Bba312 Decision Analysis Final Assessment Task Brief Rubrics

Bba312decisionanalysis Finalassessment Taskbriefrubricst

Develop and write a report to assess the case study from El Mejicano. The case involves the company's consideration of whether to initiate a promotional pricing campaign for their new menu line amidst competitive pressure from Panchito, a rival fast-food chain in Barcelona. The decision involves potential risks of price wars, competitive reactions, and implications for market share, profit margins, and long-term strategy. The report should include analysis of alternative decision options, decision variables, decision tree and influence diagram development, clarification of the company's objectives, risk assessment for each alternative, and a reflection on risk preferences. Employ relevant decision-making theories, risk management frameworks, and methodological approaches learned in class. The report should be between 1000 words, formatted in Arial 12.5 pts, justified text, and include Harvard style in-text citations and a bibliography.

Paper For Above instruction

Introduction

The fast-food chain El Mejicano in Barcelona faces a strategic decision: should they proceed with a promotional menu campaign amidst potential retaliation from their main competitor, Panchito? This decision is complex due to the competitive dynamics, uncertain market responses, and the risks and rewards associated with different strategic choices. Effective decision analysis, incorporating decision trees, influence diagrams, risk assessment, and clear articulation of objectives, is essential for making an informed choice that aligns with El Mejicano's strategic goals and risk appetite.

Alternative Decision Options and Key Decision Variables

Beyond the initial alternatives of launching the promotion early or sticking to the original plan, an additional option could be to develop a differentiated marketing strategy that emphasizes value or quality rather than price cuts. This approach could mitigate the risk of price wars while still gaining market share. Furthermore, the decision variables to consider include the timing of the promotion (early, on schedule, or delayed), the extent of price reductions, potential marketing investments, and contingency plans in case of competitive retaliation. Other factors include the company's current market share, brand positioning, operational capacity, and the financial impact of profits reduction versus long-term gains.

Decision Tree and Influence Diagram Development

Constructing a decision tree involves mapping the initial decision (launch early or as planned), possible reactions of Panchito (retaliate or not), and subsequent outcomes in terms of market share, profits, and market positioning. Each branch captures probabilistic elements, such as a 30% chance of immediate retaliation if the campaign is launched early (as suggested by Manuel). The influence diagram complements this by visually representing the key variables—decisions, uncertainties, and outcomes—and their interdependencies, providing clarity and facilitating communication among stakeholders. The decision tree assists in quantitative analysis, while the influence diagram offers a simplified view of the decision problem, highlighting the strategic relationships and influences.

Objectives of El Mejicano in This Decision-Making

The primary objectives of El Mejicano are to increase market share (aiming for at least 2 percentage points), maximize the profitability of their promotional campaign, and establish a competitive advantage over Panchito. Secondary objectives include minimizing the risk of profit erosion due to price wars, maintaining brand value, and positioning for sustainable growth post-promotion. These objectives need to be balanced against each other, considering the trade-offs between aggressive market capture and risk exposure.

Risk Assessment and Preference

Each decision alternative entails specific risks. Launching early could provoke an immediate and intense price war, risking significant profit losses if both competitors reduce prices excessively. Delaying the launch reduces the likelihood of retaliation but may result in losing market share to Panchito. Developing an alternative marketing strategy involves risk related to consumer acceptance and market differentiation failure.

Using frameworks such as risk matrices and expected utility theory, I assess that an aggressive early launch is riskier but might yield substantial market gains if well-executed. Conversely, a conservative approach aligns with risk-averse strategies, prioritizing profit stability and brand integrity. Based on the company's risk appetite—whether risk-seeking or risk-averse—recommendations can be tailored. For instance, if El Mejicano favors cautious growth, delaying the promotion or adopting differentiation strategies might be preferred. If market share gain is critical, an early launch despite higher risk could be justified.

Conclusion

The decision to launch a promotional campaign amidst competitive threats involves complex trade-offs. Developing comprehensive models, including decision trees and influence diagrams, supports understanding the uncertainties and strategic interdependencies. Clear articulation of objectives guides risk assessment and choice selection, aligning decisions with corporate goals and risk appetite. Ultimately, a nuanced approach balancing aggressive tactics with risk mitigation should inform El Mejicano's strategy, ensuring sustainable growth and competitive advantage.

References

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• Finkelstein, S., & Cowan, R. (2014). Strategic Decision Making: A Handbook for Practitioners. Wiley.
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