Question 1

Section B - Case 2: CyberShield

CyberShield is a tech startup developing a new B2B SaaS (Software as a Service) platform for cybersecurity.

Assume the probabilities of competitor reaction are: Weak (0.6) and Strong (0.4).
Expected Value (EV) of Aggressive = (500*0.6) + (-100*0.4) = 260
EV of Moderate = (300*0.6) + (100*0.4) = 220
EV of Conservative = (150*0.6) + (120*0.4) = 138

A market research firm offers to find out exactly what the competitor will do. What is the Expected Value of Perfect Information (EVPI)?

Accepted Answer

1. Calculate EV with perfect information: For each state of nature, pick the best outcome and multiply by its probability. Sum these up. 2. Subtract the best EV without perfect information (260).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Forgetting to subtract the EV without perfect information, or picking the wrong 'best' option for the Strong reaction.

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA PM — Performance Management Practice Exam 3

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