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A company sells goods in a foreign market, and the manager is faced with the problem of choosing a distributor. The manager of the company wants to be prepared for increased competition and plans to expand the current distribution network. The first choice is a long-term contract with a firm with whom the company has done business in the past and whose distribution system reaches 50% of all potential customers. The second option is to sign a one-year contract with a new company. Although a year ago the coverage of the new company reached only 25% of customers, they claim they invested heavily in distribution resources and now expect to be able to reach 75% of customers. The manager is not that optimistic about the new company’s claim and give them about 20% of trust. If the new distributor still covers only 25% in Year 1, however, the company can switch back to the familiar old distributor. The manager of the company wants to develop two scenario plans: 2-year and 5-year planning horizon. Which distributor should the manager choose for each plan? Show your analysis.

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                            Year 1    Year 2    Year 3    Year 4    Year 5      Explanation
Combination 1       Old          Old         Old          Old       Old          This is the option to go with the old distributor for all 5 years
Combination 2       Old         New         Old          Old       Old          This is the option to go with the old one year and swittch to the new and to have a bad year and to switch to old...

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