Philippines You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table: Success Level Big Mediocre Failure Malaysia Probability 0.3 0.2 0.5 Units 1,100,000 352,000 0 Philippines Probability 0.3 0.3 0.4 Units 1,300,000 650,000 0 Singapore Probability 0.7 0.1 0.2 Units 600,000 360,000 0
Philippines You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table: Success Level Big Mediocre Failure Malaysia Probability 0.3 0.2 0.5 Units 1,100,000 352,000 0 Philippines Probability 0.3 0.3 0.4 Units 1,300,000 650,000 0 Singapore Probability 0.7 0.1 0.2 Units 600,000 360,000 0
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter17: Making Decisions With Uncertainty
Section: Chapter Questions
Problem 17.1IP
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Question
Philippines
You're the manager of global opportunities for a U.S. manufacturer that is considering expanding sales into Asia. Your market research has identified the market potential in Malaysia, the Philippines, and Singapore as described in the following table:
|
Success Level
|
||
---|---|---|---|
Big
|
Mediocre
|
Failure
|
|
Malaysia | |||
Probability | 0.3 | 0.2 | 0.5 |
Units | 1,100,000 | 352,000 | 0 |
Philippines | |||
Probability | 0.3 | 0.3 | 0.4 |
Units | 1,300,000 | 650,000 | 0 |
Singapore | |||
Probability | 0.7 | 0.1 | 0.2 |
Units | 600,000 | 360,000 | 0 |
The product sells for $20, and each unit has a constant marginal cost of $16. Assume that the (fixed) cost of entering the market (regardless of which market you select) is $500,000.
In the following table, enter the expected number of units sold, and the expected profit, from entering each market.
Market
|
Expected Number of Units Sold
|
Expected Profit
|
---|---|---|
Malaysia |
|
|
Philippines |
|
|
Singapore |
|
|
If you were to enter one of the previously described markets, which one would you enter in order to earn the highest expected profit?
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