Economics 12 Chapter 1

“Dell to invest $100 billion in China by 2020”

Read more: http://www.vancouversun.com/business/asia-pacific/Dell+invest+billion+China+2020/3543381/story.html#ixzz108katvoH

Summary

As the title says, the computer company Dell plans to invest $100 billion in China by 2020. They will be opening their second centre in Chengdu, Sichuan. The centre will include manufacturing, sales and services to help the rapidly growing market in the area. It expects to be open in 2011 and will have around 3000 employees. One reason as to why the company may have decided to invest in China is because investing in the coastal regions is becoming too expensive for the company.

Connections

This article really made me think about the idea of opportunity costs. Every time you decide to invest in something (opportunity), there is a loss. The loss is the potential money you could have made if you hadn’t made that decision. Every action you take has a consequence; it doesn’t matter if it’s something as large as investing 100 billion dollars into a country, or if it’s as small as buying something from a vending machine. Usually, the loss is something as simple as time. For example, in this article, Dell is not putting 100 billion dollars into China overnight. Rather, it is a long-term plan spanning 10 years, during which a lot of time and effort will be spent. Will the investment be worth it?

Reflections

I now understand why making financial decisions is not easy. Even the smallest steps of a plan can cause huge losses. As well, every step is crucial. You can’t ever really avoid opportunity costs, you can only hope that the decision you make will reward you with something bigger than what you could have lost. Even when you do nothing, you just lost time, time which could have been spent more productively somewhere else. In conclusion, I think I now have a much better grasp about the concept of opportunity costs, and how I should always be more thoughtful about the decisions I make.