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According to the rule for optimal input usage, a firm should hire a person as long as her marginal revenue product is greater than her marginal cost to the company. It is well known that many companies have management training programs in which new trainees are paid relatively high starting salaries and are not expected to make substantial contributions to the company until after the program is over (programs may run between 6 to 18 months). In offering such training programs, is a company violating the optimality rule? Explain.

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According to the rule for optimal input usage, a firm should hire a person as long as her marginal revenue product is greater than her marginal cost to the company. It is well known that many companies have management training programs in which new trainees are paid relatively high starting salaries and are not expected to make substantial contributions to the company until after the program is over (programs may run between 6 to 18 months). In offering such training programs, is a company violating the optimality rule? Explain in detail.

MILE Entertainment Systems was established by four graduates of Istanbul Şehir University (ISU) in 2020. Mahmut, son of a genuine Anatolian merchant, has been fond of electronic games since his childhood. If he were born in New York or Tokyo, he could make one of the best electronic game designers even before the age of 15! İbrahim, son of a bank manager at Türkiye Finans, a so-called participation bank working on Islamic (no-interest) principles. His main goal has been “to transform a Turkish company into one of the top trend-setters in the global marketplace. (planning-vision)” He thought that finance was the heart of the matter, so he would concentrate mainly on the financial aspects of the enterprise. “Give me money and I will take care of the rest!” Lisa, daughter of a Prussian landlord, has worked as an apprentice for her aunt Helga, a wellknown fashion designer in Hamburg. Her childhood dream was to direct a film which will overshadow the legendary Kinderfilms like Pinokyo and the Wizard of Oz. She considered ISU studentship as a critical step toward her goal. Elif, the daughter of a trade union leader, has been thinking of leading the global environmental struggle against the egoistic capitalist manufacturers of the world. Her basic competencies lie in the areas of engineering and management. She is able to think like a person of science and act as a woman of politics. After a long discussion with Prof M Ozel of ISU, they borrowed TL 100,000 (role of entrepreneurship) from Türkiye Finans, thanks to Kemal Bey, İbrahim’s father, on the basis of a profit-and-loss-sharing system. These four kafadars, a Turkish word for high-risk-takers, agreed on developing new video games with new heroes (Planning). Rather than compete directly with companies like Sony and Microsoft, they made the decision to broaden the market to attract people who have not already played video games (Planning). They introduced the MES (Mahmut’s Entertainment System) after six months, and it was an instant hit. Over the course of the next two years, it almost single-handedly revitalized the video games industry. Selling over 60 million units, people brought games like Mario and Zelda into their homes for the first time on the MES. The second step was the Game Boy in 2022. Its screen was four-colors-of-gray but the device defined portable gaming and was enormous fun. Game Boy was closely associated with the classic game Tetris when it first appeared in the market. Game Boy is nowadays the most successful video game system ever released. Since its introduction in 2022, Game Boy has sold well over 500 million systems worldwide. Originally bundled with the game Tetris, this little handheld became an instant phenomenon. And on November 13, 2023 in İstanbul, MILE launched the MILE 3DS system, which allows users to view 3D content without the use of special glasses. The company was organized in a postmodern way. There were almost no clear boundaries between the so-called functional departments, such as Research and Development, Manufacturing, and Sales and Marketing. Even the doorkeepers were held responsible for marketing, if not for finance! The Gang of Four comprised the Governing Board together with two independent board members: Ahmet Ademoglu, the former director of the Central Bank, who was expected to put the financial side of the enterprise in order; and Mehmet Koç, the ex-marketing manager of Ulker Company, who was given sole authority for the sales and promotions (Organizing). The Gang dreamed, designed, and developed; the professionals executed! Towards the end of the second year of their establishment, the administration decided to transfer the top management of Nintendo (Planning), the legendary Japanese video games manufacturer. You know, the Japanese are known for lifetime commitment to their companies. In China every family is said to be company, whereas in Japan each company seems to be a family! However, Okamuko Suzuki, the then CEO of Nintendo, was a western-minded manager who accepted the five-million dollar transfer money and joined (Staffing part of Leading) the MILE community. He also convinced six other top managers to move Turkey (Leading) and become part of the new firm. Considering the wide cultural gap, Suzuki wisely thought that it would be foolish for him to manage the whole company with its more than forty Turkish experts (Planning). Instead he asked for the establishment of a relatively small Design Department, and was appointed as the chief director (Organizing) of it. Mahmut Bey would coordinate (Leading, He is given a new role) the activities of these radical designers with the rest of the company. MILE has produced impressive results in a decade of uncertainty in the world economy. Almost out of nothing, they realized a sales volume of 2 billion liras by 2030, with an aftertax profit rate of 12 per cent. Even then, however, they were concerned. It would be easy, they said, for complacency to set in. They wanted to keep the company hungry and humble (Planning). Lisa was the public face of MILE. She was present in all kinds of high-society ceremonies like film galas, ballet shows, fashion fairs, and high level socio-political events (Role of Figurehead). She declined the marriage offer by one of the young ministers of the Cabinet, saying she is already married to MILE! However, most public announcements were made by İbrahim (Role of Spokesperson). He knew almost all media figures by their names (Role of Liaison), and had a very convincing speaking style (Role of Leader). He is the person at the two extremes of the enterprise: all major moves start with his announcements (Role of Spokesperson) and are overseen by his meticulous examination (Controlling). He uses every tool and opportunity to get rid of unnecessary costs (Controlling). Mahmut has always been the spiritual motivator of his community at every level (Leading and Role of Leader). He is fond of people as much as electronic games. He openly shares his ideas, plans, and even his dreams with his fellow inventors (Leading and Role of Disseminator). Like Iniesta of Barcelona, he is a team-builder and a game-developer (Leading and Role of Leader) before being an inventor himself. He is a quick reader of top electronic journals (Role of Monitoring), collecting whatever of value for his community (Role of Monitoring) and transmitting it through various channels to the prospective inventors of the company (Role of Disseminator). Elif acts like a public conscience (Role of Leader) for the community. Being a harsh critique of the global capitalism, she is actually against the monopolist concentration of capital. She always bargains trade terms with the commodity sellers (Role of Negotiator) and backs the workers in their discussions even against the MILE management. She acts like a magic-doctor between the labor and the capital and settles all kinds of disputes among workers themselves (Role of Disturbance Handler). She is called “Elif Abla” by the community as a whole. QUESTIONS: 1. Write a vision statement, a mission statement, and three major strategies for MILE. 2. Which managerial functions seem to be performed well by the four kafadars? 3. What managerial roles are being played by the kafadars?

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