1. A strategy is being consider by the management of a chocolate manufacturer. The brand is called last mile and the tag line is one bite to get you to the finish The objective of the company in the next 5 years is to become the chocolate that people who work long hard hours rely on for a healthy mental and physical boost. The chocolate is being branded as a relatively healthy lift to mental and physical clarity as well as the best tasting dark chocolate with interesting twists like dried pineapple or banana added. It will be molded in the shape small coffee cups. The marketing strategy is to distribute the chocolate for free to doctors, nurses and physician assistants, FDNY, NYPD, EMS teams, air traffic controllers and pilots who work at in trying stressful environments. The goal is that they will eat the chocolate during their shifts and share their opinions with friends, family and followers on social media.

The cost of executing this strategy will be the free product, shipping, logistics, and social media that is used to influence the general public to buy the product.

Management pitches the idea to investors. Investors want to see CAGR in sales of at least 15% and CAGR in profits of at least 12%. Based on the following projections the investors would be satisfied.

Investors believe that the management needs to reduce unit costs by locking in the price of ingredients and working with suppliers who are willing to accept lower prices in the near term to help this business grow in return for a contractual commitment by the company for increased business when the company begins to hit CAGR targets for sales and profits. Suppliers agree and costs per unit are lowered to $1 in year zero and will be limited to an increase of 1% per year. Key investors all commit to placing the product in key positions in their stores. The following projections are based on the changes to costs and increased product exposure. Based on these projects the investor criteria for CAGR in sales and profits are satisfied.

time	sales	price per unit	total operating cost per unit	yearly change in operating costs per unit
0	10,000.00	$3	$1.00	1%
1	11,500.00
2	13,225.00
3	15,208.75
4	17,490.06
5	20,113.57

True

False