Student

Fast Snacks

If there was one thing the folks at Innovative Products Inc. (IPI) knew well, it was how to come up with useful and unique products in the midst of economic adversity. With current year revenues considerably lower and profit margins shrinking due to severe price competition, the firm’s engineers had been pushed really hard to develop a prototype of a useful, and hopefully, highly profitable “unique” product. Then, last month, the design team unveiled a fully-tested prototype of their latest innovation, the “remote-controlled” lawn mower, nick-named the “Fast Snacks”.

Surveys of retailers and customers, conducted by the marketing department, indicated that demand would be excellent, provided the price was lower than a riding lawn mower. The testing and developing phases took almost 3 years and the final product passed all safety hazard tests wit flying colors. After the unveiling, the product was exhibited at various home shows nationwide and received raving reviews. Full production had not yet started however, because there had been a change in CEOs and the new CEO was highly conservative.

Before being given the “go ahead” to go into full-scale production of Fast Snacks, the design team had to present a detailed feasibility study to the Capital Investment Committee (CIC), which was chaired by the Vice President of Finance, Abrar. As was typical in a major understanding of this type, the proposal had to include detailed cost and revenue estimates with sufficient documentation to substantiate the numbers.

Having been involved with more than a few of these kinds of proposals before, the head of the Design team, Ali, knew that he had better take every possible factor into consideration and be prepared for a tough and demanding question and answer session at the next committee meeting. Luckily for Ali, his assistant, Ahmad, who had recently earned his Chartered Financial Analyst (CFA) designation, was an experienced and dependable employee. Prior...