JGT2 – Organizational Management
The different options
The company is thinking about opening a new store.
1. Open a store in an existing box store (stand-alone option)
2. Open a store in the Auburn Mall
Do not open a new store
3. The company also needs to consider whether they should purchase market research or not.
The company is thinking about the possibility of opening a new store. They have the possibility of opening a store in an existing box store which is referred to as the stand-alone option. Another option they have is opening a store in the Auburn Mall or not opening a store at all. Shuzworld is also considering purchasing market research. They need to consider each option and do an effective analysis to see which direction they should go. An effective breakdown of each option is critical for Shuzworld.
Decision Tree to find the right option
A1) Analysis Tool Selection
For this slide there a Decision Tree method was used to assist in the decision process of opening a new retail store, and if they did open one, which method would be most profitable.
The data Ms. Rodriguez provided shows that the projected profit of the stand alone store in Auburn would be as much as $700,000, assuming a favorable market. However an unfavorable market would see losses as bad as -$400,000, so quite a large difference there. Looking into creating a store in the Auburn mall shows potential profits as high as $300,000 if there’s a favorable market, and a substantially smaller loss of $50,000 should the market prove to be unfavorable in the mall-store scenario. Ms. Rodriguez believes there is a 50/50 chance for the profitable market scenario, which of course is an equal chance of an unfavorable market. Should the company decide against opening a store in either fashion, there would be zero losses and zero profits. If the raw information on these two scenarios it’s hard to determine exactly which would be the...