What is the core problem in the company which leads to this situation?

Determine the most suitable project for the company's growth and profitability and the reasons why it is suitable? $($Points to be considered for the evaluation?

Project Proposals Evaluation:

Yao needs to evaluate the two project proposals within the production division: one focusing on video game development and the other on creating accessories for existing product lines. He must assess the feasibility, potential returns, and strategic alignment of each proposal.

Market Analysis:

Understanding the dynamics of the U$.$S$.$ toy and game industry is crucial. With revenues projected to increase to $$52\mathrm{.}5$ billion by $2024,$ Yao must identify growth opportunities within segments like video games and traditional toys.

Division Performance and Resources:

Yao should evaluate the performance and resources of the production division. Understanding its capabilities, strengths, and weaknesses will help determine which project aligns best with the division's expertise and capacity.

Competitive Landscape:

Electronic Games International operates in a competitive market dominated by global enterprises. Yao needs to assess how each project would position the company against competitors and leverage any competitive advantages.

Financial Viability:

Yao must analyze revenue projections, production costs, expected returns, and potential risks associated with each project. Financial analysis, including net present value $($NPV$),$ internal rate of return $($IRR$),$ and payback period calculations, can help assess the projects' financial viability.

Strategic Alignment:

Yao needs to ensure that the chosen project aligns with Electronic Games' overall strategy and long$-$term objectives. He should consider how the project would contribute to the company's growth, market presence, and brand reputation.

Risk Management:

Identifying and mitigating risks associated with each project is crucial. Yao should anticipate potential challenges such as technological advancements, changing consumer preferences, or supply chain disruptions and develop strategies to address them effectively.

Presentation to the Capital Budgeting Committee:

Yao must prepare a compelling case for his recommended project. This involves clearly articulating the rationale behind his decision, presenting supporting data and analysis, and addressing any concerns or questions the committee might have.

By meticulously evaluating these aspects, Yao can make a well$-$founded recommendation that maximizes Electronic Games' potential for future growth and profitability. His decision will shape the trajectory of the production division and contribute to Electronic Games' competitive edge in the toy and game industry.