Fred’s Pets R Friends recently celebrated
its 5th anniversary as a specialty pet store in Scottsdale, AZ..
The company was founded by Fred who worked
for many years at Pets R Us. Fred is more of a people person and is always
looking for the next new business venture to take on. Admittedly, Fred had no
experience in running a business when he decided to go out on his own and
enlisted the help of his long-time friend, Horatio. Horatio has spent his
career working for larger corporations in finance and had no experience in pet
stores, but was looking for a change.
Over the 5 years since the company’s
founding, the business struggled at first but slowly grew over the last two
years when Fred began marketing on the Internet. The more Internet marketing
that the business has done, the more the business has grown. Fred’s Pets R
Friends currently has six employees and two managers that run the store in
Scottsdale 7 days a week.
Fred is really interested in expanding the
business to other cities in Arizona, believing that “there are only so
many pets in Scottsdale.” He feels that if they’ve grown quickly the last
two years, then they should continue to focus on growing the business. Horatio,
on the other hand, feels that expansion will put the company at risk as it
takes time to develop a decent client base at a new location. They opened a
second location in Phoenix several years back but eventually closed it when it
didn’t generate enough revenue to cover expenses. He’s worried the expansion
may bankrupt the company.
Even though the two are business partners,
Fred is the president and Horatio the vice president. Fred asked Horatio to
evaluate three options to further expand the business. From Fred’s perspective,
he has concluded that three objectives are important in this decision. First,
is to find a city with strong projected pet sales, low start-up costs, and a
city that is in a reasonable distance from Scottsdale as he and Horatio would
be spending a lot of time in the new location at first and they both have families
with young children. Fred feels that the driving distance is twice as important
as each of the other two objectives.
Here is the summary of Clydes’ research for
three locations in AZ.
1. Yuma, AZ: Projected pet sales:
$5000/month; Start-up costs: $40000; Driving Distance: 184 miles
2. Sedona, AZ: Projected pet sales:
$3500/month; Start-up costs: $30000; Driving Distance: 144 miles
3. Oral Valley, AZ: Projected pet sales:
$2500/month; Start-up costs: $50000; Driving Distance: 116 miles
1. a) Describe the general nature of the
problem
b) What is the decision to be made?
2. Whatevent triggered the situation?
3. Identify at
least three constraints on the decision situation?
4. Define the three fundamental objectives
identified in the case.
5. Identify the
three alternatives identified in the case.
6. Using a
consequence table, scoring model with proportional scores (100 – 0) and
weighted scoring model, evaluate the alternatives based upon weighted
objectives. Show all three tables for full credit (you can separate items in
your tables with spaces).
7. a). Using styles
presented in the Week 4 Lecture, identify the decision-making style for Fred
and then the style for Horatio.
b) Using the attitudes
presented in the Week 5 Lecture, identify the risk attitude for Fred and then
the risk attitude for Horatio.
8. Using biases
presented in the Week 7 Lecture, identify at least 2 biases are in play here
that may impact the effectiveness of the decision.
9.
a). Identify two potential uncertainties for this decision.
b). For each uncertainty, identify 2 possible outcomes, their likelihood
and consequences.
10.
a). Based upon your Weighted Scoring Model, which location should be
select?
b). Describe at least two linked decisions that should be considered.
