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    Business Decisions Led by Assumptions- Pontiac & Xbox 360

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    As a recently promoted manager, you are learning about the importance of basing important decisions on good assumptions; you thought you would practice by thinking through some major decisions that have been made and what the assumptions that the decisions were based on must have been.

    Research and find two situations in which decisions were made. For each situation, describe the likely assumptions that were made prior to each decision. Do you feel the decision was a good one? Why or why not?

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    Solution Preview

    I will use two examples from recent business events that focus on 2 of the most major business decisions that a product manager would make: decision to discontinue a product and the decision of a product manager to introduce a new product. I have provided two resources for each, but each situation is thoroughly covered in the press.

    General Motors and the Pontiac division
    Sources: http://www.msnbc.msn.com/id/30438201/ & http://en.wikipedia.org/wiki/Pontiac

    Situation: General Motors was under extreme financial pressure and suffering under a looming bankruptcy. General Motors needed to cut costs (particularly labor costs) and focus efforts and resources more strategically.

    Decision: General Motors decided to eliminate the Pontiac division/brand as a cost-cutting effort.

    Assumptions: there were several business assumptions that had to made to make such a drastic decision.
    ? Pontiac is not profitable enough to remain part of General Motors' brand portfolio. The ability to be profitable and add to the bottom line will usually trump other factors. For a brand to be sacrificed, the likely assumption was that it was not profitable enough and did not have the capacity to be profitable enough to remain part of ...

    Solution Summary

    This solution examines two business cases (product launch and product discontinuation) and the likely assumptions that led to these major business decisions. The two business cases are Microsoft's decision to launch the Xbox 360 Kinect and General Motor's decision to discontinue the Pontia line. The solutions provides 3 assumptions for each case study, sources for each case study (as background) and provides a point of view on whether the decisions made were solid or not.