Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Statistics and Probability Expert

Polar, Inc. and ILEN are the two largest companies that produce and sell database software. They each have been negotiating to buy DSOFT, the third largest company in the database software market. Polar currently has 50% of the world market for database software, ILEN has 35%, DSOFT has 10%, and there are several other smaller companies that share the remaining 5% of the market for database software. Financial and market analysts at Polar have estimated the value of DSOFT to be $300 million in net worth. Throughout the preliminary negotiations, DSOFT has made it clear that they will not accept a purchase offer below $300 million. Jacob Pratt, the CEO of Polar, figures that acquiring DSOFT will make Polar the dominant player in the industry as Polar would then have 60% of the market. In addition, Jacob knows that DSOFT has been developing a new product that has tremendous earnings potential. Jacob has estimated that the new product would increase the net worth of DSOFT by an additional $300 million with probability 0.50, by an additional $150 million with probability 0.30, or have no impact on net worth with probability 0.20. To simplify matters, Jacob has decided to consider three possible strategies regarding the possible purchase of DSOFT: (i) Make a "high" offer of $400 million; (ii) make a "low" offer of $320 million; or (iii) make no offer at all. If he pursues this third strategy (making no offer), Jacob is certain that ILEN will buy DSOFT. If Polar makes an offer to DSOFT (either a "high" or a "low" offer), Jacob figures that ILEN will increase the offer further. He is uncertain about what ILEN will offer in this case, but he has made the following intelligent estimates of possible outcomes: ILEN would increase Polar's offer by 10% with probability 0.30, by 20% with probability 0.40, or by 30% with probability 0.30. If ILEN were to make such an offer, Jacob would then need to decide whether he would make a final offer to DSOFT. His thinking is that after ILEN makes a counter-offer, Polar would either withdraw from the bidding, match the counter-offer, or make a final offer at 10% above ILEN's counter-offer. If Polar's offer and ILEN's offer are identical, Jacob estimates that the probability that DSOFT will accept Polar's final offer is 0.40 ; however, if Polar counters with an offer which is 10% higher than ILEN's offer, Jacob estimates that DSOFT will accept Polar's final offer with probability 0.60.

Assignment:
(a) Structure Polar's acquisition offer problem as a decision tree.
(b) Solve for the optimal decision strategy for Polar.

Statistics and Probability, Statistics

  • Category:- Statistics and Probability
  • Reference No.:- M998356

Have any Question? 


Related Questions in Statistics and Probability

Starting in the 10th century movements to reform the church

Starting in the 10th century, movements to reform the church began. Why was the church in need of reform, and what were the consequences of the Gregorian Reforms? How did these reforms change society? 1 and a half page e ...

Generally researchers are more concerned about making a

Generally, researchers are more concerned about making a Type I error than a Type II error. Can you think of any instances in which you might be more concerned about making a Type II error?

Answer the following questions showing all work1 using

Answer the following questions showing all work. 1. Using http://onlinestatbook.com/stat_sim/sampling_dist/index.html, select a population distribution that is NOT normal (i.e., heavily skewed, uniform, bimodal). Using t ...

The average batter life of the iphone 4s is reported to be

The average batter life of the iPhone 4S is reported to be 6.0 hours by Apple. Assume that the population standard deviation for the better life for this cell phone is 30 minutes. A random sample of 50 iPhones had an ave ...

Experiments on learning in animals sometimes measure how

Experiments on learning in animals sometimes measure how long it takes a mouse to find its way through a maze. Long experience indicates that the mean time is 20 seconds for one particular maze. A researcher thinks that ...

Assume the sweatshirt test scores are normally distributed

Assume the sweatshirt test scores are normally distributed with a mean of 500 and a standard deviation of 100. (a) Consider all random samples of 100 test scores. What is the standard deviation of the sample means? (b) W ...

Grear tire company has produced a new tire with an

Grear Tire Company has produced a new tire with an estimated mean lifetime mileage of 36,500 miles. Management also believes that the standard deviation is 5000 miles and that tire mileage is normally distributed. To pro ...

During a certain week the mean price of gas was 2709 per

During a certain week the mean price of gas was $2.709 per gallon. A random sample of 35 gas stations is drawn from this population. What is the probability that the mean price for the sample was $2.697 and $2.716 that w ...

A social welfare function f is called monotonic if for

A social welfare function F is called monotonic if for every alternative a ∈ A, and every pair of strict preference profiles P N and QN satisfying a>p 1 c ⇒ a>Q 1 c, ∀c≠a, ∀i ∈ N, the following is also satisfied: a>F(P)c ...

Considering the effect that colonialism has had on the

Considering the effect that colonialism has had on the world today, how has and/or does Colonialism continue to affect the world? Choose one country or area that we have studied and discuss the continuing effects of colo ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro