A. Im trying to decide whether I would like to start a company to enter the video game industry. Sales indicate that while the video game market is large ($120B/year), but it is only growing by 3% annually, which is not good. It would take $10M of capital investment to create a facility to design video games and I certainly dont have that amount of capital available. However, it is not an outrageously large sum of money, so other people could probably afford to enter the industry. In addition, there are really only 3 large video game platforms, so access to customers is limited by those companies. Finally, there are numerous other game design companies. Using only the information in this case, conduct a five forces analysis. As my strategy consultant, explain to me why I should or should not start a video game design company. Be thorough.

B. As a the new production manager at a manufacturing plant, you've developed a new operating procedure to produce widgets that will save your company four percent on each unit made. However, it will take some investment in money and labor in order to implement it. Further, the new operating procedure fundamentally changes how 75% of the employees in the plant complete their job tasks. Finally, even though you're new, you know that your boss, the plant manager, is risk averse and prefers doing things that he knows work rather than trying new things. Discuss how you should convince all the stakeholders in this decision that the plant should implement your new operating procedure.

C. The CEO of a large multinational company is used to making important decisions and he's usually good at it. However, one day he's sitting in your office, when he gets a call from the project manager in charge of a large building project to create a new factory. Unfortunately, the project is already months behind schedule and $29 million over budget, so when the project manager informs the CEO that there is going to be another delay because the ground on which the foundation is built is unstable. This means at least another 2 month delay and another $13 million. This will make the entire factory project unprofitable for the company.

The CEO is angry. He starts yelling at the project manager, saying things like, "In my entire career, I've never allowed this company to fail at something and I'm not going to allow it to fail here." and "I think that you're in a conspiracy to undermine my authority as CEO. That is the only thing that would explain why this factory project has gone so poorly. Bad things keep happening and it is forming a pattern that I don't like. "

In the end, the CEO tells the project manager that the company already has so much invested and that because he believes that it will ultimately be successful that they cannot afford to let the project die. As a result, he gives a go ahead for the cost overruns and extended time and slams the phone on his desk. After he calms down in a half hour, he starts wondering if he made the right decision, so he calls you in to discuss.

1) Discuss the decision making biases and heuristics that affected the decision making of the CEO in this incident.

2) What should the CEO have done to make a good decision in this incident? Detail your process.