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Free response · 4.3 Strategy and Decision Making
Exam-style concept-application task: apply the topic to a new business scenario. Suggested time 12–13 minutes.
FRQ — Business Decision using the PACED model (3 points)
Thornbury Hardware, a single-location store, has seen weekend foot traffic fall 18% since a big-box hardware chain opened nearby. The owner is considering three alternatives: (1) match the chain's prices on the 20 most popular items, which would cost an estimated $30,000 in lost annual margin; (2) launch a free Saturday workshop series teaching home-repair skills, costing about $8,000 a year and projected to add $11,000 in annual profit from workshop-driven sales; (3) do nothing and hope loyal customers return on their own.
(A) State a clear problem statement for Thornbury Hardware, following the PACED model's first step, and explain why it is better than simply restating 'a competitor opened nearby.' 1 pt
(B) Calculate the ROI of Alternative 2 (the workshop series), and explain ONE quantifiable and ONE intangible criterion relevant to comparing it with Alternative 1 (price matching). 1 pt
(C) Recommend one of the three alternatives using at least TWO of the four criteria types (financial, market, operational, organizational), and acknowledge one piece of information Thornbury does not yet have that makes this an imperfect decision. 1 pt