The apparel market is a global business. It is a labor-intensive industry, and often follows the cheapest labor market. It is also a time-sensitive business; there are economic advantages to being closer to your market. The tariffs in the textile and apparel industry are complex and must be considered.
In this project, you will complete a detailed NPV analysis of various options for building, operating and sourcing for a global sweater manufacturing facility. Options will include a plant in the U.S. or a foreign country.
You will evaluate issues of global finance and economic conditions will include considerations of currency rates, foreign inputcosts, transportation costs, project financial performance. You will have various milestones to complete over the course and your final analysis will be due in the last week of class.Your final deliverablewill include all of the prior weekly financial analyses of the investment alternatives, a brief comparisonstating the pros and cons of each option, and a final project-build recommendation to include your rationale.
Each weeklyand the final deliverable will be accumulated and submitted in a single MS Excel workbook.
NPV Analysis for U.S. Investment
Your first option to consider is building the plant in the U.S. This will be the base case for comparison as you consider direct foreign investment (DFI).
Build a table in Excel and calculate the NPV of a plant in the United States. Use the following assumptions:
Your next option is building the plant in China. Assume all output from the facility will be sold into the domestic China market. Calculate the NPV of a DFI (show NPV in Chinese currency units, and converted to USD based on the currency exchange rate per the CIA web site link below).
Use the following assumptions:
Exporting to the US
Your next option in your project is building the plant in China, but exporting the product back to the U.S. for sale.
Construct a table in Excel and calculate the NPV of a plant in China that exports product to the U.S. market. Start with your NPV spreadsheets from the last two weeks, and add the following adjustments:
Calculate the following:
Final Project Deliverable
For your final deliverable must combine all of the previous milestones adjusted per any feedback.Addyourcomparative analysis of each option and make your final recommendation.
Your final recommendation is your rationalized decision on where to build and where to ship and sell the product. Your decision rationale must be based onproject financial performance.
MBA619 Business Analysis Tips
In the corporate world, when you are assigned to complete a business case analysis, a marketing or business plan, follow these basic rules:
|Element||Purpose for reader||Tips|
|Executive Summary||Briefly tell reader what you are going to tell them||Should not exceed one page and only gives highlights|
|Body elements||Convey subject specific information/tell the reader what you want them to hear, i.e. what you are recommending and why… your rationale||Keep concise, include “in-text” references tied to list of Resources|
|Summary & Conclusion or Recommendation||Briefly tell reader what you told them in the body, and tell them what you have concluded||Should not exceed 2-3 pages and must be very concise…”just the facts, nothing else”|
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