In 2000 Boeing corporation mad a decision to pay Hughes Electronics
             Corp. 3.75 billion dollars for a satellite operation meant to not only put
             Boeing in the satellite business but also boost them into "high-margin,
             space based services" including linking airline passengers via the internet
             and digitally delivering movies to flyers (Holmes, 2001). The decision was
             based on the idea that benefits to the company and employees would increase
             as profits increased from new services potentially offered by the satellite
             Boeing corporation predicted that the cost to benefit ratio respective
             to this investment was positive. They also believed that an increased
             output and better services would result from their initial investment.
             Though Boeing was incurring excess variable costs associated with
             implementing a new technology and service to customers, the potential
             increased financial gains expected from customer interest in the product
             Variable costs incurred by Boeing included the need to hire more
             people to operate and maintain the satellites production and market the new
             services to the public. Fixed costs included regular operations and
             maintenance of Boeings jets with or without the satellite services. A new
             fixed cost introduced would be monthly payment to operate the satellite
             system. Other variable costs would include the number of digital services
             Boeing would eventually decide to offer clients.
             The reason behind the strategic decision was in part the notion that
             profits would increase as more clients sought out Boeing's technologically
             advanced services. Thus the additional cost load could be justified based
             on the assumption that productivity and financial gain would increase. The
             reality of the decision however was that economically it was a poor one for
             The law of diminishing marginal productivity states
             ...