Ocean's Dilemma

Abstract

The case is intended for a class relatively early in a decision analysis or a risk analysis class module. The case can be used as the very first case in the course if students are familiar with the concepts of NPV. Alternatively, students can be given a short technical note on calculating NPV for cash flows as pedagogy for the case. The analysis requires use of NPV calculations to determine the outcomes of different options in the case and to choose one of the given options. Using the choices that students make, the instructor can lead a rich discussion on effects of risk-seeking and risk-averse behavior in situations that managers face in real life. Excerpt UVA-QA-0798 Rev. Sept. 11, 2015 OCEAN'S DILEMMA On the morning of January 12, 2012, Ross Bean, president and CEO of Ocean Technologies (OT), was reading his e-mails. After its strong financial performance in 2011, with revenue of $ 200 million and net income of $ 52 million, the company had plans to expand aggressively in 2012. Bean was excited about the expansion but worried that it could be delayed if four critical product issues were not handled immediately. Bean looked carefully at the four issues and drafted a memo on each issue to its respective product manager. He hoped for a resolution during the product managers' meeting the following week. Cloud Computing OT was a technology company headquartered in Menlo Park, California. Founded in 2008, the company was one of the fastest-growing in cloud computing, the use of shared, on-demand storage capacity by computers and other electronic systems such as smartphones and tablets. Because of the cost effectiveness of its infrastructure, the reliability of its data storage, and the ease with which it allowed data to be shared, cloud computing was in high demand among IT services. . . .