Report: Financial Justification

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You work as a middle manager for one of the top U.S. producers of luxury and mass-market automobiles and trucks. The company from the course scenario has decided to incorporate internet of things (IoT) technology in its vehicles (also called connected cars). Often organizations have to choose from multiple innovative implementation options. The choice is usually determined by many factors including the financial viability of each idea. In this assignment, you will compare the financial benefits for two innovation options and create data visualizations to help determine the option with greater financial benefit. This assignment will help you make a recommendation for one of the two options in Milestone One.

Prompt
Create a series of charts in an Excel spreadsheet and a memo that compares the financial benefits of options A and B. The charts in your spreadsheet should include a comparison of financial forecasts from both innovation options (discontinuous and incremental). You should create the charts using the data in this Make sure to add titles to all your charts so you can clearly reference them in your memo. Consider the following points:

Create a chart for sales forecast data.
Graph sales forecast data for total sales for options A and B on a three-dimensional stacked column chart.
Each column should show traditional sales on the bottom and connected sales on the top.
Both options may appear on the same three-dimensional chart, or you can make a separate chart for each option.
Create a chart for gross margin forecast data.
Graph gross margin forecast data for total sales for options A and B on a three-dimensional stacked column chart.
Each column should show traditional sales on the bottom and connected sales on the top.
Both options may appear on the same three-dimensional chart, or you can make a separate chart for each option.
Create a chart for gross margin less R&D and capital costs calculations.
Calculate gross margin less R&D and capital costs for options A and B.
Graph total gross margin less R&D and capital costs forecasts to compare options A and B on a line chart.
Both options should appear on the same chart.
Explain any conclusions you can draw from your data visualizations.
Review the charts and discuss any conclusions you can make from those data visualizations.

 

Sample Solution

Before we dive into creating the Excel spreadsheet and memo, let’s clarify the key components:

Data and Analysis

  • We have two innovation options (A and B) with sales and gross margin forecasts for both traditional and connected vehicles.
  • We need to calculate gross margin less R&D and capital costs for both options.
  • We will create three types of charts to visualize the data.

Deliverables

  • An Excel spreadsheet with the necessary calculations and charts.
  • A memo summarizing the findings from the charts.

Data Preparation (Assumptions)

Note: To provide a concrete example, I’ll assume the following data structure:

  • Data points: Years (e.g., 2024-2028)
  • Metrics: Traditional Sales, Connected Sales, Gross Margin, R&D Costs, Capital Costs

Data Table Structure:

Year Option Traditional Sales Connected Sales Gross Margin R&D Costs Capital Costs
2024 A … … … … …
2024 B … … … … …
… … … … … … …

Export to Sheets

Calculations:

  • Total Sales: Sum of Traditional Sales and Connected Sales.
  • Gross Margin Less R&D and Capital Costs: Gross Margin – R&D Costs – Capital Costs.

Creating the Excel Spreadsheet

  1. Input Data: Enter the provided data into the Excel spreadsheet.
  2. Calculations: Create columns for Total Sales and Gross Margin Less R&D and Capital Costs for each option.
  3. Charts:
    • Sales Forecast: Create a 3D stacked column chart with years on the x-axis, options on the y-axis, and sales amounts on the z-axis.
    • Gross Margin Forecast: Create a 3D stacked column chart with years on the x-axis, options on the y-axis, and gross margin amounts on the z-axis.
    • Gross Margin Less R&D and Capital Costs: Create a line chart with years on the x-axis and the calculated values for both options on the y-axis.

Creating the Memo

The memo should include:

  • An introduction outlining the purpose of the analysis.
  • A brief overview of the methodology used.
  • A detailed discussion of the findings from each chart, highlighting key trends and comparisons between options A and B.
  • A clear and concise conclusion summarizing the overall financial performance of each option and providing recommendations.

Key Considerations

  • Data Accuracy: Ensure the accuracy of the input data.
  • Chart Clarity: Use clear and informative chart titles and labels.
  • Data Interpretation: Provide a comprehensive analysis of the data, avoiding oversimplification.
  • Sensitivity Analysis: Consider conducting sensitivity analysis to assess the impact of different assumptions.

By following these steps and carefully analyzing the data, you can create a compelling comparison of the two innovation options and provide valuable insights to decision-makers.

 

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