into their day-to-day decision-making and how they communicate and spread it throughout the entire organization. However, the above average problem analysis would be the highest opportunity cost incurred; particularly if the interested firm is participating in a complex market or experiencing a complex current situation.
On the other side, if we were to choose the high rank executives over the group of young professionals, the opportunity cost presents a wide array of concepts as well.
For starters, there’s the obvious, payroll costs are lower and therefore provide more flexibility if it is one of the firm’s main variables conforming its fixed costs. However the key consideration regarding opportunity costs might be the energy provided by “injecting” new talent into the organization. This energy can be
