Instead of writing about my views on business strategy as I do every month, I would like to present an exciting and tricky problem today.
It is an issue of decision making similar to what many senior and top managers have to deal with from time to time. Occasionally, they have to make decisions that involve considerable expense but they cannot be sure of the outcome or the bearing it may have on the firm’s future. How do they decide what to do?
I am happy to present such a problem, albeit hypthetical, for your decision.
It is not a test of skill, intelligence, or experience. It is a question of judgement, your judgement. There are no right or wrong answers. Whatever you decide will be a source of learning on how we make major decisions.
Here is the outline of the situation.
Parivartan Enterprises is in hot water. A Public Interest Litigation (PIL) has been filed against the Company for defective products. The Court is expected to pass its order in a week. The company has the option of settling the dispute out of court before the judgement is pronounced.
The out of court settlement will cost the Company INR 10 Crores (100 million). If it is left for the court to decide there is a 50% chance of winning or losing. If Parivartan loses the case the Court will ask the Company to pay INR 40 Crores (400 million) in settlement. If they win, there will be no cost.
The Board of Directors has assembled to decide whether the Company should go for out of court settlement or await the Court’s order. As a member of the Board you have to cast your vote.
I would much appreciate if you will read the problem once again in the link below and click on one of two options provided on the linked page.
Your response will be anonymous. It won’t take you more than FIVE minutes.
I will analyse all responses and share the findings with you in a few weeks. By participating in it you will have contributed to an interesting enquiry that will be useful to you and many others.
Please cast your vote without consulting anyone as every response needs to be unbiased. This mail is meant only for you; please do not forward it.