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In the mid-eighties, the Toro company launched a promotion in which snowblower purchasers could refund a portion of their purchase if the next winter brought modest snowfalls. The amount of their refund was tied to snowfall amounts and so, the program was prey to certain risks and uncertainties. You will explore those risks and choices from a variety of perspectives.
Review the case study “The Toro Company S’No Risk Program” by David E. Bell (1994) from this module’s assigned readings. Click here to download the Toro Excel worksheet which contains data exhibits from the article; the exhibit titles match the tabs long the bottom of the worksheet. Use this tool to conduct your data analysis for this assignment.
Analyze the risks of the program from the following points of view:
The insurance company
Write a 4–6 page analysis paper that addresses the following:
Why did the insurance company raise the rates so much? How would you estimate a fair insurance rate?
From the perspective of the consumer, how were the paybacks structured and how might they be restructured to entice you at an equal or lower cost of insurance? How does the program influence your decision to purchase?
What are the common decision traps which each group in point (2) is susceptible to? Develop a matrix or decision tree in order to compare the groups. How does the program impact the consumer’s “regret”? (Hint: Map the possible outcomes for the consumer)
From either Toro’s or the insurance company’s perspective, how would you frame your argument to achieve your desired objective?
Was the program successful? Why or why not?
If you were Dick Pollick, would you repeat the program? Assume you manage the S’No Risk program and argue your case. To what biases are you susceptible in this case?
Answer rating (rated 2 times)
The Toro Company S’No Risk Program Case Solution
body preview (1432 words)
The xxxxxxxxx xxxxxxx xxxx xxxxxxx agreed xx xxxx all xxxxxx xxxxxxxxx from xxx xxxxxxxx xx xxxxxxxxxx xx exchange xxx x premium xx 2.1% of the xxxxx retail value xx the snow xxxxxxxx xxxx are xxxxxxxx xxxxxx this winter season xxxxx was a plummet xx xxx xxxxx xx xxxx xxxxxxxx therefore there were not xxxx xxxx throwers covered xx the xxxxxxxxxx xxx xxxxxxxxx xxxxxxx xxxxxx xxxxx premium in the xxxxxxxxx xxxx to xxxxxx xxx the amount xx xxxx xxxxxxxx that xxx and xxxxx xx sold xx the following xxxx to 8% xx xxx retail value xx the snow throwers. xxxx rate xxx xxxx xxxxxx xxx xx the fact xxxx Toro xxx giving refunds xx the consumers. If the snowfall xxx below xxxxxxxx averages the xxxxx xx the snow thrower would xxxxxxx a refund for xxx xxxxxx xxxxxxxxx depending on the amount xx xxxx averages. x xxxxx personally xxxxxxxx a fair xxxxxxxxx rate xx xxxxx xxxxxxxxxx xxx xxxxxxxx xxxxxxxxx xxxxxxxxxxx xxx promotions xxxx xxx report. xx xxxxxxxxxxxxx Toro’s xxxxxxxxx xxxxxxxxxxx I would
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file1.doc preview (1528 words)
xxxxxxx xxxxx RISK PROGRAM 1 RISK xxxxxxxxxxxxx PAGE \* xxxxxxxxxxx xxxxxxxxx
The S’xx Risk Program
The xxxxxxxxx company xxxx xxxxxxx agreed to xxxx xxx claims resulting from the campaign in 1982/1983, xx xxxxxxxx xxx a xxxxxxx xx 2.1% xx xxx total xxxxxx value of the snow throwers xxxx are xxxxxxx xxxxxx xxxxxx During this winter season there xxx x xxxxxxx xx xxx sales of snow xxxxxxxx therefore there xxxx xxx xxxx snow throwers xxxxxxx by xxx insurance. xxx xxxxxxxxx company raised their xxxxxxx xx xxx following year xx xxxxxx for xxx amount xx xxxx xxxxxxxx that xxx xxx would be xxxx xx the following xxxx xx xx xx the xxxxxx value xx xxx snow xxxxxxxxx This rate xxx also xxxxxx xxx xx the xxxx xxxx Toro xxx giving xxxxxxx xx xxx xxxxxxxxxx xx the xxxxxxxx was xxxxx xxxxxxxx averages the xxxxx of xxx snow xxxxxxx would xxxxxxx x refund xxx xxx xxxxxx xxxxxxxxx xxxxxxxxx on the xxxxxx xx snow xxxxxxxxx x xxxxx xxxxxxxxxx estimate x xxxx xxxxxxxxx
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