BASE JNB END OF UNIT
Grummet Company is acquiring a new wood lathe with a cash purchase price of $80,000. The Wood Master Industries (the manufacturer) has agreed to accept $23,500 at the end of each of the next 4 years. Based on this deal, how much interest will Grummet pay over the life of the loan?
$14,000
Without using a calculator, which of the following is the closest estimate of the NPV of $10,000 received two years from now if the discount rate is 10%?
$8,000
SCOPE
(1) Quick, inexspensive preliminary investigation and scoping of the project. Largely desk research.
DESIGN
(2) Detailed investigation involving primary research (customer, market, and technical) leading to a business case that include project and project definition, project justification, and the proposed plan for development.
DEVELOP
(3)The actual detailed design and development of the operations or production process required for eventful full scale production.
SCALE UP
(4) Tests or trials in the lab, plan and marketplace to verify and validate the proposed new product, brand/marketing and production or operation plans.
LAUNCH
(5)commercialization: the beginning of full scale operations or production, marketing and sales.
Consumer driven focus
= Validate ideas with voice of customer analysis + work on it form the perspective of consumers.
New product development is important for which company stage? Start up High Growth Mature All of these choices.
All of these choices.
Which of the following is false about Stage Gate? Work is divided into gates; decisions occur at stages. Decisions include stop go and wait. Stage Gate is a way to guarantee the success of a new product launch. All of these choices.
All of these choices.
SNACK PACK DEVELOPMENT
Before launch, JNB tested the packaging with 850 consumers. However, the consumers were more concerned with the flavor since the pretzels were gluten free. They decided to ignore the customers' concerns and not change the ingredients.
Expecting quality
Believes the team can do great things and tries to motivate the team to do excellent work regardless of reward
strategic fit
Brand image often starts with how consumers view the brand - what does it stand for in consumers' eyes?
Having relevant knowledge, skills, and experience
Can perform any role of the team if need be or acquires the skills necessary to do so in the process.
interacting with team members
Contributes ideas, asks for input + feedback to improve, and encourages/enthuses the team
STAGES
Discover: PRE-WORK Scope (1) Design (2) Develop (3) Scale Up (4) Launch (5)
In which phase of Stage Gate would you most likely go interview users in search of unmet needs with a goal of finding new business opportunities?
Discovery
T/F Justin's now uses Stage Gate including 5 distinct stages.
FALSE
Kelvin has a great eye and does all the graphic design work as the intern for his company. He helps his team with all of its PowerPoint presentations. In this example, which of the CATME dimensions is Kelvin using?
Having related KSAs
Pros of stage-gate
Helps companies weed out bad projects before investment levels are too big Increases clarity and alignment between day to day project team & leadership Makes for structured process + due diligence _> more product success
Which scenario do would you prefer? WACC > IRR IRR> WACC
IRR> WACC
Zaid makes a point to arrive on-time to his remote team meetings, with his camera turned on, and a positive attitude for completing the team project. In which of the CATME team dimensions does Zaid appear strong?
Interacting with teammates
SNACK PACK SCALE UP
Justin's did not conduct proper testing and trials that would have validated the product in its final, packaged form. With limited time, "line trials" and further research with consumers were not utilized. Rather, the internal team used samples to solidify the product instead of gathering information directly from the target market.
keeping the team on track
Monitors progress and provides succinct feedback
Snack Pack was failure because:
No proper Stage Gate-esque infrastructure for new product development + compressed launch time -> less research; research mostly focused on the concept but not the product's usability or its price. Had to crank up prices in order to cover bulk sum costs paid to the manufacturer Dippers were of infirm quality and the nut butter's materials would separate + leak; some of it would also harden too. Targeted to millennials despite the product appearing to have more appeal to children in appearance and packaging. Following this they created their Stage-Gate adjacent NPD process (Assess, Initiate, Launch)
Is depreciation relevant to taxes? Why or why not?
Not directly because it is not a cash expense. That is why it is subtracted out of operating income so that it is not factored into the tax deductions, and then it is added back in to find operating cash flows. It can however decrease the amount of taxable income.
Discover
PRE-WORK designed to dsiscover and unvover business oppurutnities and generate new ideas. (NOT CONSIDERED A STAGE)
market attractiveness
Pertains to market size, level of competition in the industry, rate of growth of the market, and the amount of market share a firm can feasibly acquire Consolidated market implies oligopoly + hard for new competitors to enter; fragmented market allows for easier competition
What is the primary goal of implementing an NPD process?
Reduce risk
contributing to the team's work
Seeks to accomplish high quality work consistently + assists their teammates
technical feasibility
Sourcing of new ingredients for product How many new processes or new equipment are necessary Distribution: Is storing and handling feasible or does it need new investments Logistics: Movement of product from factory to storage to retail.
stage-gate process
Stages utilized as stepping stones for new product development; Gates used as checkpoints determining whether to proceed, hold, kill, or recycle a project. Helps preserve quality while also saving on costs incurred throughout the project Increases time required for R&D
Cons of stage-gate
Takes a long time to get through the process Often not done right, phases not often enforced properly (rarely executed properly, and very sensitive if a stage is not properly executed ruins everything) Too many gates can ruin the flow of the process Can stifle creativity Can be very costly
You are explaining time value of money factors to your friend. Which factor would you explain as being larger?
The present value of $1 is larger than the future value of $1.
Are payback period and IRR related? How?
They are related trying to figure out when present value and npv break even
top management involvement
Top management needs to have a level of investment in a strong and visible manner.
SNACK PACK DESIGN
When designing the product, they focused more on how the packaging could appeal to the customers, as opposed to the functionality of the packaging. This stage was not correctly executed due to the rushed timeline and consumers were not willing to pay a premium for poorly packaged products.
Tough Go/Kill Decisions
Willingness to commit to specific projects to ensure the best products get the bulk of resources, and wasteful projects are culled.
In which stage of Stage gate do you conduct a more rigorous analysis of an opportunity?
design
JNB BACKGROUND
established in 2004 bought by Hormel in 2016 for over 280 million high/good market share/growth
Of the following, which calculation helps determine the profitability of an investment?
internal rate of return (IRR) method
This calculation determines profitability or growth potential of an investment, expressed as a percentage, at the point where NPV equals zero
internal rate of return (IRR) method
The third step for making a capital investment decision is to establish baseline criteria for alternatives. Which of the following would not be an acceptable baseline criterion?
inventory turnover
Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the initial investment?
net present value (NPV)
Which of the following does not assign a value to a business opportunity using time-value measurement tools?
payback period method
Preference decisions compare potential projects that meet screening decision criteria and will be ranked in their preference order to differentiate between alternatives with respect to all of the following characteristics except ________.
political prominence
Capital investment decisions often involve all of the following except ________.
short periods of time
When using the NPV method for a particular investment decision, if the present value of all cash inflows is greater than the present value of all cash outflows, then ________.
the investment provides an actual rate of return greater than the discount rate