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I need help with this question This is the only information that has been given Fiona Park is CFO at Klein Barnes and Nobel Ltd,
I need help with this question
This is the only information that has been given
Fiona Park is CFO at Klein Barnes and Nobel Ltd, KBN Ltd. Her company is rather diverse with a number of business areas. During the weekly management meeting on Monday morning the CEO elaborated around a number of different business scenarios for the Supermarket Division of KBN Ltd. There were four different scenarios for new product areas: Exotic Fruit and Local Meat The division can only handle one new product area per year. Looking at the two opportunities they are faced with rather different probabilities and outcomes. Based on the input from marketing research department and the planning department Fiona got the estimates as follows: Exotic Fruit would have a 30% probability for Failure, 10% for Bad Start, 20% for Normal, 10% for Good and 30% for Success. The expected return is -40% for Failure, -12% for Bad Start, 10% for Normal, 30% for Good and 50% for Success. When it comes to Local Meat the scenario looks different with 20% probability for Failure, 15% for Bad Start, 35% for Normal, 20% for Good and 10% for Success. The expected return shows a narrower span than for Exotic Fruit with -25% return for Failure, 7% for Bad Start, 10% for Normal, 20% for Good and 30% for Success. The reason for the difference in outcomes lies in the fact that it is easier to control the logistics with local sourcing Jason Brundle, Head of Operations, claimed that the expected outcomes are so similar that "we could toss a coin" and then decide. Fiona hesitated and liked to take a good look at this. Make the proper analysis of this with full set of calculations plus the likely comment Fiona would deliverStep by Step Solution
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