Unit 1 Case Study Decission Making

Unit 1 Case Study

GB519: Measurement and Decision Making

A.

Based on the information provided in the case study of GSM pharmaceutical research I found that the original estimates for Return of Investment (ROI) was much higher the new projects provided by Richard Lawrence. If we take the net operating income of $25 million and divide that by the amount of investment which is $140 million and then multiply by 100 we receive a ROI of 17.85%. If we do the same with the new projections provided by Richard Lawrence we have a net operating income of $17.5 million divided by amount of investment of $140 million multiplied by 100 to receive a return of investment of 12.5%.

Original

ROI = (net operating income/ Amount of investment) * 100

ROI = ($25/$140)*100 = 17.85%

New Projections

ROI = ($17.5/$140)*100 = 12.5%

B.

It is Elaine’s responsibility to deliver the best information for the company for molecular identification process (MIP). It is important for her to explain that their ROI will be less than earlier projected, and that the applications is also lesser than expected as well. Since the ROI is less it will take longer to gain money that was invested by 2.5 years longer than previously projected. Her advice should not be tainted by her personal gain for the stocks gained if the company goes public with the MIP product line. She has a dedication to the company and needs to maintain that loyalty and duty for her company.

C.

Elaine has a very important role of providing the most correct information to her supervisor. She knows that the answer will not be the popular answer and that Blake will have heart burns as they expected to go in these directions. But, under the new projections this will change what Blake has prepared for the board of directors and some additional thought should be made. If Elaine does not convince Blake of the difference it will take to make up the money from 5.5 years to 8 years to return the money invested some...