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Sagot :
The large investment the company made in the failed project most likely was made by a manager who did not fully understand "Sunk Costs".
What is Sunk Cost?
An price or investment that has already been made and cannot be recovered is referred to as a sunk cost.
Types of sunk cost are -
- Investment in advertising. This money is lost if you advertise a new product; it cannot be recovered.
- Investigation into a new product.
- Labour expenses.
- New software system installation and operational procedures.
- Loss of relationships in business and reputation.
Therefore, Sunk expenses are unrelated to any particular occurrence and shouldn't be taken into account while choosing an investment or project.
To know more about ways to harvest an investment in a business, here
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