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$10,000,000 Project

Assume you work for a medium sized manufacturing company that's has $10 million for capital projects for this year, and you work in one of the following departments (Choose only one). You're asked to provide a proposal for why the company should allocate the $10 million to your department. Here's the scenario:

1. Sales department--$10,000,000 needed to setup a new sales office and add an additional warehouse on the West Coast to expand distribution and increase sales.
2. Production department--$10,000,000 needed to purchase new equipment and redesign the manufacturing facility to reduce product costs and improve quality.
3. Planning department--$10,000,000 needed to acquire a small competitor that has some good products that will complement your company's product offering.

Solution Preview

As we know, production capacity limitations are hampering future growth. We could increase sales almost immediately by 10% with an adequate capacity increase. As head of the production department, I urge you to consider funding growth of this department.

In the past, management has expressed concern with having to build a new plant, hire and train additional production staff, and the compounding effects these increased costs would have upon the underlying profitability of the growth. I propose a different approach that will lower average production costs and contribute significantly to overall profitability. For example, by replacing the dilapidated equipment, we could take advantage of tax depreciation for a few years ...

Solution Summary

The solution outlines a $10,000,000 budget decision and describes in detail precisely how a manager might attempt to convince the finance department that his/her idea is worthy of the funds.