Managerial Economics & Quantitative Analysis Question – Random House: Shifting to E-Books in a Globa


Question Description:

30

Managerial Economics & Quantitative Analysis Question – Random House: Shifting to E-Books in a Globa 1 answer below » Managerial Economics & Quantitative Analysis Question – Random House: Shifting to E-Books in a Globalized World The Random House management group is considering several complex issues. They have been given two proposals within the context of how to best proceed with the new Penguin merger in developing the Chinese market. Analysts are proposing two alternative approaches, the first of which will focus eighty percent of its effort in the development of an e-book penetration, with the balance focusing on traditional books (High E-text). The second would devote sixty-five percent on e-books, View complete question » Managerial Economics & Quantitative Analysis Question – Random House: Shifting to E-Books in a Globalized World The Random House management group is considering several complex issues. They have been given two proposals within the context of how to best proceed with the new Penguin merger in developing the Chinese market. Analysts are proposing two alternative approaches, the first of which will focus eighty percent of its effort in the development of an e-book penetration, with the balance focusing on traditional books (High E-text). The second would devote sixty-five percent on e-books, with the balance focusing on traditional books (Mod E-text). The initial costs of the alternative projects would be €170 million on the first approach and €140 million for the second. They have received two alternative estimated profit streams with associated probabilities of success as outlined in the data. Using what you have learned from your managerial economics and quantitative analysis experience, analyze this information and make a recommendation to the Random/Penguin group what you consider to be the best recommendation for proceeding. Part 1 (40%) Only a conceptual outline is expected in each question of Part 1. Given the scenario outlined in the case, what would you describe as the more important issues management should consider in deciding whether to use the High or Mod e-book focused project in penetrating the Chinese market? Which of the two approaches appears to have the higher risk associated with the project development? (20%) Describe the process you should use to evaluate the data provided, and briefly describe the analytical techniques appropriate to making an informed decision. What are the critical issues you should consider and the relative weights that should be applied in making a final recommendation? You can assume that the annualized profits presented will be applicable over the next several years. (20%) Part 2 (60%) Use the Excel file provided below to do your analysis. Calculate the expected profits of both the High E-book and Mod E-book profit streams outlined in the data. Demonstrate your understanding of these processes by providing a narrative of what should be done to evaluate which of the two projects has the better likelihood of success. Describe the specific recommendation you consider best and the reasons for that decision. (45%) What additional information would you suggest the Random House/Penguin managers should seek to improve the results of their final recommendation? (15%) Answer Formatting Guidelines: Use appropriate headings that follow the basic format of the parts of the question. There is a narrative section that describes the appropriate processes that should be used in responding to the issues raised. And there is an analytical and summative section in the second part that allows you to demonstrate you can apply the theory using the data provided. It would be most appropriate to include the Excel output used in making the analysis, and a concise narrative describing the results obtained, and the justification for the your recommendation on the better approach, given the results of the data analysis. Total words: 950-1050 Attachments: g8h7i5j8k5l3m….zip…

Answer

30