Decision tree diagram - a case study for IB Business Management | Teacher RK

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Decision tree diagram - a case study for IB Business Management | Teacher RK
#Decisiontreediagram #IBBusinessManagement #TeacherRK
Questions to discuss:
a) With reference to Home Needs, explain the terms, internal growth, and external growth.[ 4 marks]
b) Construct a decision tree and calculate the predicted outcome for each expansion option. [ 6 marks]
c) Briefly comment on the most financially desirable option for Home Needs business expansion. [ 2 marks]
d) Identify and explain two benefits of using a decision tree diagram as a planning tool for Mr. David. [ 4 marks]
Option1: Expand the existing store. The probability of success is 0.7 and failure is 0. 3. If it is successful, the expected revenue is $ 8 m and if it is a failure, the expected revenue is $ 5.5 m. The cost of this expansion is $ 2. 5 m
Option 2: Open a new store in another part of Mumbai. The probability of success is 0.5 and failure is 0. 5. If it is successful, the expected revenue is $ 9 m and if it is a failure, the expected revenue is $ 5 m. The cost of this expansion is $ 3 m.
Option 3: Acquire ‘Green Kitchen’, another supermarket. The probability of success is 0.4 and failure is 0. 6. If it is successful, the expected revenue is $ 6 m and if it is a failure, the expected revenue is $ 4 m. The cost of this expansion is $ 4 m.


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teacher RK, decision tree diagram,IB business management,A Level Business, how to draw a decision tree diagram, what are the components of a decision tree diagram,
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