Tossa College of Economic Development

Individual Assignment_#1_on Project Analysis and Management:

Course Code – PPM 621; Instructor: Dr. Melkamu Tadesse

Name: ……………………………………………….………………….……. ID……………………………

INSTRUCTION:

Read the case study detailed below carefully and answer the questions accordingly.

PART I
CASE STUDY: Project Management in Practice

NanoTech, Inc., designs and manufactures automotive components. For years, the company enjoyed a
stable marketplace, a small but loyal group of customers, and a relatively predictable environment.
Though slowly, annual sales continued to grow until recently hitting $300 million. NanoTech products
were popular because they required little major updating or yearly redesign. The stability of its market,
coupled with the consistency of its product, allowed NanoTech to forecast annual demand accurately,
to rely on production runs with long lead times, and to concentrate on internal efficiency.

Then, with the advent of the North American Free Trade Agreement (NAFTA) and other international
trade agreements, NanoTech found itself competing with auto parts suppliers headquartered in
countries around the world. The company was thrust into an unfamiliar position: It had to become
customer-focused and quicker to market with innovative products. Facing these tremendous
commercial challenges, top management at NanoTech decided to recreate the company as a projectized
organization.

The transition, though not smooth, has nonetheless paid big dividends. Top managers determined, for
instance, that product updates had to be much more frequent. Achieving this goal meant yearly
redesigns and new technologies, which, in turn, meant making innovative changes in the firm’s
operations. In order to make these adjustments, special project teams were formed around each of the
company’s product lines and given a mandate to maintain market competitiveness.

At the same time, however, NanoTech wanted to maintain its internal operating efficiencies. Thus, all
project teams were given strict cost and schedule guidelines for new product introductions. Finally,
the company created a sophisticated research and development team, which is responsible for locating
likely new avenues for technological change 5 to 10 years down the road. Today, NanoTech operates
project teams not only for managing current product lines but also for seeking longer-term payoffs
through applied research.

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QUESTIONS

1. Given the market demand NanoTech has experienced before the company found itself
competing around the world, which quantitative market analysis method is more appropriate
and why?
2. A project can be designed for various reasons such as for grabbing opportunities. What is (are)
the opportunity (-ies) that made NanoTech to consider other innovative products? Elaborate.
3. Propose (draw) an organizational structure and explain projectized organizational structure
with respect to NanoTech’s condition and critically comment on the company’s move?
4. What is (are) the challenge (s) raised/faced by NanoTech on product development and the
associated organogram to be adopted? Give recommendation(s) on how to adopt smoothly.
5. Clarify process quality by taking examples from the directions set by NanoTech.

PART II

Project Feasibility and Appraisal: Work out

6. Repi Soap and Detergent Factory is one of the oldest chemical industry in Ethiopia. Less
than a year after its formation that it was nationalized by the government and later re-
established as public enterprise by birr 1,525,000.00. The company this time is run by joint
venture partnership. In the history of the company, the famous products were ROL, AJAX
and LARGO which are the company’s responses to product decline through new products’
projects.
Repi is now considering whether or not to invest in a new detergent project that will cost
birr 100,000.00 in initial investment. The company requires a rate of return of 14%. The
useful life of the project is anticipated to be four years and it has projected future cash flows
of birr 20,000.00, 50,000.00, 50,000.00, and 25,000.00 consecutively.

Initial investment -100,000.00

20,000.00
Cash Flow 50,000.00
50,000.00
25,000.00
A) Find the NPV and BCR of the new project
B) Based on the findings in (A), interpret the result and write your recommendations for the
company’s CEO.

============================ Good Luck! ==================================

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