Marketing has long been perceived by many consumers as an unethical function, and this reputation has contributed to a crisis of trust in the field (Drumwright 2018). This is partly because marketing often involves persuading people to buy products or services that they may not need or that may not be in their best interests. In addition, marketing has often been associated with deceptive or manipulative practices, such as false advertising or hidden fees.
To address these concerns and improve the reputation of marketing, it is important to base marketing practices on sound ethical foundations. This means considering the impact of marketing actions on all stakeholders, including consumers, employees, shareholders, and society as a whole. Marketing ethics can be analyzed in relation to the 4Ps of marketing, which are product, price, promotion, and place. For example, a company may be ethically responsible for ensuring that its products are safe, accurately labeled, and fairly priced, while also being transparent in its promotion and distribution practices.
Some theories of the firm, such as deontological theories, propose a model of responsibility or right action that goes beyond profit-seeking. These theories argue that profits are not the ultimate goal of the firm, but rather the result of dutiful action that is guided by ethical principles. This includes concepts such as fair prices, which ensure that consumers are not being taken advantage of and that the company is not engaging in predatory pricing practices. By adopting a deontological approach to marketing, firms can work to rebuild trust with consumers and contribute to a more ethical business environment.
Marketing ethics is a subfield within business ethics that focuses on the ethical issues that arise in marketing practice and research. The field has attempted to provide both normative and positive models to address ethical dilemmas in marketing. Normative models offer guidance on what should be considered ethical behavior, while positive models describe what is actually happening in practice.
Marketing ethics has addressed a wide range of topics, including consumer privacy, deceptive advertising, green marketing, and corporate social responsibility. In recent years, the field has also begun to consider the ethical implications of emerging technologies, such as artificial intelligence and machine learning, in the domain of machine ethics.
There are two main traditions of ethics or moral philosophy: deontological and teleological (Hunt and Vitell 1986). Deontological ethics, also known as duty ethics or rights-based ethics, focuses on identifying the right action based on moral rules or duties. This approach is best represented by Kantian ethics and the categorical imperative, which holds that individuals should act in ways that can be universalized and that respect the inherent value of other people. In Kantian ethics, named after German Philosopher Immanuel Kant, who is depicted in the below illustration, people are considered ends in themselves, rather than means to an end. This means that individuals should act as if they are legislating members of the Kingdom of Ends (Reich der Zwecke). Kantian ethics is intended to help individuals make ethical decisions when faced with difficult choices.
According to Kant's ethical theory, the categorical imperative is the test that provides moral guidance in difficult cases. This test is not meant to persuade unethical people to be ethical, but rather to assist those who want to do the right thing but may not know what that is in certain situations. For example, Kant's theory could be used to help someone decide whether to commit suicide when they are nearing the end of life and experiencing a great deal of pain. Kant's use of hard cases is based on the assumption that people generally know what is right in easy cases, but may need additional guidance in more challenging situations. By using the categorical imperative as a guide, individuals can make ethical decisions even in the most difficult circumstances. (Bowie 2017, p. 19)
Teleological ethics, on the other hand, focuses on the consequences or outcomes of an action. This approach, also known as consequentialism, is best exemplified by utilitarianism, which holds that the right action is the one that maximizes overall happiness or well-being. Both deontological and teleological approaches have their own strengths and weaknesses and have been influential in shaping ethical debates in various fields, including marketing.
Gamification, the use of game elements in non-game contexts, is increasingly being used in educational settings to enhance student motivation and learning outcomes (Legaki et al. 2020). Gamification can be a powerful tool for teaching complex concepts, such as ethical decision-making, in a way that is engaging and interactive. In this paper, we propose that gamification can be an effective tool for teaching ethical decision-making in marketing. We explore the use of gamification in education to teach about deontological and teleological approaches to ethical decision-making. In this study, a game was designed in which users were required to respond to ethical dilemmas that involved financial tradeoffs. The game provided sample cases and outlined the potential outcomes of different decisions. By engaging with these scenarios through a game, students are able to learn about the different ethical approaches and apply them to real-world situations.
The game described in the passage involves presenting players with ethical dilemmas and a range of potential decisions that have tradeoffs and ethical implications. Players must then choose which decision they believe is the most ethical or appropriate in the given situation. This process helps to teach players about the ethical implications of different decisions and encourages them to consider the tradeoffs involved in each choice.
By presenting players with realistic ethical dilemmas and allowing them to explore the consequences of different decisions, the game can potentially help players build critical thinking skills and develop a better understanding of ethical decision-making. This can be particularly useful in the context of marketing, where ethical issues are often complex and multifaceted.
In playing the game, some of the participants were asked to take decisions from a deontological or teleological perspective. Deontological ethics focuses on identifying the right action, while teleological ethics appeals to the outcome. Other players were asked to take decisions that reflect their actual choices in a realistic environment, regardless of whether they align with deontological or teleological principles.
Some of the cases presented in the game involved tradeoffs that were not related to ethics, such as financial or logistical considerations. The goal of the game was to explore how players approach decision-making and how different ethical frameworks influence their choices. The scenarios were presented to both business executives and students to compare their decision-making processes.
You have just discovered that a product your company sold to a small customer does not fully meet the requirements. The customer has not yet noticed this issue and may never discover it. You have the option to ignore this problem and collect payment immediately, but if the issue is discovered later, your company could be sued. You must decide what to do. Below are your options:
Option 1: Ignore the issue and collect payment immediately.
Option 2: Inform the customer of the issue and offer a solution, such as a refund or replacement product.
(In this scenario, you must weigh the immediate financial gain of ignoring the problem against the potential legal and reputational risks of being discovered. Ethically, it may be more responsible for informing the customer and offering a solution, even if it means sacrificing some short-term profit.)
(In this scenario, you must consider the potential financial gain of the deal versus the ethical and legal risks of faking the certificate. Faking the certificate may be tempting due to the potential financial gain, but it is also a dishonest and potentially illegal action that could have serious consequences if discovered. Obtaining the necessary certification may require more time and resources, but it is a more ethical and legally sound option. Alternatively, you could choose to pass on the deal and pursue other opportunities that do not require compromising your values or breaking the law.)
Scenario Case 3: Branding
You have been approached by a leading agency that is offering a comprehensive branding program for your company. Based on your past experience, you believe that branding is unlikely to have a significant impact on immediate sales. Additionally, many of your competitors are investing in branding without seeing direct benefits. You must decide whether to proceed with the branding program or pass on the opportunity. Below are your options:
Option 1: Go ahead with the branding program.
Option 2: Pass on the opportunity for now.
Decision | Cash Flow | Gain Profile | Loss Profile |
Option 1 | -1 | +1 | 0 |
Option 2 | 0 | 0 | 0 |
(In this scenario, you must weigh the potential long-term benefits of branding against the immediate costs and the likelihood that the branding will have a tangible impact on sales. While branding can be important for building awareness and establishing a strong corporate identity, it may not always lead to direct financial returns in the short term. Therefore, it may be more beneficial to wait and see if your competitors' branding efforts pay off before committing to a similar program. Alternatively, you could choose to go ahead with the branding program, but only if you believe it will be a worthwhile investment in the long term.)
Scenario Case 4: New Product Development
Your company has been working on a new product development project for several years, and you have invested 90,000 M in it. Your research and development (R&D) team has told you that the project will require additional funding to be completed, but there is also a risk that the product may not be successful in the market. You must decide whether to continue funding the project or scrap it. Below are your options:
Option 1: Continue funding the project.
Option 2: Scrap the project.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
-1
|
+1
|
+1
|
|
Option 2
|
0
|
0
|
0
|
(In this scenario, you must weigh the potential benefits of completing the project against the financial and time investment that has already been made. If the product is likely to be successful in the market, it may be worth continuing to fund the project. However, if the product is not likely to be profitable or if the costs of completing it outweigh the potential benefits, it may be more sensible to cut your losses and move on to other opportunities.)
Scenario Case 5: Delivery Commitment
A new employee at your company has made an unrealistic delivery commitment to a customer that your company cannot keep. You believe that firing the employee will send a strong message and help retain the client, but you also worry that it could demoralize other employees and lead to similar incidents in the future. You must decide how to handle the situation. Below are your options:
Option 1: Fire the employee.
Option 2: Counsel the employee and provide additional training.
Option 3: Ignore the episode.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
0
|
+1
|
+2
|
|
Option 2
|
-2
|
0
|
-1
|
|
Option 3
|
0
|
0
|
+1
|
(In this scenario, you must consider the potential consequences of each course of action. Firing the employee may send a strong message and help retain the client, but it could also have negative effects on employee morale and may not address the underlying causes of the problem. Providing additional training and counseling may be a more effective way to prevent similar incidents in the future, but it may not have the same immediate impact on the client relationship. Ignoring the episode may not have any immediate consequences, but it could lead to similar incidents in the future and may not be a responsible or ethical way to handle the situation.)
Scenario Case 6: Contract Manufacturing
Company EFG, a leader in its field, is offering to pay you a large sum of money to contract manufacture for them. However, you are concerned that taking on this contract may negatively impact your ability to deliver other products and lead to reduced sales. EFG is willing to help you improve your process, which may reduce your risks. You must decide whether to accept the contract or opt out. Below are your options:
Option 1: Agree to the contract.
Option 2: Opt out.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
+20
|
-2
|
-1
|
|
Option 2
|
0
|
0
|
0
|
(In this scenario, you must consider the potential benefits and risks of accepting the contract. The financial gain from the contract may be tempting, but you must also consider whether it is worth the potential loss in sales and the risk of overextending your resources. On the other hand, accepting the contract and working with EFG to improve your process may provide long-term benefits and help you build a stronger business.)
Scenario Case 7: Salesman's Behavior
Your star salesman, Mr. K, has consistently exceeded his targets and has been a key factor in your recent success. However, there have been complaints about Mr. K's behavior with subordinates, and upon investigation, you have found these complaints to be true. Despite previous warnings, the complaints have continued. You must decide how to handle the situation. Below are your options:
Option 1: Ask Mr. K to leave.
Option 2: Pay off the complainants.
Option 3: Postpone the decision.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
0
|
-1
|
-2
|
|
Option 2
|
-2
|
0
|
0
|
|
Option 3
|
0
|
0
|
+1
|
(In this scenario, you must consider the potential consequences of each course of action. Asking Mr. K to leave may be necessary to address the issue of his inappropriate behavior and protect your company's reputation, but it may also disrupt your business and negatively impact your sales. Paying off the complainants may be a quick fix, but it does not address the underlying problem and may not be a responsible or ethical solution. Postponing the decision may allow you more time to investigate the situation, but it may also allow the problem to continue and potentially escalate.)
Scenario Case 8: Key Client
A significant portion of your sales come from a single client who has been making unreasonable demands on you. They now want you to stop supplying your products to other clients and are not willing to negotiate. If you do not accept their demands, you risk losing the client. However, continuing to work with this client also increases your risks considerably. You must decide whether to reject or accept the demand. Below are your options:
Option 1: Reject the demand.
Option 2: Accept the demand.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
0
|
-2
|
0
|
|
Option 2
|
0
|
0
|
+2
|
(In this scenario, you must weigh the potential benefits and risks of each course of action. Losing the client could have a negative impact on your sales and financial performance, but it may also allow you to focus on other opportunities and reduce your risks. On the other hand, accepting the demand may help you retain the client and the associated financial benefits, but it also exposes you to increased risks and may compromise your values or business principles.)
Scenario Case 9: Product Sample
Company TUV has requested a custom made sample of your product for evaluation. Just before dispatching it, you realize that the product has a serious flaw, but there is only a small chance it will be detected. If the flaw is detected, you risk losing the order and damaging your reputation. However, if the flaw goes unnoticed, you have a good chance of winning a major order. You do not have time to redesign the product. You must decide whether to dispatch the product or not. Below are your options:
Option 1: Dispatch the product.
Option 2: Don't dispatch the product.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
+10
|
-2
|
+1
|
|
Option 2
|
-5
|
+1
|
0
|
(In this scenario, you must weigh the potential benefits and risks of each course of action. Sending the flawed product may increase your chances of winning the order, but it also exposes you to the risk of damaging your reputation and losing the order if the flaw is detected. On the other hand, not sending the product may protect your reputation and reduce your risks, but it may also mean missing out on the opportunity to win a major order.)
Scenario Case 10: Employee Bonus
Mr. PQRS, the head of research and development at your company, is demanding a large one-time bonus and is not willing to negotiate on the amount. He has threatened to leave if the full amount is not given. PQRS is a critical resource and his departure would have a negative impact on your company's sales and increase its risks. However, his departure would also reduce costs as he is the highest paid employee at your company. You must decide whether to give the bonus or not. Below are your options:
Option 1: Don't give the bonus.
Option 2: Give the bonus.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
+12
|
0
|
+2
|
|
Option 2
|
-1
|
+1
|
0
|
|
Option 3
|
0
|
0
|
0
|
(In this scenario, you must weigh the potential benefits and risks of each course of action. Not giving the bonus may save your company money and reduce costs, but it could also lead to the departure of a critical resource and have negative impacts on sales and risks. On the other hand, giving the bonus may help retain a valuable employee, but it also incurs additional costs and may not address the underlying causes of the problem.)
Scenario Case 11: Patent Sale
Company JKL has approached you about purchasing your most important patent, a technology that makes your product safer and stronger. If you agree to the sale, you will not be allowed to use the technology in your products, which will reduce your profits and increase your risks. However, the price that JKL is offering meets your previous valuation of the patent and you feel that you could invest the proceeds in more research and development. You must decide whether to sell the patent or not. Below are your options:
Option 1: Sell the patent.
Option 2: Don't sell the patent.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
+25
|
-2
|
+2
|
|
Option 2
|
0
|
0
|
0
|
(In this scenario, you must weigh the potential benefits and risks of each course of action. Selling the patent may provide a financial windfall and allow you to invest in more R&D, but it also means losing access to a valuable technology and potentially increasing your risks. On the other hand, not selling the patent may allow you to continue using the technology in your products, but it also means missing out on the opportunity to receive the offered price and potentially invest in more R&D.)
Scenario Case 12: Vendor Relationship
You currently have a single vendor, MNO, for a key component, but your analysis shows that MNO is on the verge of bankruptcy. You have been considering looking for alternatives to reduce your risks, but changing vendors at this point could also reduce your profits. MNO approaches you and offers a large down payment in exchange for signing a long-term contract with them, stating that the contract will help them survive. You must decide whether to replace MNO with a new vendor or sign a long-term contract with them. Below are your options:
Option 1: Replace MNO with a new vendor.
Option 2: Sign a long-term contract with MNO.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
0
|
-1
|
-1
|
|
Option 2
|
+20
|
0
|
+2
|
(In this scenario, you must weigh the potential benefits and risks of each course of action. Replacing MNO with a new vendor may reduce your risks, but it could also have a negative impact on your profits in the short term. On the other hand, signing a long-term contract with MNO may provide a financial benefit in the form of a down payment, but it also exposes you to the risk of doing business with a potentially unstable vendor.)
Scenario Case 13: Product Development Project
Client PQR has paid you in full to develop a product, but you have already spent the entire advance on development and the product is not yet ready. To keep the project going, you must allocate key resources from other research and development projects, which could potentially reduce your market share. If you decide to stop the development now, you will have to return the entire advance immediately. You must decide whether to continue the project or stop it and return the advance. Below are your options:
Option 1: Continue the project.
Option 2: Stop the project and return the advance.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
0
|
-1
|
+2
|
|
Option 2
|
-10
|
0
|
0
|
(In this scenario, you must weigh the potential benefits and risks of each course of action. Continuing the project may allow you to complete the product and potentially earn additional profits, but it also requires redirecting resources away from other projects and exposes you to the risk of not recouping the advance. On the other hand, stopping the project and returning the advance may minimize your risks, but it also means giving up on the potential profits and potentially damaging your relationship with the client.)
Scenario Case 14: Quality System
Your Quality Head has proposed implementing a new quality system that could significantly reduce product failures and warranty costs. While this may improve the quality of your products and lower your long-term expenses, it could also increase your upfront costs and potentially reduce your market share. You must decide whether to implement the new quality system or not. Below are your options:
Option 1: Set up the new quality system.
Option 2: Do not set up the new quality system.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
-1
|
-2
|
-2
|
|
Option 2
|
0
|
0
|
0
|
(In this scenario, you must weigh the potential benefits and risks of each course of action. Implementing the new quality system may improve the reliability of your products, reduce warranty costs, and enhance your reputation, but it may also require additional resources and potentially lower your short-term profits. On the other hand, not setting up the new quality system may minimize your costs and risks, but it also means potentially missing out on the long-term benefits and potentially sacrificing the quality of your products.)
Scenario Case 15: Business Deal
A large company has approached you for a deal that would be the biggest in your company's history. However, accepting this deal directly would mean bypassing your exclusive dealer in a certain territory, company XYZ. While this would allow you to retain more profits from the deal, it could also hurt your reputation and make it more difficult to find new dealers in the future. On the other hand, involving XYZ in the deal would reduce your profits, but it would protect your reputation and relationships with dealers. You must decide whether to take the order through the dealer or directly. Below are your options:
Option 1: Take the order through the dealer.
Option 2: Take the order directly.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
+20
|
-1
|
+1
|
|
Option 2
|
+5
|
0
|
0
|
(In this scenario, you must consider the potential risks and benefits of each course of action. Accepting the order through the dealer may protect your reputation and relationships, but it could also reduce your profits. On the other hand, taking the order directly may increase your profits, but it could also damage your reputation and make it harder to find new dealers in the future.)
Scenario Case 16: Company Acquisition
You are considering the option of buying a small R&D firm called DEF. Your analysis has shown that DEF holds several key patents and has valuable technology know-how that could help your company develop new products and improve the quality of your existing ones. However, buying DEF would require a significant investment of your financial resources. You must decide whether to pursue this opportunity or pass it up. Below are your options:
Option 1: Buy DEF.
Option 2: Pass up the opportunity.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
-20
|
+2
|
-2
|
|
Option 2
|
0
|
0
|
0
|
(In this scenario, you must weigh the potential benefits of acquiring DEF's technology and patents against the financial cost of the acquisition. Buying DEF could provide long-term benefits for your company, but it could also strain your financial resources in the short-term. On the other hand, passing up the opportunity may allow you to preserve your financial resources, but it could also mean missing out on valuable technology and patents.)
Scenario Case 17: Patent Licensing
You are considering the option of licensing a patented technology to a company called PQR. PQR is willing to pay a large one-time sum for the license and has assured you that the technology will not be used in a competing product. On one hand, the money from the sale could be beneficial for your company, potentially allowing you to invest in further research and development. However, you are also concerned that licensing the technology could potentially reduce sales of all your products that use this technology. You must decide whether to pursue the licensing deal or not. Below are your options:
Option 1: License the technology to PQR.
Option 2: Do not license the technology.
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
+10
|
-1
|
0
|
|
Option 2
|
0
|
0
|
0
|
(In this scenario, you must weigh the potential financial benefits of the licensing deal against the potential risks to your product sales. Licensing the technology could provide a one-time financial benefit, but it could also have long-term consequences for your product sales. On the other hand, not licensing the technology could allow you to protect your product sales, but it could also mean missing out on a potentially lucrative opportunity.)
Scenario Case 18: Tax Payments
You have discovered that the former CEO of your company falsely represented accounting information in order to reduce payable taxes. If this is detected, your company will be penalized. You have the option to set this right by paying the outstanding dues and reducing your risks. However, your chief accountant advises against it, stating that this is unnecessary and that the liability will not be detected. Below are your options:
Option 1: Pay the outstanding dues
Option 2: Ignore the issue
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
-5
|
0
|
-1
|
|
Option 2
|
0
|
0
|
+1
|
(In the above scenario, the tradeoff involves weighing the costs and benefits of taking action to correct the false representation of accounting information and pay the outstanding taxes. On the one hand, taking this action could potentially reduce the risks faced by your company, as failing to pay the outstanding taxes could result in penalties if the liability is detected. On the other hand, taking this action may be costly and may not be necessary if the liability is not detected.)
Scenario Case 19: Insurance Cover
A leading insurance company has offered to cover certain risks faced by your business. While the fee for this coverage is hefty, it has the potential to substantially reduce the possible losses that your business may incur. The Chairman of the company believes it is a good idea to take out this insurance, but wants you to come to your own conclusion independently. You should take one of the below decisions.
Option 1: Take the insurance cover
Option 2: Don't take the insurance cover
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
-15
|
0
|
-2
|
|
Option 2
|
0
|
0
|
0
|
(In the above scenario, the tradeoff involves weighing the costs and benefits of taking out insurance coverage for certain risks faced by your business. On the one hand, the insurance coverage could provide protection for your business and reduce the potential losses that may occur if an insured risk were to occur. On the other hand, the cost of the insurance coverage may be a significant financial burden for your business.)
Scenario Case 20: Partnership
A leading global company, MNO, is seeking to partner with your company in your country. This partnership has the potential to improve your sales and reduce your costs. However, a junior manager in your company, who was previously employed with MNO, strongly champions the partnership. You are concerned that their opinion may be biased and that the significant upfront investment required from your company to seal the partnership may not be justified. You have two options:
Option 1: Partner with MNO
Option 2: Do not partner with MNO
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
-10
|
+1
|
-1
|
|
Option 2
|
0
|
0
|
0
|
(In the above scenario, the tradeoff involves weighing the potential benefits of partnering with MNO, such as improved sales and reduced costs, against the costs and risks of entering into the partnership. On the one hand, partnering with MNO could provide significant benefits for your company, such as access to new markets, distribution channels, and resources. On the other hand, there are several potential risks and costs to consider, such as the upfront investment required to seal the partnership, the potential for conflicts of interest or bias on the part of the junior manager, and the potential for the partnership to not deliver the expected benefits.)
Scenario Case 21: Patented Technology
An ex-employee of your competitor, JKL, has approached you and offered you documents containing details of a patented technology belonging to JKL. If you were to incorporate this technology into your products, it could potentially lead to a lucrative deal and increase your market share in the long term. However, there is a risk that JKL may find out and sue your company for theft of intellectual property. You have following options:
Option 1: Accept the offer
Option 2: Reject the offer
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
+5
|
+2
|
+2
|
|
Option 2
|
0
|
0
|
0
|
(In the above scenario, the tradeoff involves weighing the potential benefits of incorporating the patented technology offered by the ex-employee of JKL against the risks of being sued for theft of intellectual property. On the one hand, incorporating the technology could lead to immediate financial gain and increased market share in the long term. On the other hand, there is a significant risk that JKL may find out and sue your company, which could result in costly legal fees and damage to your company's reputation.)
Scenario Case 22: Product Pilot
Your company has developed an innovative new product that is ready for launch. You are confident that the product will perform well in all segments. However, your market research team disagrees and suggests conducting a pilot run first in order to eliminate the risk of the product performing poorly in some segments. You are concerned that conducting a pilot run may allow your competitors to catch up and reduce your sales. You have two options:
Option 1: Conduct a pilot run
Option 2: Launch the product immediately
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
0
|
+2
|
-1
|
|
Option 2
|
-1
|
+1
|
0
|
(In the above scenario, the tradeoff involves weighing the potential benefits of conducting a pilot run before launching the product against the potential risks of launching the product immediately. On the one hand, conducting a pilot run could provide valuable insights and help to identify any potential issues or weaknesses in the product before a full launch. This could help to reduce the risk of the product performing poorly in some segments and potentially save your company money and resources in the long run. On the other hand, conducting a pilot run may also give your competitors an opportunity to catch up and potentially reduce your sales if the product is successful.)
Scenario Case 23: Product Exhibition
The marketing department has suggested that your company should organize a series of exhibitions around the world to showcase your new products. They have cited market research indicating that these exhibitions could significantly improve product sales in several territories. However, your CFO is opposed to the idea and believes that it would be a waste of money. A similar suggestion was made last year and rejected. You have two options:
Option 1: Organize the exhibitions
Option 2: Reject the suggestion
|
Decision
|
Cash Flow
|
Gain Profile
|
Loss Profile
|
|
Option 1
|
-10
|
+2
|
0
|
|
Option 2
|
-1
|
0
|
0
|
(In the above scenario, the tradeoff involves weighing the potential benefits of organizing exhibitions to showcase your new products against the costs and risks involved. On the one hand, organizing exhibitions could potentially improve product sales in several territories, which could be beneficial for your company. On the other hand, there are several potential costs and risks to consider, including the financial cost of organizing the exhibitions, the potential for the exhibitions to not generate the expected sales or return on investment, and the potential for the exhibitions to distract your company's resources and attention from other important matters.)
Scenario Case 24: Component Vendors
You have recently purchased one of your component vendors, PQR, in order to decrease your costs and improve your product quality. The former owners of PQR have now approached you to buy back the company for a steep premium. Your CFO is in favor of the sale as it would result in a profit for your company. You have two options:
Option 1: Sell back PQR to the owners
Option 2: Do not sell back PQR
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Decision
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Cash Flow
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Gain Profile
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Loss Profile
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|
Option 1
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0
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+1
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-2
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|
Option 2
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+5
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0
|
0
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(In this scenario, the tradeoff involves weighing the potential benefits of selling PQR back to the owners for a premium against the potential risks and costs of retaining ownership. On the one hand, selling PQR back to the owners could result in a profit for your company and potentially free up resources for other opportunities. On the other hand, retaining ownership of PQR could potentially continue to provide benefits such as cost savings and improved product quality. It is also important to consider any contractual obligations or commitments that may be associated with retaining ownership of PQR.)
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