Part I:
1. What type of competitive environment does ElectronicCity face? Why do you say so?
2. What can you say about the management style of the VP of Marketing in the case? Is it appropriate? Why, or why not?
3. Define any ethical issues that you perceive in the scenario.
4. Should Phil become more adept at predicting which of his customers will likely buy the warranty – say he goes from 80% accuracy to 90% accuracy – will this impact his incentive pay? Explain your answer.
5. How do the comments/reactions of each of these people shape Phil’s thinking regarding his job?
a. Maria
b. Dr. Smith
c. Fr. George
6. What will Phil do when he returns to work next week? Why do you think so?
Part II (You should show work to support your numeric answers.)
1. What is the dollar amount of warranty extensions that Phil sold in January 2013?
2. Estimate the dollar amount of HDTV sales that he generated in the same month, assuming that he was able to sell warranty extensions in roughly 55% of eligible transactions?
3. Suppose that the number of HDTV sets sold in 2013 is projected to be 4% more than the number sold in 2012. How much profit can ElectronicCity expect per-store in 2013 from its warranty extension business? (Assume that the average selling price of an HDTV set in 2013 remains the same as in 2012.)