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The scconi element of a leasibility analysis is to perform an economic feasibility analysis (also called a cost benefit malysis) that identifies the financial risk associ- ated with the project. This attempts to answer the question “Should we build the system?” iconomic feasibility is determined by identifying costs and benefits asso- ciated with the system, assigning values to them, and then calculating the cash flow and return on investment for the project. The more expensive the project, the more rigorous and detailed the analysis should be. Figure 1-8 lists the steps to perform a cost–benclit analysis, cach step will be described in the upcoming sections. Identify Costs and Benefits The first task when developing an cconomic feasibility analysis is to identify the kinds of costs and benefits the system will have and list them along the left-hand column of a sprcadshect. Figure 1-9 lists examples of costs and benefits that may be included. The costs and benefits can be broken down into four categories: (1) de.elopment costs, (2) operational costs, (3) tangible benefits, and (4) intangibles. Development costs are those tangible expenses that are incurred during the creation of the system. such as salaries for the project team, hardware and software expenses, consultant fecs, training, and office space and equipment. Development costs are usually thought of as one-time costs. Operational costs are those tangible costs that are required to operate the system, such as the salaries for operations staff, software licensing fees, equipment upgrades, and communications charges. Operational costs are usually thought of ns ongoing costs. 1. Identify Costs and Benefits 2. Assign Volves to Costs and Benefits 3. Determine Cash Flow 4. Assess Project’s Economic Value Return on Investment (RON) • Break-Even Point (BEP) list the tangible costs and benefits for the project Include both one-time and recurring costs. Work with business users and IT clessionals to create numbers for each of the costs and benebts . Even inkungids shouki te whail of all poble Forecast what the costs and benelits will be over colloin period, usually, three to live years. Apply a growth role to the values, i recessory Lvclucatie: popus op led chun comparison ils costs. Use one or more of the following evaluation techniques: Calculate the role of cum canned on the money invested in the project, using the Rol formula. Find the year in which the cumukative project benefits exceed cumulative project costs. Apply the breakeven formules, using ligures for that year. This calculation measures how long it will take for the system to produce benefits that cover its costs. Restale all costs and benelits in today’s dolor terms Ipresent valucl using an appropriale discount rate. Determine whether the Iclal present value of benefits is greater than or less than the tolal presenl value of costs. • Net Present Value (NPV)
 
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Hailey was recently promoted to the position of production manager in the manufacturing plant of a company that makes desktop printers for commercial and home use. Her department is responsible for producing the printer drums that house the cartridges. Hailey has an undergraduate degree in industrial engineering and an MBA. She aspires toward eventually holding a high-level leadership position in manufacturing or operations. Hailey therefore considers her promotion to production manager to be a building block in her career. She says: “Our country became great by building things. That’s why I love manufacturing. Here’s my chance at age 26 to make a difference as a manufacturing leader.” Having worked as an industrial engineer for two years at the plant, Hailey understands the technology behind printer drums, as well as the manufacturing process. During her first week in her new assignment, Hailey spent a lot of time talking with her two supervisors and many production technicians. She was particularly looking for ways in which she could provide leadership to the group. Hailey asked Jud, an experienced supervisor, what changes needed to be made in the functioning of the department. Jud replied: “Right now things are going well. Despite the worldwide decline in the number of desktop computers purchased, we have a nice steady demand for new drums. The office-supply stores still sell a lot of replacement drums for existing printers. I notice too that morale is okay in my department. Just keep the year-end raises and bonuses flowing (said with a laugh).” Hailey asked Jenna, a supervisor with five years of experience, the same question. Jenna said: “I think the biggest problem we face is not having enough new, qualified production technicians. Maybe making drums is hum-drum, but you need skill to do the job right. These days, most young people don’t want to make things. They just want to stay glued to their mobile devices. Also, a lot of the people we recruit for entry-level jobs can’t do much math, and they don’t want to talk. We need to find a pipeline of new blood for our basic production jobs.” Hailey spoke with Barney, a production technician with twenty-five years of experience, about what changes he thought a department leader should bring about. Barney replied: “Not much, Hailey. I know that you are well educated and very smart, but don’t worry much about changes right now. The other guys and gals in the department and I are all happy that our jobs have not been shipped to another country. We also like the idea that we have not been replaced by robots so far.” Hailey was particularly interested in the comments of Gloria, another production technician, who said: “I am a little worried about the future of our department. We are making printer drums, but how long can this last? Maybe you as the leader can find another product for us to make that will keep us going at least until I retire.” Hailey reflected: “I have been collecting a lot of information. But what do I do with the information? As the department leader, how can I make a difference now and in the near future?” 1. Advise Hailey on where she should get started in making a difference as a leader in the drum-manufacturing department. 2. To what extent do you think it is advisable for Hailey to interview workers in the department to get some input as to what she should do as their leader?

 

 
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Brittany is the director of merchandising for Auto Pal, a large chain of automotive supply stores in the United States and Canada. The company has continued to grow in terms of stores and income, as so many more people keep their vehicles longer, and also perform more maintenance, such as oil changes, by themselves. Merchandising is a core function of Auto Pal because the chain distributes thousands of products in its stores, from floor mats to transmissions. With profit margins thin, and heavy competition, the pace of conducting business at Auto Pal is hectic. Brittany moves quickly when dealing with her direct reports, sometimes to their surprise. Sid, a merchandise specialist for vehicle cleaning and polishing supplies, recently requested a two-week paternity leave because he and his wife were expecting a baby any moment now. Brittany replied that such a request was kind of wimpy, and a little bit out of the ordinary. “Don’t you have a mother-in-law who can help with the new baby? Or, are you so poor that you can’t hire a nanny for two weeks?” Katie, a merchandising specialist for batteries, regulators, and radiators, sent Brittany a detailed report about new procurement software that might save thousands of dollars for Auto Pal in the long run. Brittany sent back an e-mail stating in part, “Does this great new software come from a company that employs a relative of yours? We are already using state-of-the art software.” Jeff, the office manager, and one of Auto Pal’s most senior employees, sent Brittany an e-mail asking if he could take his ten days of vacation in five two-day pieces next year instead of ten consecutive working days. The next day, Brittany wrote back, “I like your idea, Jeff. In this way your work flow would be less disrupted. And besides, an old-timer like you needs a few more long weekends than the rest of us do.” One day, Auto Pal CEO Derek asked Brittany how well she was proceeding with her strategic plan for next year. Brittany replied, “Not much progress yet. I’m running around putting out fires and dealing with the realities of making sure my team gets the right merchandise into the stores. Maybe you could have one of those overpaid marketing specialists dream up a strategic plan that I could sign off on.” Questions 1. In which leadership trait or characteristic does Brittany seem to need the most development? 2. How would you rate Brittany’s warmth and enthusiasm as a leader? 3. What action would you recommend that Derek take to improve Brittany’s leadership effectiveness?

 

 
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Baxter is the marketing and sales director of Train and Subway Interiors, a niche company that makes interiors for railroad and subway cars. The interior components include ceilings, overhead storage compartments, holding bars, and kitchenettes. As the demand for public transportation has increased, so has the business of Train and Subway Interiors. Baxter attributes much of the sales growth of Train and Subway Interiors to his magnetic personality, and the way in which he has inspired the four sales representatives on his team. Baxter says, “I’m a positive thinker. I know that we can win together. I smile at everybody, and my customers love me. I’m good, my sales staff is good, and we all know it. The competition is jealous.” Baxter decorates his office to project his personal pride. An 8×10 photo shows him front and center on his college football team. Another photo shows him shaking hands with the U.S. Transportation secretary. A large cabinet is filled with sales trophies and employee-of-the-month plaques Baxter has won at various employers. Another photo shows Baxter smiling in front of an Amtrak high-speed train. The landscape on Baxter’s laptop consists of a photo of Baxter seated between two Labrador retrievers. Phil, the head if engineering at Train and Subway, made this comment about Baxter as the head of marketing and sales: A lot of people go for Baxter’s hype and bravado. He shakes a lot of hands, gives lots of pep talks, and smiles most of the time. But what Baxter doesn’t realize is that without our design and engineering, he and his team would have nothing to sell. He tells me, of course, that without his great marketing and sales skills, the company would have nothing but scrap. Francesca, the head of HR and administration, had collected some feedback about Baxter’s approach to leadership from his subordinates, colleagues, and customers. She commented, Baxter is well liked and charming. He is great at entertaining railway train and subway manufacturing executives, both from the United States and other companies. Yet a lot of people are tired of his bragging and self-congratulations. He talks about being the driving force behind this business, even though Train and Subway Interiors has existed for over fifty years. A clerk said that “Baxter makes more use of mirrors that anybody she knows.” Megan, a sales representative who left the company to take a sales position with a steel company, made this comment about Baxter: “I liked most of the marketing strategy Baxter developed for the company. He also has a warm personality. Yet, I couldn’t take the way he never really listened to me. When I began talking about a tough sales problem I was facing, Baxter would start talking about his self and the sales challenges he had conquered. If Baxter dropped by my work area in the office, he would begin by describing in great detail what his beloved Labradors did recently.” Questions 1. What hints do you get from this case that Baxter is charismatic? 2. What hints do you get from this case that Baxter is narcissistic? 3. What suggestions can you offer Baxter so he can make more effective use of his charisma?

 

 
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