Forward Software Settlement or Else

694 Words Dec 21st, 2014 3 Pages
Risk Management: Case Analysis Submission (Forward Software) 1. Introduction and problem statement
Focus software with its Focus A-B-C is the current market leader in the spreadsheet market. Focus Software, being the first mover with its intuitive menu system with functionality like macros had the largest market share with only one flaw, of printing graphs. Discount Software, with its VIP Scheduler had the same menu system to ease the user in making the transition to its software whereas Cinco, a Forward Software product, gave the users the options of either using its own menu system or a Focus style menu system with all the functionalities like and inbuilt graph printing ability.
With the current legal proceedings initiated by Focus
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loss if he conducts survey ($4.64 million, includes research cost) > loss if he doesn’t conduct the survey ($4.5 million). * The research cost for the survey should not greater than $ 0.564 million * If he doesn’t conduct the survey he should wait for Focus –Discount trial result as the loss is less, if he doesn’t wait and tries to settle it outside. In case the Focus wins the case and files another against Forward, it would be optimum for Forward to settle it outside court

3. Basic Tree Diagram
Please refer to the attached Excel Sheet for the Tree Diagram 4. Analysis related to hiring the outside law firm and sensitivity of the value of information to their prediction accuracy

We have tried to find the expected final monetary value (final output, in the graph Figure 1) by varying the cost of survey charged by the law firm keeping the accuracy constant at 0.9. Without considering the impact of fees charged by the law research firm, the cost of survey should not be greater than $ 0.9 million
In figure 2, we have varied the prediction accuracy of the law research firm and based on the graph we have come to the conclusion that with associated cost of $ 0.7 million the research firm should have accuracy greater than 0.9 to reduce the expected monetary value than $ 4.5 million 5. Probability distribution of costs under optimal decisions and sensitivity analysis of optimal cost with various parameters

In figure 3, we have calculated EMV for

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