Sheet1Case Chapter 1860%High response$1,150,000Introduce globally$2,000,000$1,150,000$(850,000)$530,00040%Low response$(400,000)$450,000$(400,000)

Remain in NA$1,000,000$1,200,000$1,000,00090%2High global response$1,011,50070%$1,600,000High NA responseMarket globally$2,000,000$1,600,00020.0$1,445,000$(200,000)$1,445,00010%Low global response$50,000$450,000$50,000

Drop product$(200,000)NA test market0.0$(200,000)$(200,000)$1,011,500Remain in NA0.0$200,0000.05%High global response30%$1,200,000Low NA responseMarket globally$2,000,000$1,200,00010.00.0$(600,000)$(272,500)95%Low global response$(350,000)$450,000$(350,000)Drop product$(200,000)0.0$(200,000)Optimal strategy: Test market in North America; if the response is high, then market globally; if the response is low, then remain in NARisk profileOutcome ProbabilityTest market; high NA response; market globally; high response: $1,600,0000.63Test market; high NA response; market globally; low response: $50,0000.07Expected valueTest market; low NA response: remain in NA:0.00.3$1,011,500.00Note that the expected value of the risk profile is the same as that of node 1Students may conduct various sensitiviy analyses on the probabilitiesExample:P(high NA resp.)Expected valueDecision$1,011,500Test0.1$530,00000Global0.2$530,00000Global0.3$530,00000Global0.4$578,00000Test0.5$722,50000Test0.6$867,00000Test0.7$1,011,50000Test0.8$1,156,00000Test0.9$1,300,50000Test

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