CASE STUDY

Case Study-Project Selection

Case Study-Project Selection

Introduction

Hin Ting Kawano, Inc. is a large developer of business software and application programs. The company had been facing the downturn in operating revenues since past three quarters, therefore, the management is thinking about the new product development. Product development department has come up with two different projects, Min and Lincoln. The two departments i.e. software development and the business application have come up with different suggestion; both have selected different projects based on their different screening models. Software development has used NPV analysis and chose Lincoln, whereas business applications has used scoring model and chose Min project. Now, Xia Zhao, the vice president of new product development has to select one of the products.

We know that for developing new product, a management needs to apply certain model in order to select a best project for the firm to develop. The appropriate selection of the products is essential to the long run sustainability of the company. Different project selection models are there to enhance profitability, select investment within the constraints of the company, and to increase the competitiveness of the company. While choosing a selection model company should consider that the model incorporates the management decision of the company. The model should consider the limitation of resources of the firm. The model should also be capable of dealing with multiple time periods and optimize the decision by simulating several circumstances both internally and externally. The model should be easy to apply effectively and come up with right results. The model should be realistic; come up with appropriate decision that can be applied and should be realistic. Finally, the data gathering and modelling cost must be considered while choosing a screening model (Jalil, 2009, p.1).

Discussion

Divergence of Opinion

The two groups, software development and business applications, have divergence in their opinion regarding the two techniques used for project evaluation. The basic reason behind this divergence is the importance that both groups place with their evaluation technique. Software development department used the NPV analysis for evaluating the projects and emphasising on the financial benefit associated with both the projects. On the other hand, business applications used scoring model for screening the projects and emphasising on different components associated with each project, not just the financial benefits.

Strengths and Weaknesses of Each Screening Model

Both the screening models have strength and weaknesses in their own way. Scoring model is ...