Subject Decision Theory (US MBA course) - Essay Example

Steve put in all his efforts into the running of the business and managed to make it very successful, so much so that by 1980 the total annual sales went up to more than $2 million. However, after that the company underwent a turn. Steve's son, Jim, joined Blake Electronics in 1984 as a general sales manager. He had completed high school and had obtained a two year course degree in electronics. Jim was said to be quite aggressive and this quality in him did not change after he joined his father's company.

In fact, his aggressiveness increased. This led to him making deals with companies which the Blake Electronics was not able to complete. Jim would take contracts to provide the supplies to companies without checking out whether Blake Electronics could manage to fulfil the deal. Due to this Blake Electronics had to face certain embarrassing situations. Still, there was not much harm done yet. By 1988 Jim had started taking government contracts too and two years after that the total sales mounted to greater than $10 million.

After that the Company lost the chance of obtaining any more contracts. Jim continued with his behaviour and that led to the government not offering any more contracts to Blake Electronics. This also made the Company lose its reputation and it was termed as an unreliable supplier. Thus, by 1997 there was a great risk of Blake Electronics facing losses. To avoid . For this he asked the research team of his company to design novel electronic gadgets for home use. The research team came up with the Master Control Center.

This was to be sold for $250. The functioning of the device was such that it had two rows of five buttons and each button operated as a switch or a rheostat, depending on what you want. It was powered by two D-sized batteries which lasted till a year or so, depending on how much it is used. According to the research team, this project would cost them $500,000 and if it turned out to be successful, it could bag up to $2 million of sales. Therefore, it surely did sound attractive. However, the problem was that Steve was unsure as to whether this venture would succeed and whether his company would get profits or would lose through this project.

In order to solve this problem Steve sent requests for proposals so as to conduct marketing research. Total he sent 30 proposals to business operating in southern California. First of all Marketing Associates, Inc. (MAI) responded. They had offered to charge $100,00 for a survey and according to the information they gave, that company had been operating since three years and were quite a successful business. The second and the last proposal that Steve got was from Iverstine and Kinard. This company had a very good reputation throughout the company and was termed as the largest marketing firm in the region.

They were going to charge Steve $500,000 for the survey. Although the cost was higher than of the previous company, Iverstin and Kinard were more able to predict about the sales. This company also did not have as good a record as that of Marketing Associates. However, the fact that they could better be able to make predictions about the Blake