ive got a business case that needs to be answered by Monday July 18 at 12pm. I'm willing to pay for this to be completed by then. Will you pls do this for me . I have attached the case and the example to follow with this.

Webster University - Greenville Metro FINC 5880 - Summer 2016 Team Project Big Breeze Fans Background Big Breeze Fans got its start 45 years ago as a manufacturer, seller, and installer of fans for industrial sites. They invest heavily in fan technology and lead the nation in sales of fans to large industrial customers. Big Breeze developed a reputation for innovative design and energy efficiency that allows them to charge a premium price for their fans. Likewise, many Big Breeze sales representatives enjoy the generous expense accounts and healthy commissions that the steep margins on a large sale to an industrial customer make possible. While the investment made in product engineering and research paid off handsomely over the first 40 years of the company's history, sales reached a plateau and Big Breeze has not been able to increase prices over the last five years. Concerned about the company's future, 3 years ago Big Breeze's executive management team developed a new long-term strategic plan. The plan looks out 10 years into the future and caused some dramatic shifts in the company's thinking. The plan called for the creation of a new product line designed for luxury homes. Big Breeze had never designed fans for consumer use, however, it appeared more and more architects and designers were ordering industrial fans for large spaces in their clients new \"estate - sized\" homes. As a result of additional market research, Big Breeze concluded there was, indeed, a healthy demand for industrial quality fans for the retail market. Two years ago, Big Breeze retooled a section of their main manufacturing facility and began producing smaller diameter, lower horsepower fans. Robust sales of the new product line encouraged them to expand their consumer grade fan building capacity. Because of the relatively limited run of fans produced in the initial test of the market, Big Breeze decided it would sell the fans via the internet and use third parties to distribute and install the fans (Big Breeze delivers and installs 100% of its industrial fans). This new fulfillment model worked so well, that Big Breeze intends to expand its online presence and market and distribute consumer fans strictly via the internet. Another initiative called for by the strategic plan was to conduct customer satisfaction surveys and determine why industrial fan sales had stagnated. A major marketing research firm was hired to gather and analyze feedback from customers. What the surveys uncovered was eye-opening to Big Breeze executives. The surveys revealed that industrial customers who ordered large quantities of fans were generally very satisfied with the product and the customer service they received. Large customers often credited their Big Breeze sales representative with providing a seamless customer experience. Unlike large, well established industrial customers, however, more entrepreneurial customers were completely dissatisfied with the service they received and felt the company had not lived up to its marketing pitch. 1 Big Breeze Business Case The main problems experienced by smaller customers seemed to be missed delivery and installation deadlines, confusing paperwork and billings, and uncertainty over the credit terms they would be extended. Cash flow was critical to smaller customers and Big Breeze made it difficult for the small shop or retailer buying only one or two fans to predict when the bills would be presented or due. Smaller customers said they definitely WOULD NOT recommend Big Breeze fans to a business associate. Management concluded from the research results that industrial fan sales would indeed be slowing if a better service experience could not be provided to new start-up businesses and smaller customers. After further investigation, it appeared the \"back-office\" processes used by Big Breeze were a major impediment to achieving a great customer experience for smaller industrial fan buyers. The consultants advised Big Breeze to investigate implementing a CRM (Customer Relationship Management) System. A CRM would enable Big Breeze to streamline the order and fulfillment process, providing much better service to its smaller industrial customers. In addition, a CRM was especially critical for support of online marketing and sales and would be needed if Big Breeze wanted to aggressively expand their consumer product line. The industrial fan fulfillment process, shown as exhibit 1, had evolved over time such that, without a sales representative to intervene, the process created delays and undue confusion for a customer. For large industrial accounts, the sales reps worked diligently to keep customers informed and to prioritize their orders over smaller customers. As such, the sales reps protected their commissions and had, over time, built a fulfillment system that only an experienced sales person could effectively navigate. Implementing a CRM would drive radical change in the fulfillment process and would require sales representatives to do more work upfront to feed information to the system. That upfront information was used by the CRM to automatically check inventories, schedule deliveries, and order installations. Moreover, the CRM provided information that enabled anyone at Big Breeze to resolve customer issues. Sales representatives would also be more productive because they would now be able to handle a larger number of customers. A CRM, however, was not a popular idea with the sales reps. While greater sales productivity could potentially increase their commissions, many sales representatives thought adding more customers to their workload would not be worth the extra salary earned. Economic Costs and Benefits Big Breeze executives appointed a team to conduct a feasibility study and investigate various CRM systems that could be implemented. The team was told to use a 7-year life for the project as technology changes would require Big Breeze to adopt a replacement system at the end of 7 years. The team was also told to estimate inflation at 2% over the life of the project. The study team met with various software vendors and saw CRM systems in action at some of the vendor's clients, after which the study team recommended Big Breeze's fulfillment process be revised as shown in exhibit 2. 2 Big Breeze Business Case Based on study findings, the cost of implementing the new system would be $15 million and it would take an entire year to set up the CRM and train employees in its use before it could be brought online. Benefits to be gained were estimated by the team as well. Because of process streamlining, there would be a reduction of labor required to perform back office functions. Sales projections were also made based on track records of other businesses who had gone through a CRM conversion. The study team's benefit estimates are as follows: Sales Increases - Year over Year Growth Estimates: Current Year 1 Year 2 Units Sold % growth % growth per Year Industrial 50,000 No growth 7.5 % Fans Consumer 25,000 15.0% 15.0% Fans Year 3 % growth Year 4 % growth Year 5 % growth 7.5% No growth No growth 15.0% 15.0% 15.0% Sales for industrial fan are not projected to increase until two years after CRM implementation because of the sales personnel learning curve and organizational change issues. Because of uncertainty over the industrial market, growth is not projected to increase beyond the 3 rd year after implementation. Sales of consumer fans will increase in the first year after implementation because the fulfillment process is not undergoing significant change. The consumer market is thought to be robust enough that growth can be sustained for five years after which it will level off. There are no additional sales of either consumer or industrial fans forecasted for years 6 and 7 of the project. Industrial fans sell at a gross margin (price less cost of goods sold) of $800 per unit on average. Consumer fans have a lower markup and only generate a gross margin of $150 per unit. To support volume growth, plans are not to raise gross margins over the life of this project. They are forecast to remain flat. Because consumer fans are distributed through a 3 rd party, there is an additional expense for marketing and logistics of $50 per fan. Contracts with these third party distributors include fee increases based on the rate of inflation each year. Expense Reductions: The significant streamlining of the fulfillment process will eliminate positions in the billing department and warehouse. The CRM is also cloud-based, meaning less IT employees will be needed. In all, 15 fulltime positions would be eliminated as a result of moving to a CRM system. If an employee whose position is eliminated cannot qualify for another open position at the company, they will be offered a severance package which includes outplacement services. Big Breeze's payroll costs for these positions, including salaries, benefits and payroll burden, averages $60,000 per year. Payroll costs are also expected to track inflation, so manpower savings will be worth more in the future. Employees will be severed immediately as the new system comes on line. Severance is estimated to cost 60% of the total payroll costs saved in the first year of the project. Payouts are immediate and outplacement is provided for 6 months after termination YOUR ASSIGNMENT Big Breeze's CEO and special Committee of the Board want you to evaluate the study team's findings and calculate the project's cash flows and economic returns to the company. They would like to know what 3 Big Breeze Business Case the NPV, IRR, and Payback are for implementing a CRM. The CEO has set hurdle rates at 25% for all capital projects. While Big Breeze has a WACC of 15%, the CEO only wants to consider projects that far exceed WACC to guard against the risk of a slowdown in the overall economy which would hurt fan sales. The CEO refers to this as \"Project A\". The CEO also wants you to look at another variation of this project, \"Project B\" which can generate even greater savings, but which involves terminating more employees. She wants to make sure she understands the difference in the economic impacts of both projects and selects the one that best serves the stockholders without damaging the company's culture and reputation as a fair employer. Project B takes advantage of new system capabilities to outsource the remaining back office functions to a 3rd party. Because of economies of scale of the outsourcer, it appears the cost of the fulfillment process can be further significantly reduced by letting a 3 rd party perform warehousing, billing, and other back office functions. Project B Incremental Economics: An additional 25 positions can be eliminated by moving these functions to a 3 rd party provider. Therefore, project B results in termination of a total of 40 Big Breeze employees. Because these additional employees include managers and other technical experts, their average salaries and benefits are higher at $75,000 per employee. These salaries are also expected to rise with inflation. Severance and outplacement continue to be estimated at 60% of the payroll costs saved. Not all 25 positions can be eliminated in the first year, however. In order to support a successful transition to the 3rd party provider, Big Breeze will need to hold onto 10 key employees during the first year after implementation. In order to do this, Big Breeze will need to offer a retention bonus equivalent to 30% of salary and benefits for each retained employee. At the end of that year, the retained employees will be terminated and receive full severance benefits. The third party provider will charge a flat fee of $1 million per year to perform the duties of these 25 people. The provider signs only 3 year contracts and the feasibility team estimates the rate will jump to $1.1 million for years 4-6, and then $1.25 million for years 7 and beyond. Analyze the economic returns of Project B, compare them to Project A, and present a business case recommending the best course of action. The CEO and Board can move forward with one of these projects or reject the idea of moving to a CRM and continue to do business as usual. The CEO and Board are willing to consider other economic criteria, but they must know what the NPV, IRR, and Payback on these projects are in order to accept the recommendation made in your business case. It will be important that the Board knows you took into account the human resource issues associated with these projects and weighed them appropriately. The Board is accountable to stockholders for this decision and will need your business case to defend their actions. 4 Big Breeze Business Case BIG BREEZE FANS Business Case Project Name: Acquire Charleston Warehouse Date: 07/19/2016 Purpose / Business Opportunity This project proposes a warehouse be built or acquired near the Port of Charleston, SC to support MMI's projected growth in sales of computer peripheral products to Europe. Executive Summary The project team recommends purchase and retrofit of an existing warehouse near the Port of Charleston. The warehouse will allow us to better control logistics at the Port, accurately track inventory and control the quality of outbound shipments to customers in Europe, and eliminate significant losses from product damage and theft currently experienced in our leased, third-party controlled Charleston Warehouses. Owning and operating a warehouse at the Port allows sufficient room for expansion of sales and protects our reputation for quality and customer satisfaction which is currently under assault because of shipment errors originating at the Port. $onehalf million will be saved annually from reduction of theft, damage, and another $1.6 million or more from the cost of self-operation vs. leasing and using third party services to conduct warehousing operations. Lease and contractual services rates are anticipated to increase by 4% for the foreseeable future as warehouse space becomes tighter at the Port. A warehouse of sufficient size for our operation, but requiring retrofitting and some degree of remediation is being marketed for $7 million. Real estate experts believe the property can be acquired for an all-in cost of $6.5MM. Another $3 million would need to be invested to bring this space into a condition that would meet our operational requirements. Land is available for expansion at the candidate site and sales forecasts would require we make a future $0.5 MM expansion, bringing the total investment in a Charleston warehouse operation to $10 MM or less. The IRR on this project is 26% and it has an NPV of nearly $3 MM at our current project cost of capital hurdle rate of 18%. The project team also evaluated the purchase of land and construction of a new warehouse facility, but the costs, delays and risks from permitting and zoning variances made this approach less economically attractive and somewhat riskier should forecasted sales growth in Europe fall short of target. Background Big Breeze Fans has been around for 45 years, seller, and installer of fans for industrial sites. They invest heavily in fan technology and lead the nation in sales of fans to large industrial customers. Big Breeze developed a reputation for innovative design and energy efficiency that allows them to charge a premium price for their fans. Likewise, many Big Breeze sales representatives enjoy the generous expense accounts and healthy commissions that the steep margins on a large sale to an industrial customer make possible. Losses from theft and damage amounted to 4% of sales volume, 8 times higher than expected. 20% of shipments arrived later than scheduled with our buyers in Europe, a ten-fold increase in missed shipment dates from our experience just 3 years ago. Shipments were shorted or included damaged goods another 14% of the time, meaning our reputation has suffered with one-third of our European customer base. This project proposes either the construction of a new warehouse or the acquisition of an existing warehouse that can be rehabilitated and modified to gain better control over product loadings at the Port of Charleston and to support continued growth of our sales to Europe. Options Considered Two basic options were evaluated; 1- purchase a \"green field\" site with good logistical access to the Port and construct a new warehouse, and; 2- purchase an existing warehouse currently serving the Port and modify it for MMI's needs. Local real estate experts were engaged, as were architects and construction management firms familiar with Charleston building codes and zoning ordinances. Vacant land near the highly developed industrial corridor was in very short supply and land with abandoned structures that could be demolished to provide space for new construction were usually in areas where zoning variances would be required to allow heavy truck traffic to use streets leading to the site. As a result, buying an older, but serviceable, existing warehouse emerged as the faster and less costly approach. Strategic Case MMI's strategic plan calls for expansion into the European market over the next 5 years. At the projected growth rates, MMI will need to lease another 75,000 square feet of space at the Port which is currently not available in any of the three shared warehouse facilities we already use. The acquisition of a space large enough to serve both our current operations and future projected European sales is needed to support our market expansion strategy. A uniquely positive customer experience is a hallmark of the brand MMI has built over the last decade. That experience is beginning to erode for our European wholesale buyers due to inaccurate and late product shipments. These shipments also have been arriving with unacceptable percentages of damaged products. MMI's reputation is beginning to suffer in this marketplace where we once enjoyed a distinct brand advantage. The source of most of our customer problems has been traced to our outbound shipping operations at the Port of Charleston. While corrective actions are being taken to minimize the inherent problems created by third party warehouse operators, the permanent solution to this problem is to operate a facility MMI can control in totality and one that uses proven best practices and systems implemented across the rest of our sales and customer fulfillment operating sites. Economic Case Sources of Benefits: Both Scenarios have Identical Operating Cash Flow Benefits Operating Costs Eliminating 3rd Party Leases and Support Contracts* Less: Self-operated Warehouse Expenses Annual Cash Flow $(000's) $5,000 Net Operating Cost Improvement $ (3,400) $ 1,800 Increased Sales Reduced returns for damaged merchandize (lost sales) Reduced theft and damage in the warehouse (lost sales) TOTAL OPERATING CASH FLOWS $200 $300 $2,300 *Note: Leases and contract expenditures are expected to increase by 4% each year KEY ASSUMPTION - additional terminal cash flow Because computer technology is undergoing such a rapid pace of change, the project has a 7-year life at which time it is assumed an owned warehouse would be sold at its net book value using a 30-year depreciable life for the investment in the warehouse. Investments: Construct New Warehouse (Scenario A) - Total Investment = $11 MM Land Purchase = $3 MM New Construction = $8 MM with a two-year construction period due to permitting and zoning issues Purchase Existing Warehouse (Scenario B) - Total Investment = $10 MM Purchase Price = $6.5 MM Retrofit Costs = $3.0 MM Future Expansion = $0.5 MM (expansion is needed to accommodate future sales forecast) PROJECT ECONOMIC RESULTS (see attachment 1) Measure of Return NPV @ 18% cost of capital IRR Payback Period Etc.... Scenario A $385,000 19% 5.16 Scenario B $2,975,0 00 26% 4.12 The Economic Case concludes that Scenario B, Purchase and Retrofit of an Existing Warehouse, yields greater value for shareholders, although both scenarios are viable. Given the risk inherent in any sales projections, the project team also recommends Scenario B because of its shorter payback period. Also, since the Purchase and Retrofit option includes a warehouse space expansion in year 4 of the project, if sales do not grow as quickly as forecasted, the expansion can always be deferred. Compliance Case The lack of control over merchandize in the warehouse creates concerns over devices that have highly restrictive export license requirements. Warehouse, sales, and corporate units must coordinate their efforts to comply with documentation and properly executed manifests. Having greater physical control over sensitive technology and MMI employees who are properly trained and supervised executing these duties provides greater assurance of compliance. Recommendations The project team recommends MMI begin immediate negotiations to acquire the warehouse available in Charleston for $9.5 MM or less. Plans to retrofit this warehouse should be developed as soon as practical and leases and existing service contracts associated with 3rd party warehouses in the Charleston area should not be renewed beyond the date we plan to occupy the retrofitted facility. Plans to hire a local workforce and management team for the Charleston operation should also be formulated. Finally, given the nature of real estate speculation, all discussion of this matter should be kept on a need-to-know basis until such time as MMI acquires the existing warehouse. BIG BREEZE FANS Business Case Project Name: Acquire Charleston Warehouse Date: 07/19/2016 Purpose / Business Opportunity This project proposes a warehouse be built or acquired near the Port of Charleston, SC to support MMI's projected growth in sales of computer peripheral products to Europe. Executive Summary The project team recommends purchase and retrofit of an existing warehouse near the Port of Charleston. The warehouse will allow us to better control logistics at the Port, accurately track inventory and control the quality of outbound shipments to customers in Europe, and eliminate significant losses from product damage and theft currently experienced in our leased, third-party controlled Charleston Warehouses. Owning and operating a warehouse at the Port allows sufficient room for expansion of sales and protects our reputation for quality and customer satisfaction which is currently under assault because of shipment errors originating at the Port. $onehalf million will be saved annually from reduction of theft, damage, and another $1.6 million or more from the cost of self-operation vs. leasing and using third party services to conduct warehousing operations. Lease and contractual services rates are anticipated to increase by 4% for the foreseeable future as warehouse space becomes tighter at the Port. A warehouse of sufficient size for our operation, but requiring retrofitting and some degree of remediation is being marketed for $7 million. Real estate experts believe the property can be acquired for an all-in cost of $6.5MM. Another $3 million would need to be invested to bring this space into a condition that would meet our operational requirements. Land is available for expansion at the candidate site and sales forecasts would require we make a future $0.5 MM expansion, bringing the total investment in a Charleston warehouse operation to $10 MM or less. The IRR on this project is 26% and it has an NPV of nearly $3 MM at our current project cost of capital hurdle rate of 18%. The project team also evaluated the purchase of land and construction of a new warehouse facility, but the costs, delays and risks from permitting and zoning variances made this approach less economically attractive and somewhat riskier should forecasted sales growth in Europe fall short of target. Background Big Breeze Fans has been around for 45 years, seller, and installer of fans for industrial sites. They invest heavily in fan technology and lead the nation in sales of fans to large industrial customers. Big Breeze developed a reputation for innovative design and energy efficiency that allows them to charge a premium price for their fans. Likewise, many Big Breeze sales representatives enjoy the generous expense accounts and healthy commissions that the steep margins on a large sale to an industrial customer make possible. Losses from theft and damage amounted to 4% of sales volume, 8 times higher than expected. 20% of shipments arrived later than scheduled with our buyers in Europe, a ten-fold increase in missed shipment dates from our experience just 3 years ago. Shipments were shorted or included damaged goods another 14% of the time, meaning our reputation has suffered with one-third of our European customer base. This project proposes either the construction of a new warehouse or the acquisition of an existing warehouse that can be rehabilitated and modified to gain better control over product loadings at the Port of Charleston and to support continued growth of our sales to Europe. Options Considered Two basic options were evaluated; 1- purchase a \"green field\" site with good logistical access to the Port and construct a new warehouse, and; 2- purchase an existing warehouse currently serving the Port and modify it for MMI's needs. Local real estate experts were engaged, as were architects and construction management firms familiar with Charleston building codes and zoning ordinances. Vacant land near the highly developed industrial corridor was in very short supply and land with abandoned structures that could be demolished to provide space for new construction were usually in areas where zoning variances would be required to allow heavy truck traffic to use streets leading to the site. As a result, buying an older, but serviceable, existing warehouse emerged as the faster and less costly approach. Strategic Case MMI's strategic plan calls for expansion into the European market over the next 5 years. At the projected growth rates, MMI will need to lease another 75,000 square feet of space at the Port which is currently not available in any of the three shared warehouse facilities we already use. The acquisition of a space large enough to serve both our current operations and future projected European sales is needed to support our market expansion strategy. A uniquely positive customer experience is a hallmark of the brand MMI has built over the last decade. That experience is beginning to erode for our European wholesale buyers due to inaccurate and late product shipments. These shipments also have been arriving with unacceptable percentages of damaged products. MMI's reputation is beginning to suffer in this marketplace where we once enjoyed a distinct brand advantage. The source of most of our customer problems has been traced to our outbound shipping operations at the Port of Charleston. While corrective actions are being taken to minimize the inherent problems created by third party warehouse operators, the permanent solution to this problem is to operate a facility MMI can control in totality and one that uses proven best practices and systems implemented across the rest of our sales and customer fulfillment operating sites. Economic Case Sources of Benefits: Both Scenarios have Identical Operating Cash Flow Benefits Operating Costs Eliminating 3rd Party Leases and Support Contracts* Less: Self-operated Warehouse Expenses Annual Cash Flow $(000's) $5,000 Net Operating Cost Improvement $ (3,400) $ 1,800 Increased Sales Reduced returns for damaged merchandize (lost sales) Reduced theft and damage in the warehouse (lost sales) TOTAL OPERATING CASH FLOWS $200 $300 $2,300 *Note: Leases and contract expenditures are expected to increase by 4% each year KEY ASSUMPTION - additional terminal cash flow Because computer technology is undergoing such a rapid pace of change, the project has a 7-year life at which time it is assumed an owned warehouse would be sold at its net book value using a 30-year depreciable life for the investment in the warehouse. Investments: Construct New Warehouse (Scenario A) - Total Investment = $11 MM Land Purchase = $3 MM New Construction = $8 MM with a two-year construction period due to permitting and zoning issues Purchase Existing Warehouse (Scenario B) - Total Investment = $10 MM Purchase Price = $6.5 MM Retrofit Costs = $3.0 MM Future Expansion = $0.5 MM (expansion is needed to accommodate future sales forecast) PROJECT ECONOMIC RESULTS (see attachment 1) Measure of Return NPV @ 18% cost of capital IRR Payback Period Etc.... Scenario A $385,000 19% 5.16 Scenario B $2,975,0 00 26% 4.12 The Economic Case concludes that Scenario B, Purchase and Retrofit of an Existing Warehouse, yields greater value for shareholders, although both scenarios are viable. Given the risk inherent in any sales projections, the project team also recommends Scenario B because of its shorter payback period. Also, since the Purchase and Retrofit option includes a warehouse space expansion in year 4 of the project, if sales do not grow as quickly as forecasted, the expansion can always be deferred. Compliance Case The lack of control over merchandize in the warehouse creates concerns over devices that have highly restrictive export license requirements. Warehouse, sales, and corporate units must coordinate their efforts to comply with documentation and properly executed manifests. Having greater physical control over sensitive technology and MMI employees who are properly trained and supervised executing these duties provides greater assurance of compliance. Recommendations The project team recommends MMI begin immediate negotiations to acquire the warehouse available in Charleston for $9.5 MM or less. Plans to retrofit this warehouse should be developed as soon as practical and leases and existing service contracts associated with 3rd party warehouses in the Charleston area should not be renewed beyond the date we plan to occupy the retrofitted facility. Plans to hire a local workforce and management team for the Charleston operation should also be formulated. Finally, given the nature of real estate speculation, all discussion of this matter should be kept on a need-to-know basis until such time as MMI acquires the existing warehouse