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Transcription of this question: 2.Protect LtdProtect Ltdis an Australian leisure clothing company. It imports materials from Asia to produce highquality clothing used by walkers and joggers. It has a large share of the domestic market, but in recentyears also exported to Europe. These exports now represent Of all sales revenues.The research and development department has invented a new lightweight, breathable waterprooffabric. Initial primary and secondary market research has shown very positive results from existingcustomers and identified potential applications to a range Of sports markets. TO manufacture newgarments using this fabric, Protect Ltd will need new manufacturing equipment. The researchand development department believe that it can improve the fabric further to provide the strengthnecessary for contact sports such as rugby and American football.The board Of directors recently identified three potential strategic options:1. As the sports market is highly competitive, sell the patent for the new fabric to a leading sportswearmanufacturer for SIO million.2. Purchase machinery at a cost OfS2 million to manufacture the new fabric as outdoor clothing.The estimated success Of this option is 80% with returns Of $20 million. However, the failure Ofthe product in the market place would result in a loss Of $5 million.3. Conduct further research and development into improving the fabric for sports use.This would cost $2 million. Failure to produce a suitable fabric would result in a loss OfS5 million. However, it is believed that there is a 60% chance Of success. If a suitable fabricis produced then the firm would have another choice. They could either sell the patent for theimproved fabric for S25 million, or choose to manufacture it themselves at a cost Of S2 million.If they choose to manufacture, the estimated chance Of a successful market launch is 50% withestimated returns of $72 million. However, if the market launch proves a failure, they would makea loss Of $8 million.The board Of directors are concerned about the economic conditions in Europe, with the expectation(a)(b)(c)Define the term primary market research.Prepare a decision tree to show the three options available to Protect Ltd,the expected values Of each, and identify the most profitable option.With reference to the external environment and the decision tree prepared in (b),[2 marks/[8 marks/recommend an appropriate course Of action for Pmtect Ltd.[l O marks/

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