Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
marketing strategy the competitive environment
marketing strategy the competitive environment
marketing strategy the competitive environment
Don’t take our word for it - see why 10 million students trust us with their essay needs.
Recommended: marketing strategy the competitive environment
Silicon Arts is a young start up company that manufactures digital imaging Integrated Circuits. These circuits can be used in digital cameras, DVD players, computers, and medical and scientific equipment. This four year old company has managed to grow their annual sales to $180 million. The market is strong and the company wants to expand on its short success. Hal Eichner, the chairman of the board, has recently put together a task force that has developed two capital investment proposals that could provide significant revenue growth to the company. One project considers expanding on the company’s current technology and growing its digital imaging business. The second project considers entering into the Wireless Communications industry because the IC 1032 semiconductor chip that Silicon Arts recently developed is used 50% of the industries mobile handsets. The company must now review the market research, apply the data to perform various scenario analyses and determine which investment will provide Silicon Arts the greatest NPV and IRR. The project that shows the greatest NPV and IRR will be the project that is launched at Silicon Arts (University of Phoenix, 2009).
The first step in the process is to perform a scenario analysis to factor in adjustments to the variables of sales volume, price and marketing cost and see the correlation each can have on the NPV and IRR. In the Dig-Image analysis the marketing research data was used to adjust the sales volume for year 2 and year 3 to a growth rate of 20%. The same was done for year 4 and year 5 at a growth rate of 10%. However, there is a rumor that T&T, SAI’s major competitor will introduce a low cost substitute to the market early in year 1 that could after sales volume by as much as 5%. So the target growth rates were adjusted to mitigate this risk to 17% in year 2 and year 3. It is not likely that T&T will gain all 5% right away in year 1 but it must be factored in that they will steal some market share away early and then potentially more as it used in the market past year 1. So the adjustment was made to consider a 3% decline from the target in year 2 and year 3. The market research has already factored in a declining market in year 4 and year 5 so no additional adjustments were considered.
Capital Budgeting encourages managers to accurately manage and control their capital expenditure. By providing powerful reporting and analysis, managers can take control of their budgets.
Capital budgeting is how a firm decides whether it should invest in a project. To determine if a project should be invested in, firms use methods such as net present value and internal rate of return to analyze the projected cash flows. Firms should choose projects that increase its value.
Portfolio Theory is a way of budgeting that entails organizing budget activities into portfolios and comparing portfolios with each other in order to maximize utility. By creating portfolios, budget activities are not simply evaluated on their own merits, but also by how they interact with each other. A weighted average of expected returns provides the overall return of the portfolio, while examining the covariance of the activities in the portfolio shows the overall variance or risk that the portfolio has. By understanding the constraints and following particular rules, you can arrive at the best possible portfolio which will determine the best possible budget (Khan, 2002).
In April l988, Dan Cohrs, vice president of project finance at the Marriott Corporation was preparing his annual recommendations for the hurdle rates at each of the firm’s three divisions. Investment projects at Marriott were selected by discounting the appropriate cash flows by the appropriate hurdle rate for each division.
This case traces the strategic decisions of Intel Corporation which defined its evolution from being a start-up developer of semiconductor memory chips in 1968 to being the industry leader of microprocessors in 1997 when it ranked amongst the top five American companies and had stock market valuation of USD 113 billion.
NPV fails to consider the presence of potential constraints in Digitalis’ structure that may restrict the amount of capital generated. This potential restrictions may hinder the clarity of the outcome of this project evaluation. Another limitation of NPV is its sensitivity to its discount rate. A slight change in the discount rate would have a considerable effect on the final output of the NPV calculations.
The department of Developmental Education is tasked each year with coming up with the following years budget and this year I was given that task. The Dean has given us a very hard task and that is that we have to cut 10% of our budget for next year. My task is to come up with five strategies that help in reducing our budget by 10% just for the following year, two of them will have to present a permanent change to our current budget and the ones to follow. This was a very tough decision, as many items have to be considered. I have given it a lot of thought and this is what I came up with, I will also explain which one of the strategies I think works best for our department and the institution.
One particular digital electronics company stuck out above the rest, and that was Sony. With Sony’s recent release of the Play Station 4 and its already successful Play Station 3 model, Sony seemed like the ideal company to invest in for the coming years. With Sony’s wide range of electronic products, including stereos, DVD players, and televisions, and with new technology being developed close to every week, all sorts of new jobs are beginning to open up. Sony happens to be one of the leading manufacturers of electronic products for consumer and professional markets, and in 2013 they had employed over 145,000 people and the number is still increasing with new job fields opening up weekly and more specialists being required to keep up with the changing technology. Their increasing technological ability will also lead to a bigger and brighter future for the American and global economy. With the creation of more jobs the unemployment rate will decrease, and products will become more accessible to families and individu...
In markets that constantly change in technologies Silicon Arts Inc. needs to consider this in making its decision. Though the Global Digital Imaging semiconductor market forecasts for a growth of 20% in the 1st year and demand to grow 7% between years 2-4, one has to consider that new technology will replace the old technology by the end of year 5. The overall growth is great for the industry but another factor that will affect Silicon Arts sales volume is the rumor that one of their major competitors is introducing a cheaper similar product in early year 1. I feel this will make a major impact. As mentioned before, technology is always changing and products are being introduced everyday and getting cheaper every time, for example portable CD players was very popular when it was first introduced, as time passed a new product the mp3 player ultimately replaced the portable CD player. Silicon Arts can use the sensitivity analysis to examine how sensitive the Net Present Value is to changes in basic assumptions (Ross, Westerfield, & Jaffe, 2005,Chapter 8). In the simulation I was able to see how sensitive these changes were to revenues by changing the volume of sales, increasing or decreasing the percentage of price per unit and the increasing or decreasing of the percentage of marketing costs. In the second cycle of the simulation I needed to analyze the Capital Expenditures for the two proposals.
In this assignment I was asked to carry out a financial analysis of a proposal for the NOVA Corporation and to include analysis concerning the possible impact of a price change for their product in question. I was asked to consider several sales growth scenarios and expected to obtain the NPV of the project for over a five-year period. The model also needed to allow for measuring NPV as change in sales volume, price and labor cost occurred.
The following content provided will include information regarding Nikes Inc. cash management strategies, which will include more in depth information from the previous group paper. In addition, working capital recommendations will be provided to senior management base on next year’s in the pro-forma financial statements.
Star Appliance is looking to expand their product line and is considering three different projects: dishwashers, garbage disposals, and trash compactors. We want to determine which project would be worth doing by determining if they will add value to Star. Thus, the project(s) that will add the most value to Star Appliance will be worth pursuing. The current hurdle rate of 10% should be re-evaluated by finding the weighted average cost of capital (WACC). Then by forecasting the cash flows of each project and discounting them by the WACC to find the net present value, or by solving for the internal rate of return, we should be able to see which projects Star should undertake.
The business scope of the modern day economic agents is no longer that of simply selling their products and cashing in the revenues, but has become more complex. More specifically, while the ultimate objective remains that of profit registration, economic agents have changed their approach to attaining the objective. They now focus on satisfying the customers, attaining the approval of the society and creating a favorable working environment for the employees. In the context of increasing challenges, the economic agents are also presented with incremental opportunities, which aim to increase their revenues, to improve the production volumes, to increase operational efficiency through technological enhancements or to expand into new markets and serve new customers. All these efforts are completed through projects of capital investments.
Line item budgeting categorizes various expenses and places them in list format on a document for budgetary purposes. This type of budgeting is considered the heartbeat of budgeting due to the systematic method by which it controls revenue and expenses, this is made evident when Tyer and Willand (1992), pointed out “Statutory or administrative controls could be imposed on the transfer of funds from one-line item to another, or between broad categories of expenditure.” According to Schick (1971), “line item budgets were attractive to legislative officials because they did not focus explicit attention on substantive policy issues or choices.”
Budgeting Assignment A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of a manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496)