1. You are a division manager. There are rumors that corporate may enact another downsizing this year. You believe there is a 25% chance that your division will be downsized as there are 4 divisions and historically only one gets downsized per year. But you of course are ultimately interested in profitability. The chance that you are downsized and that you can remain profitable is only 12.5%, based on the results from the last 5 years.
A) What is the chance you will be profitable given you are downsized?
B) What is the probability you are downsized or you are profitable?
C) What are your managerial reactions to these results?