As Director of New Projects, You Have Just Learned That

question 156

Essay

As director of new projects, you have just learned that cash flow problems have forced your organization to cut back product-development activities. This means that two of the eight projects currently being developed must be terminated, along with the employees working on those projects (about 25 per cent of employees in your unit). You have a good knowledge of these projects as well as the performance and seniority of employees who work in your unit. While some projects clearly have a high chance of success, the long-term potential of a couple of them is unknown. Identify the best level of employee involvement in this situation and describe three factors (contingencies) that support this level of involvement.

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Definitions:

Target Profit

The amount of net income a company aims to achieve for a specific period as part of its financial and operational planning.

Fixed Expense

Costs that do not change with the level of goods or services produced by the business, such as rent or salaries.

Break-even Point

The point at which total revenue equals total costs, resulting in no profit and no loss for the business.

Sales Dollars

This term represents the total amount of revenue a company generates from the sale of its goods or services, expressed in dollars.