Analyzing The Draft Npv Calculation

1236 Words Sep 30th, 2014 5 Pages
There are significant mistakes in the draft NPV calculation. I have also identified the following issues and risks facing MMB in light of the expansion plan. Recommendations on the course of action regarding the NPV analysis, accounting issues and bonus plan are given in the memo.
Expansion Proposal
Firstly, an SWOT analysis and a scan on the Porter’s five forces can help us examine the expansion plan strategically.
Strength – We are reputable for our intricate design, handcrafted workmanship, and high quality;
Weakness – We depend on external suppliers to acquire the electronic touch button movements for the music boxes and will have to do so to acquire the mechanical movements for the clocks if we add the new product;
Opportunity –The demand for the high-quality miniature clocks is strong;
Threat – Recently the costs are going up with the weakening Canadian dollars.

The scan on Porter’s five forces shows that, featured with high-quality signature products, we are in a favorable position in the market. While our competitors are failing and leaving this market, we are able to maintain our market share. We also have the potential and can utilize our leverage to expand.
I would stress that the import of mechanical movements is most critical to our business, which will determine the cost structure and the quality of the final products hence the success of the expansion. We need to establish a standard procurement policy and procedure and ensure an effective control. The…
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