SixDecisions Jean-PierreBenoît Case Study Analysis
1 HowMuchEffort?
TigerCorporation,withheadquartersinCanada,alsohasofficesinLondonandRiodeJaneiro.Whiletheseofficesnormallyoperatequiteindependently; thismonththeLondonandRioteamsarepreparingajointreport.Youarethe headoftheLondonteamandyoumustdecidewhatlevelofeffortsyourteamwilldevotetothisproject:HighorLow.Ahigheffortwillproduceabetterreport.However,ahigheffortalsotakesupmostofyourteam’stime as it would be more time consuming,and this time could be used in different activities.Puttingahigheffortwill effectivelycostyourteam50,whileputtinginalowereffortwillcause cost incurrence of 10 for yourteam10.The case is similarfortheteaminRio.
HeadquarterscannotmonitortheeffortsandwillrewardyouandRiobasedonthequalityofthejointreport.Thequalityofthereportthatisproduced,dependsonyoureffortsas well astheeffortsputinbytheRioteam.Ifyoubothputinhigherefforts,thereportwillturn out to be ofhighquality,andheadquarterswillrewardyourteamwithapaymentof200andRio’steamwithapaymentof200, which is an equal reward payment.Ifyoubothputinlowereffort;thereportwillbeoflowerquality,andthe headquarterswillrewardeachofyouwith110.Ifoneofyouputsinhigheffortandoneofyouputsinloweffort;thereportwillbeofmediocrequalityandheadquarterswillrewardeachofyouwith 120.
Howmucheffortshouldyourteamputin the project,higherorlower?
A: Low-effort would be put in the development of joint report, because it would save the time required to put high-effort i.e. four times. Also, the results would be based on quality rather than efforts,and there is not much difference between the reward for low-effort and high-effort report.
2 Milk
Youarethe owner of anequally-sizedproducersoforganicmilk.Whileconsumerschoosebetweenorganicandinorganicmilk;theirdecidingwould be basedupontheirpreferredfatcontent,virtuallynoneofthembuytheirmilkonthebasisofthebrand.Moreover,itdoesnotseemto be possibletocreatea brandloyalty.However, advertisingthebenefitsoforganicmilkcanmake the consumerstoswitchtoorganicmilkfroman inorganicmilk.
Arecentindependentstudyintohouseholdconsumptionchoices,indicatedtowards the fact that theadvertisingthebenefitsoforganicproductsincreasestheconsumptionoftheseproducts.Formilk.,thestudyprojectsthatthenet worthofadvertisingwill increase theoverallconsumption of organicmilk,byanet
valueof100pxtotheproducers,wherexisthetotalamountofmoneyspent
onadvertisingbyalltheproducers.100pxisthetotalincreasein
thevalueoforganicmilkconsumption,netofmilkcosts,distributioncosts,retailercuts,etc.(butnotnetoftheadvertisingcostitself).
Giventheresultsofthisstudy,yourcompanyhasdecidedtolaunchanadcampaign.Howmuchshouldyouspend?
A: 2x amountis the amount that would bespent on advertising i.e. the doubleis amount spent by all the producers, because an effective advertising requires a heavy investment for an improved product promotion and creation of awareness among the potential consumer base.......................................
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