The company Business Simulations Global (BSG Co) is developing two different business simulations for a pilot offering in the next six months: International Trade and Logistics Strategies (ITLS) and Digital Marketing Strategies (DMS).
(i) ITLS is a unique business simulation and appears to have no competition.
(ii) BSG Co is optimistic about the success of the business simulation DMS. However, the concerns are that the profitability will be affected by a competitor’s introduction of a similar business simulation.
(iii) For planning purposes, BSG Co is predicting there is 0.6 probability that its competitors will produce and offer on the market during the next six months a new business simulation similar to Digital Marketing Strategies.
The estimated profits and probabilities under high, medium, and low demand for both business simulations are defined by BSG Co as follows:
State of Nature (Demand)
High Medium Low
International Trades & Logistics Strategies (IT&LS)
Profit A B C
Probability a b c
Digital Marketing Strategies (DMS) with Competition
Profit D E F
Probability d e f
Digital Marketing Strategies (DMS) without Competition
Profit G H I
Probability g h i