Assignment 2: LASA 1â€”The Sâ€™No Risk Program
In the mid-eighties, the Toro company launched a promotion in which snowblower 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 case study â€œThe Toro Company Sâ€™No Risk Programâ€ by David E. Bell (1994) from this moduleâ€™s assigned readings. .next.ecollege.com/pub/content/e1fea700-68fa-4cdc-9bbb-584ce323860f/AU_B6025_ToroCase.xls”>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:
- The insurance company
- The consumers
Write a 4â€“6 page analysis paper that addresses the following:
- Why did the insurance company raise the rates so much? How would you estimate a fair insurance rate?
- 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?
- 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 consumerâ€™s â€œregretâ€? (Hint: Map the possible outcomes for the consumer)
- From either Toroâ€™s or the insurance companyâ€™s perspective, how would you frame your argument to achieve your desired objective?
- Was the program successful? Why or why not?
- If you were Dick Pollick, would you repeat the program? Assume you manage the Sâ€™No Risk program and argue your case. To what biases are you susceptible in this case?