Question

Record of product launch success/failure over the last 25 years: COMPANY A

# of successful products (out of 10) … 0 1 2 3 4 5 6 7 8 9 10 … in # of years out of last 25 years 0 1 0 2 1 3 4 5 5 3 1

Record of product launch success/failure over the last 25 years: COMPANY B

# of successful products (out of 10) … 0 1 2 3 4 5 6 7 8 9 10 … in # of years out of last 25 years 1 2 1 2 3 3 5 3 4 1 0

1. On an average, how many products are launched successfully by Company A in a given year? Similarly, on an average how many products are launched successfully by Company B in a given year? (4 points)

2. Let us assume that we employ a few different sets of standards for measuring success 3(or failure). Instead of using averages, we use the following alternate benchmarks:

a. Let’s assume that we measure the likelihood of 6 or more successful product launches in any given year by these firms. The underlying idea is that a successful firm should get a majority of its products, if not all, to succeed in any given year. And ‘6’ is a number just past the halfway mark and can be used as a reasonable proxy for ‘majority’ of products (out of 10)

Using this measure of likelihood of at least SIX products succeeding in a given year, which company has a better success rate? (2.5 Points)

Answer 1

Let X be the number of successful product launches by company A in the last 25 years

The frequency of X is given by

# of successful products (X)	Frequency (f)
0	0
1	1
2	0
3	2
4	1
5	3
6	4
7	5
8	5
9	3
10	1

The average of X is

Let Y be the number of successful product launches by company B in the last 25 years

The frequency of Y is given by

# of successful products (Y)	Frequency (f)
0	1
1	2
2	1
3	2
4	3
5	3
6	5
7	3
8	4
9	1
10	0

1) ans: On an average, 6.48 products are launched successfully by Company A in a given year.  Similarly, on an average 5.16 products are launched successfully by Company B in a given year.

2) the likelihood of 6 or more successful product launches in any given year is

Company A

Company B

The likelihood of 6 or more successful product launches in any given year by company A is 0.72

The likelihood of 6 or more successful product launches in any given year by company B is 0.52

Hence Company A has a better success rate.