Managers for Keystone, Case Study Example

Managers for corporations, such as Keystone in the present case scenario, perpetually experience loss from making blind investments due in part to the lack of sound decision making models. It is even worse for managers of corporations that seek to create considerable investments in business fields for which they lack sufficient knowledge concerning the operations and schematics as is the case faced by Keystone in the present case scenario. Dealing with uncertainty in business is never easy. As such, managers and organizational leaders must therefore resort to the use of sound decision making models with the capacity to inform their choices on what aspects of investment to consider and lucrativeness of whatever investments into which they decidedly invest.

Managers must increasingly take into account interplay of specific factors, including opportunity loss and future market trends, when seeking to assess the future value of a property. In particular, opportunity loss denotes the difference between the actual profit made by a business in choosing a particular decision and the optimal profit realized, if and when, the business decidedly chose the best decision. It is imperative for business managers to weigh in on whatever business decisions, especially when seeking to make uncertain investment choices as in the case of Keystone’s dilemma on which property to purchase.

It is also imperative for investors and business organizations to rely on rigorous assessments pertaining to the future market value of whatever property they may deem worthy for investment. Before deciding to venture into a particular investment opportunity, it behooves the manager and or investor to seek critical insights on the future valuation of the property from professional analysts. Keystone, having ventured on a new business arena, it would seem rational and imperative for the company to hire the services of an experienced analyst in their investment field (real estate0, as this will enable the company’s management to make sound decisions going forward.

In seeking to determine which property to purchase, the company may just as well rely on estimates from its 60% chance that the market will be good. Based on the company’s optimism about the future sales prices of properties, it is logical to use the maximax criterion, which determines the property with the best payoff in the future. From the above table, it is evident that the best property will be property 2 seeing as it has the highest payoff in terms of future sales (3.9 million).