John felt that the decision about expanding JAC into the international markets of the Pacific Islands did not depend on the decision about the 3D printing project. However, he decided that they should not enter the markets at the same time, so they had to choose between starting with Fiji, Samoa or New Zealand. John stressed to Liza that, as with the construction of the Utopia villas, the choice of a new international market should strongly consider cultural influences and norms. For this reason, John favoured Fiji and Samoa over New Zealand, arguing that they are more culturally similar to Ratu. However, the final decision not being made, John asked Liza to do some more research into the idea and into the two markets. The results of her ideas are summarized in Tables 1, 2 and 3.

Table 1: Liza’s market research results

Liza drew up the following decision tree to help clarify the decision process and try to quantify the issues involved in the decision.

Using the case study and the additional information above, recommend which of the Pacific Island markets JAC should enter. Completing the decision tree and using the results could help you in your answer.

X=$1.7 million, Y= $3.2 million

Fiji
Positives:
• Larger population so theoretically larger market
• Many more tourists who are likely to use the coffee shops
• Better predicted value than Samoa ($2.9m compared with $1.7m)
• Stronger growth
• Higher chance of success, lower chance of failure
Negatives:
• Locals are tea drinkers
• Failure leads to a loss
• Lower GDP
• Spread out – 330 islands

Samoa
Positives:
• Only two islands
• High proportion of tourists
• Coffee drinkers
• Politically stable
• Ideal workforce
• Good for overseas investment
• No loss if it fails
• Higher GDP
Negatives:
• Higher chance of failure
• Lower growth

Marks should be allocated according to the Paper 1 markbands for May 2016 forward, section C.

Criterion A: Knowledge areas include: risk, decision trees and predicted outcomes, location decisions, use of data, strategic decision making. PEST (not necessarily formally), Ansoff and other appropriate ideas.. No understanding of decision trees/predicted outcomes, marks limited to [3]. Not all knowledge areas required, we are looking for tools that can be expected to help make a recommendation.
Criterion B: Application will be judged by the use of the stimulus material, in particular the extra material. If only one option considered, award a maximum of [2]. If both options considered but no use of additional material, award a maximum of [3].
Criterion C: Reasoned argument. For full marks there needs to be a comparison between the two options and a supported recommendation. If analysis of only one, award a maximum of [3]. If no comparison but analysis of both options awards a maximum of [2].
Criterion D: Structure – see criterion.
Criterion E: Likely issues include: impact on communities, workers, cultural differences, views of the shareholders/management, other stakeholders.

Note – a recommendation that a decision cannot be made due to lack of information (eg market research) can be regarded as a decision provided the arguments are supported.

There was, as expected, a wide range of answers to this question. The best answers systematically explored the range of data and developed ideas that helped them towards a recommendation. In these better answers the decision tree was used not only for its predicted outcomes but also to assess risk and likely outcomes through use of the probabilities. This was particularly convincing when risk was also explored with the use of Ansoff Matrix. Most candidates used most of the data but this was often in terms of simply repeating the information rather than develop it. A variety of ‘tools’ were employed including PEST/STEEPLE, SWOT and these were rewarded when their use helped to support a recommendation. Very few candidates addressed criterion E, the perspectives of groups and individuals and many candidates overlooked the need for an introduction, conclusion and fit-for purpose paragraphs for Criterion D.