CASE ANALYSIS
MGT 4201
Managing Decision making
Spring 2019
BY:
Question 1
Calculate value of strategies with benefits measured on common scale.
Answer 1
In order to manage the companys objectives, the production manager should create decisions that will lead in profit-earning, increasing market share, and minimizing risks.
The first step in order for the decision to be realized, is to understand the issues arisen. If the problem is clear, then, make strategies in order to attain the objective. Gathering data will help the production manager identify the important points in the problem. Weighing options will also help the production manager asses the situation. All possible strategies will be a huge help because these will guide the manager in evaluating the possible outcome, whether it will lead to a loss or gain in the part of the company. Choose the best solution from the given strategies that will help boost the market share as well as the profit but with less risks involved. Implement the scheme chosen and evaluate and monitor whether it meets the companys objective.
Benefit
Cost Profit
Strategies ($m) ($m) Market Share Risk
NORTH REGION
(1) Reduce to three outlets 12 (6) 100 0 100
(2) Status quo 28 (-3) 0 100 0
WEST REGION
(1) Close down operation -14 (4) 100 0 100
(2) Status quo 7 (-2) 54 30 60
(3) Expand to six outlets 16 (-9) 0 100 0
EAST REGION
(1) Status quo 2 (3) 100 0 100
(2) Expand to four outlets 25 (0) 91 25 70
(3) Expand to 10 outlets 40 (-30) 0 100 0
SOUTH REGION
(1) Status quo 20 (65) 100 0 100
(2) Expand to 16 outlets 25 (50) 50 80 40
(3) Add three town center outlets 45 (35) 0 100 0
Table 1. Value of strategies with benefits measured on common scale.
The value of strategies with benefits measured on common scale is the set of possibilities that the company might encounter. Options will come from the table and the best alternative will be the one to be implemented.
Question 2
Determine the benefit for Package A proposed by the Production manager.
Benefit
Cost Profit Market
Strategies ($m) ($m) Share Risk
North: Reduce to three outlets 12 (6) 100 0 100
West: Status quo 7 (-2) 54 30 60
East: Expand to 10 outlets 40 (-30) 0 100 0
South: Status quo 20 (65) 100 0 100
Table 2. Package A as proposed by the Production manager.
Answer 2
Package A shows that reducing to three outlets in the North will lead to $12 million in cost, $6 million up to $100 million in profit, without market share and a hundred (100) percent risk. Retaining the status quo in the West will lead to a cost of $7 million, a loss of $2 million up to a profit of $54 million, a market share of thirty (30) percent, and a risk of sixty (60) percent. Expanding to 10 outlets n the East will result to $40 million in cost, loss of $30 million up to break-even point, a market share of a hundred (100) percent and without risk to be encountered. Maintaining status quo on the South will have an outcome of incurring $20 million cost, loss $65 million up to $100 million profit, without market share and a hundred (100) percent risk.
Benefit
Strategies Cost ($m) Profit ($m) Market Share Risk
North Reduce to three outlets 12 100 0 100
West Status quo 7 54 30 60
East Expand to 10 outlets 40 0 100 0
South Status quo 20 100 0 100
TOTAL 79 254 130 260
AVERAGE 19.75 63.5 32.5 65
Table 3. Package A as proposed by the Production manager with Total and Average benefits.
Table 3 shows that the cost is $19.75 million, profit of $63.5 million, a market share of 32.5 percent and a risk of 65 percent in average. The benefit of the Package A that was proposed by the Production manager gives the company a higher profit despite of its higher risk.
Question 3
Determine the benefit for Package B proposed by the Marketing manager.
Benefit
Cost Profit Market
Strategies ($m) ($m) Share Risk
North
Status quo 28 (-3) 0 100 0
West Close down operation -14 (4) 100 0 100
East Expand to four outlets 25 (0) 91 25 70
South Expand to 16 outlets 25 (50) 50 80 40
Table 4. Package B as proposed by the Marketing manager.
Answer 3
Package B shows that maintaining the status quo in the North will lead to $28 million in cost, a negative $3 million up to a break-even point in profit, with a market share of a hundred (100) percent and without risk. Closing down operation in the West will lead to a negative cost of $14 million, $4 million up to a $100 million profit, without a market share, and a risk of a hundred (100) percent. While expanding to 4 outlets in the East will result to $25 million in cost, a zero up to $91 million up in profit, twenty-five (25) percent of the market share and a risk of seventy (70) percent. While expanding to 16 outlets on the South will have an outcome of $25 million cost, a $50 million profit, a market share of eighty (80) percent and a forty (40) percent risk.
Benefit
Strategies Cost ($m) Profit ($m) Market Share Risk
North Status quo 28 0 100 0
West Close down operation -14 100 0 100
East Expand to four outlets 25 91 25 70
South Expand to 16 outlets 25 50 80 40
TOTAL 78 241 205 210
AVERAGE 19.5 60.25 51.25 52.5
Table 5. Package B as proposed by the Marketing manager with Total and Average benefits.
Table 5 shows the average cost in Package B is $19.5 million, profit of $60.25 million, a market share of 51.25 percent and 52.5 percent in risk. The proposed Package of the Marketing manager gives an advantage of having a higher profit of about $60.25 million in average even though it gives a higher risk.
Question 4
Prepare and execute an extensive analysis and use the appropriate tools for assessment to recommend better package for organizational decisions.
Answer 4
Between the Packages that was given by the Production and Marketing manager, the one that is Beneficial to the company is the Package B that was proposed by the Marketing manager for it gives a higher market share average of about 51.25 percent, a lower cost of about $19.5 million, a lower percentage of risk than that of the Package A proposed by the Production manager.
