Why did the insurance company raise the rates so much? How would you estimate a fair insurance rate?

Assignment 2: Designing Value-Based Service

As the rate of innovation increases, companies face expanding product/service lines, shorter product and service lifecycles, and more frequent product/service transitions. All of these can bring tremendous value but also pose enormous challenges and risks.

The article “The Art of Managing New Product Transitions” by Erhun, Gonclave, and Hopman (2007) from the readings for this module includes a matrix titled “Product Drivers and Risk Factors,” which focuses on Intel, a company that manufactures high-tech products (p. 76). Based on your readings and research, address the following issues:

  • Redesign the product risk factor matrix so that the factors are appropriate for a services firm that delivers traditional tax accounting and audit services. For example, among the supply risks, assume that the company relies on individuals with specific knowledge of the tax law in the jurisdictions where its clients operate, be it state, federal, or foreign.
  • Now, assume that the firm wants to develop a management consultancy practice. (Alternatively, you may choose to add a legal services line instead.). Create a separate new matrix that summarizes the additional risk factors for this firm launching a management consultancy or legal services line. What additional risk factors are you adding to your matrix?
  • Explain how the business risks differ between traditional tax and audit services and management consulting services. In your opinion, what are the three biggest risks the firm faces if it diversifies into the new service line?
  • Recommend whether the firm should organically grow into a consultancy service or acquire a third party to achieve new goals. Justify your recommendations.

Develop a 6–8-slide presentation in PowerPoint format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M2_A2.ppt.

Be sure to include the following in your presentation:

  • A title slide
  • An agenda slide
  • A reference slide
  • Headings for each section
  • Speaker notes to support the content in each slide


Assignment 2: Required Assignment 1—The S’No Risk Program

In the mid-eighties, the Toro company launched a promotion in which snow blower purchasers could refund a portion of their purchase if the next winter brought modest snowfalls. The amount of their refund was tied to snowfall amounts and so, the program was prey to certain risks and uncertainties. You will explore those risks and choices from a variety of perspectives.

Review the Toro Company’s S’No Risk Program” from this module’s assigned readings. Click here to download the Toro Excel worksheet which contains data exhibits from the article; the exhibit titles match the tabs long the bottom of the worksheet. Use this tool to conduct your data analysis for this assignment.

Analyze the risks of the program from the following points of view:

  1. Toro
  2. The insurance company
  3. The consumers

Write a 6–8-page analysis paper that addresses the following:

  1. Why did the insurance company raise the rates so much? How would you estimate a fair insurance rate?
  2. From the perspective of the consumer, how were the paybacks structured and how might they be restructured to entice you at an equal or lower cost of insurance? How does the program influence your decision to purchase?
  3. What are the common decision traps which each group in point (2) is susceptible to? Develop a matrix or decision tree in order to compare the groups. How does the program impact the consumer’s “regret”? (Hint: Map the possible outcomes for the consumer.)
  4. From either Toro’s or the insurance company’s perspective, how would you frame your argument to achieve your desired objective?
  5. Was the program successful? Why or why not?
  6. If you were Dick Pollick, would you repeat the program? Assume you manage the S’No Risk program and argue your case. To what biases are you susceptible in this case?

Submit your analysis paper in Word format. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M3_A2.doc.

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