consider some other form of manufacturing equipment, possibly conventional or CNC with potential af-termarket application in the former case or a transfer machine in the latter case?"
Another manager wrote his thoughts down as a memo to forward to lim. He had two major concerns:
• The "Scenario II" analysis assumes the loss of substantial volume to competition. This seems rather unlikely.
• The after-tax margins seem unreasonably high. Can we get such margins on a sole-source contract?
lim wondered what these changes in their as- ...y sumptions would do to the ROI of the proposal and its overall profitability.
Conclusion lim had some concerns about the project also. He was wondering how realistic the demand forecasts were, given the weak economy and what the lapanese might do. If the demand didn't materialize, they might be. very sorry they had invested in such an expensive piece of equipment as an FMS.
Strategically, it seemed like ABI had to make this investment to protect its profitable position in the diesel engine business but how far should arguments like that be carried? Were they letting their past investments color their judgment on new ones? He was also concerned about the memo questioning the high profit margins. They did seem high in the midst of a sluggish economy.
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What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.