Prior to the investment progressing, further research has been undertaken and it has been identified that...
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Prior to the investment progressing, further research has been undertaken and it has been identified that the market for the product is uncertain and is affected by the reaction from competitors. Given this uncertainty, there is a need for reconsidering the selling price. The research suggested three possible selling prices for the pair of boots and forecast profit for each price considering the different possible reactions from competitors. This information is presented as follows: Competitors reaction Strong Medium Weak Required: £60 £50,000 £70,000 £95,000 Selling prices and forecast profit £57 £55,000 £77,000 £85,000 £54 £65,000 £65,000 £65,000 d) Identify the expected selling price using the minimax regret method and discuss its effect on viability of the project considering the sensitivity of the project's NPV to the change in the selling price. (10 marks) Prior to the investment progressing, further research has been undertaken and it has been identified that the market for the product is uncertain and is affected by the reaction from competitors. Given this uncertainty, there is a need for reconsidering the selling price. The research suggested three possible selling prices for the pair of boots and forecast profit for each price considering the different possible reactions from competitors. This information is presented as follows: Competitors reaction Strong Medium Weak Required: £60 £50,000 £70,000 £95,000 Selling prices and forecast profit £57 £55,000 £77,000 £85,000 £54 £65,000 £65,000 £65,000 d) Identify the expected selling price using the minimax regret method and discuss its effect on viability of the project considering the sensitivity of the project's NPV to the change in the selling price. (10 marks)
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Applying Minimax Regret Method 1 Construct a Regret Matrix Competitors Reaction Selling Price Regret ... View the full answer
Related Book For
Global Marketing management
ISBN: 978-0470505748
5th edition
Authors: Masaaki Kotabe, Kristiaan Helsen
Posted Date:
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