A Family Business Is Considering Making an Investment in Its

question 87

Multiple Choice

A family business is considering making an investment in its manufacturing operation. Three decisions are under consideration: (1) a large investment; (2) a medium investment; and (3) a small investment. The business believes that there are three possible future outcomes for its product: (1) increasing demand; (2) stable demand; and (3) decreasing demand. The following payoff table describes the decision situation: The best decision for the business using the equal likelihood criterion would be to

• A) make the large investment.
• B) make the medium investment.
• C) make the small investment.
• D) choose increasing demand.

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Definitions:

Planning Gap

The difference between future desired performance and projected actual performance, identified during strategic planning processes.

Sales Revenue Data

Information regarding the income generated from the sale of goods or services before any expenses are subtracted.

Visionary Organization

An enterprise that is guided by a clear, inspirational long-term vision, aimed at achieving significant goals or making a profound impact.

Marketing Environment

The external factors, including social, economic, technological, and political conditions, that affect a company's marketing strategies and performance.