User Account

All Pages

What about the widget or gadget ratio

Assignment Help Operation Management
Reference no: EM132263361

Background

XYZ Company has two product lines: widgets and gadgets. Management is considering expanding their operations online through their site xyz to increase sales of their products with the ultimate goal of maximizing company profits. They are interested in evaluating the new market opportunity there and believe it will require a $10M investment today.
 
Data

Current population is 100M persons as of 2014 and is expected to grow 10% annually over the next 10 years.

Internet penetration was 50% as of 2014 and is expected to reach 80% in 10 years.

XYZ currently has a 5% market share of Internet visitors and expects this to reach 10% in 10 years.

XYZ makes money as visitors consume pageviews and buy products on the site.

Visitors generate 5 pageviews a year and $0.05 in revenue/pageview.

In addition, average conversion of users visiting the site who buy a product is 5% and is expected to remain constant.

Of products sold, management expects to sell widgets and gadgets in a ratio of 3:1.

Average selling price: Widget = $10 / Gadget = $15

Pricing is expected to remain flat due to competitive pressures.

Cost of revenues is expected to be 10% of total sales.

Operating expenses are expected to be 40% of total sales.

XYZ's tax rate is 30%.

The company's main operations are stable and low risk, equating to a cost of capital of 5%.
 
Questions to be Answered

Using the data above, would you recommend expanding operations online?

- Feel free to use any and all forms (spreadsheet and/or written response) to justify your answer.

Understanding that such a forecast model is only as good as the drivers behind it, XYZ would also like to know what main drivers impact the overall analysis and how they change the decision of whether to invest.

- For example, how much do varying expense margins impact the attractiveness of pursuing the opportunity?

- What about the widget / gadget ratio?

Use your judgment to surface the main drivers of the model and explain your rationale.

Attachment:- Excel Assignment-Case Study.rar

Reference no: EM132263361

Questions Cloud

Draw a logical diagram for the entire network : Draw a logical diagram for the entire 64.44.120.0/22 network. Draw a physical diagram for the subnet network Net1, 64.44.120.0/23
What is the management philosophy : What promotional mix, channels of distribution, and pricing strategies are being used by the organization?
Why are data classification systems important : What Defense in Depth methodologies could be integrated into your business or educational environment? Why are data classification systems important?
What makes a secure password secure : What makes a secure password secure? As the system administrator for a medium-sized company, how would you convince users that letting the computer operating.
What about the widget or gadget ratio : How much do varying expense margins impact the attractiveness of pursuing the opportunity? What about the widget / gadget ratio?
Describe organizational learning and the firms km : Information and Knowledge Management (PBA 4808) - University of South Africa - Describe organizational learning and the firms KM
What are the two disadvantages of using the approach : Which database security mechanism would you recommend to the university? What are the two disadvantages of using this approach?
Present the budget at a high level by payer type : Prepare an executive summary which should give background information on the hospital and how Medicare inpatient reimbursement is structured.
Demonstrate the lru page replacement algorithm : Demonstrate the LRU page replacement algorithm for the given example. There are 8 pages and 4 frames. Consider the page referencing string.

Reviews

Write a Review

Operation Management Questions & Answers

  Organization involved in mergers and acquisitions

Select one of the changes (challenges faced by organization involved in mergers and acquisitions within the last 5 years.) you have identified and discuss possible solutions to that challenge. include implementation strategies based on sound theoreti..

  Failures occurred to almost lead company to bankruptcy

During the time Steve Jobs was ousted from Apple and then returned to lead company, what operational failures occurred to almost lead the company to bankruptcy?

  One of the roadblocks to this process is groupthink

One of the roadblocks to this process is ‘groupthink’. As a team leader, what could you do to prevent or combat groupthink among your team members?

  Continue by examining and evaluating a single case

Continue by examining and evaluating a single case of an FTA or customs union that you find interesting. How did it form; is it beneficial to all parties; how does it interact with the GATT and other WTO member states

  Transformation process applies to construction management

How does the transformation process apply to the field of construction management, and how you might apply the basic concepts?

  Transgendered or as having gender identity disorder

Increasingly courts are grappling with cases involving persons who identify themselves as transgendered or as having a “gender identity disorder”

  Bicycle repair shop that specializes in repairs-maintenance

Draw a SIPOC diagram for a small, independent bicycle repair shop that specializes in repairs and maintenance.

  What contradictions come into play

Discuss the two sides in this scenario, then choose one of them and justify your position. What contradictions come into play? Cicero agreed to teach a student under the following conditions: the student would pay the first half of the fee at the beg..

  Interpretation of the significant ae interaction effect

Two former students of the author at Edinburgh Napier University carried out a designed experiment as part of their course on experimental design taught by Dr. Jeff Dodgson. The factors and levels considered are listed in Table 8.35.

  Difficult to motivate employees to alter their patterns

According to Kurt Lewin, why is it so difficult to motivate employees to alter their patterns of behavior and select any portion of the video, which most appealed to you and elaborate on its contents.

  What are two challenges of legacy systems

What is 3D printing and where do you think it will be used in the future? What concerns do you have? What is the purpose of an enterprise system and describe three types? What are two challenges of legacy systems? Why are employees a source of valuab..

  Determine the process capacity of the entire process

Determine the process capacity (number of components produced per week) of the entire process. Which of the three operations limits the capacity?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd