STRATEGIC DECISION MAKING AND NEGOTIATION

TREEPLAN CASES:
Telemore Freemark Abbey Winery

R46B Reza Destryanto Teguh Permana Sidik Delfiana Primashinta 29111354 (29111366) 29111373

MASTER OF BUSINESS ADMINISTRATION SCHOOL OF BUSINESS AND MANAGEMENT BANDUNG INSTITUTE OF TECHNOLOGY 2012

CASE 1 TELEMORE

Management of the Telemore Company is considering developing and marketing a new product. The company considering some alternatives, and we help the company to find the best solution with developing decision tree. Alternatives that should be considered, are: It is estimated to be 66.67% that the product would be successful. If it were successful, the expected profit would be $1,500,000. If unsuccessful, the expected loss would be $1,800,000. A marketing survey can be conducted as a cost of $100,000 to predict whether the product would be successful. If the survey shows favorable result, the product will be successful 80 percent of time. If the survey shows unfavorable result, the product will be unsuccessful 70 percent of time. The probability that the marketing survey show a favorable result is 50%.

Analysis
alternative 1 ( Without Survey)
Successful Unsuccessful Probability Amount 0.6667 1500000 0.3333 (1800000)
0.8 0.2 0.5334 0.4666

Alternative 2 (With Survey)

Probablility Survey conducted show favorable 0.8 Favorable Unfavorable Total Successful 0.4 0.2667 0.6667 Unsuccessful 0.1 0.2333 0.3333 Total 0.5 0.5 1

p (successful | Favorable) p (unsuccessful | Favorable) p (successful | unFavorable) p (unsuccessful | Favorable)

0.6667 success introduce product w/o survey1500000 0 400110 0.3333 not success 1500000

www.TreePlan.com 1,500,000.00

(1,800,000.00) -1800000 -1800000 0.8 success 1,400,000.00 Developing product 1 400110 0.5 favorable result 1 0 740000 Do nothing (100,000.00) 0 with survey -100000 370000 Developing product 0 0 0.5334 success 1,400,000.00 1500000 0.4666 not success (1,900,000.00) 1 0 0 Do nothing 0 -100000 (100,000.00) For Evaluation Only -1800000 -100000 0 740000 0.2 not success (1,900,000.00) -1800000 -1900000 1500000 1400000

Conclusion From analysis above, we can recommend Telemore Company to take alternative 1, which is marketing the product without conduct any survey. If the company take the first alternative , the ending possible income is $400,110 considering all probability of successful and unsuccessful.

0.5 Unfavorable result

CASE 2 FREEMARK ABBEY WINERY