Chocolate Confections Corporation Case Study Analysis

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Mike Falkenstein FINA 4210 Dr. Matt Blasko 8 February 2013 Chocolate Confections Corporation Case Study (1) Provide an Executive Summary (2-3 paragraphs, overview) of the situation and the issues. The Human Resource Department of the Chocolate Confections Corporation has enlisted the services of the Forrester Consulting Group in selecting a new software package that will place them at the forefront of the human-resources/payroll computing community. With the implementation and integration of a new software system, the HR Department hopes to gain a more user-friendly system that will streamline HR and payroll business processes. The vice president of the Human Resources Department, Monica A. Bentz, appointed a “working committee” to…show more content…
b) HR manager/professional savings of $500,000 – The “time savings” of the HR managers and professionals cannot be considered to be an incremental cash flow. The managers will still be paid the same annual salary. c) Total savings associated with staff reductions ($270,000 per year) – The total savings associated with staff reductions can be considered in the evaluation of this new project because the new software system will enable CCC to reduce its number of employees. d) Information systems charge-backs (both cost reduction and additional expenses) – Only costs associated with each of the different projects should be included in the NPV analysis. For instance, research regarding which system should be purchased would be considered to be a sunk cost and should not be included in the analysis as an incremental cash flow. On the other hand, the cost reduction of each project should be included in the NPV analysis, since the reductions will greatly affect the NPV of each project. e) Maintenance contracts - Maintenance costs should be included as incremental cash flows because they could change the NPV of the project if the maintenance costs are significantly different for each of the different projects. f) Inflation. Does the explicit 5% inflation rate assumed in the HRIM’s analysis seem appropriate in light of the

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