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Forward Software

Settlement or Else?

Introduction
Sam Ellis, CEO-Forward Software Inc. introduced a new

spreadsheet product , Cinco.


Cinco: Better graphic, print graph feature, different
menu, facilitate Focus A-B-C menu too.
Current competitors are Focus Software(1981and 80%
market share) and Discount Software(1985).
Focus A-B-C: Copy protected, model of simplicity and
clarity, high price.
Discount Software-VIP Scheduler: Exact copy of Focus AB-C, not copy protected, low price.
Cinco quickly gaining market share.
Focus Software(Focus A-B-C) sued Discount Software(VIP
Scheduler) but main target is Forward Software.

Which route to take ?


1. Should wait for the case outcome between

Focus and Discount Software?


2. Should hire a consulting law firm to predict
the outcome of the case?
3. If wait and Focus sued Forward, then
whether to settle out of court or go for the
trial?
4. Should have a settlement before the case
outcome is finalized ?

Cost of each route


1. Wait for the case decision:

Sued by Focus :

1.
1.

2.

Out of court settlement: $8 million(0.3), $11


million(0.4) or $15 million(0.3) and attorney fee
$1.2 million
Go for the trial and lose : $8 million(.1),$16
million(.3) or $18 million(.6) and attorney fee $2.5
million

2. Hiring of law firm for predicting the case

result: $0.7 million


3. Settlement before case decision :$5
million(.5),$8
million(.3)or $12
million(.2)

Analysis after hiring of Law Firm


1. The cost of hiring is too high.
2. According to sensitivity report, if cost is

around $ 0.57 million, then it is optimal.


3. Below this cost Law Firm should be hired.
4. Probability of prediction of win by Law
Firm when there is actual win should be
around 0.41.
5. In other words efficiency of Law Firm
should be around 92%.

Insights from Tornado Chart


1. Probability of Focus doing case on Forward

is very highly sensitive to cost.


2. Probability of Focus winning the suit
against Discount has comparatively less
effect on outcome.
3. Decreasing the cost of out of court
settlement is less effective than
decreasing the cost of hiring of Law Firm
for survey.
4. Decrease in probability of Focus
winning has a very high impact on
outcome, while increase in the
probability of Focus winning has less