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Transcription of this question: 5.Jan is considering two options for the long-term development of the business: marketdevelopment and diversification.Option 1: Market developmentAlthough Jan, with his strong associations with the LIS, likes the idea of developing theLIS market, he has concems about it. Over the last four years, the exchange rate hasfluctuated between €1 = Sl .40 and €1 = $1.03. There is some evidence that the LIS wantsto discourage imports and prefers foreign businesses to invest directly in the LIS. Jan thinksthere are other markets in and closer to Europe that could be developed more easily withoutsignificant changes to the distribution channels or the culture of the business. He hassuggested the United Kingdom (UK) market as an alternative, which has a health servicesimilar to those in other European countries. In most other respects the LIK market is similarto other European markets. The main worry is that the LIK market would be difficult to enter,as established suppliers are likely to be preferred by the health service and there may befinancial constraints on the health service.Option 2: DiversificationJan is also considering a proposal by Heinrik Langer, a business analyst. Heinrik’s idea isfor diversification. He thinks that RDM should develop a service role. RDMs directors andworkforce have all of the skills and experience needed to help other businesses convertfrom traditional production methods to automated robotic production processes. This service(known as a consultancy) would require recruitment of more engineers and computerspecialists as well as highly skilled and experienced consultants. Heinrik’s proposal is based on:• the likely low long-term growth prospects for RDMs healthcare products. Population trendsin Europe due to the low birth rates (Table 1) will lead to an aging population in the short andmedium term. However, in the long term there could be economic and demographic problemsarising from the eventual decline in population that is predicted to occur when the birth rate isless than 2.1• his view that every business should have a service rolepossible financial pressures on European govemments, potentially reducing healthcarespending• his data market research results on robots and robotics (Table 2).[Source International Baccalaureate Organization 20191Table 1: Population birth ratesCountryGermanyPolandItalySpainRussiaUSBirth rate (births per female)1.31.31.41.41.41.81.8[Source International Baccalaureate Organization 20191Table 2: Market research on roboticsGrowth in industrial sales of collaborative robots is expected to triple between 2015 and 2025.By 2020, 1.7 million new industrial robots will be installed worldwide.Industries affected by robotics include:unmanned air, land and sea vehicles• health caremanufacturing.Worldwide spending on robots in 2019: $135 billion.[Source International Baccalaureate Organization 20191Nikita, RDMs director of corporate strategy, has asked both Jan and Xi to provide data oneach option to help her construct a decision tree to present at the next board meeting. Thedecision tree below summarizes the issues involved in the decision.Decision tree based on Jan’s and Xi’s estimatesf ur eange rateunfavourablnge ra e.6rovnh 0.5weakrowth OS[Source International Baccalaureate Organization 20191$20m$10m$18m$16musing the case study and the additional information on pages 4 and 5, recommend whetherRDM should choose Option or Option 2.(20]

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