Question: Please assist with this question - prior years question for 25 marks Nkosi Systems is considering becoming certified to the ISO 9000 series of quality

Please assist with this question - prior years question for 25 marks

Nkosi Systems is considering becoming certified to the ISO 9000 series of quality standards. Becoming certified is expensive, but the company could lose a substantial amount of business if its major customers suddenly demand ISO certification and the company does not have such certification. At a management retreat, the senior executives of the firm developed the following payoff table, indicating the NPV of profits over the next five years. What decision should they make regarding the average payoff, aggressive, conservative and opportunity loss decision strategies?

Customer Response

Standards Required Standards Not Required

Become certified R600,000 R475,000

Stay uncertified R325,000 R525,000

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