Marketing decision making -- 2
Budget: $10 – $30 USD
extension, Nestle Malaysia is expecting to further improve its performance for the coming years. The marketing plan should include the following;
i) Introduce a new product for Nestle Malaysia.
ii) You are also required to support your new marketing plan with sales forecast, pro forma cash flow for June 2022 – May 2023, Break Even analysis and Return on Investment for the new product launched.
iii) Apart from preparing a marketing plan to improve the sale and increase the market share, Nestle Malaysia is also planning to open a new factory as one of its expansion plan or expand its current plant in Petaling Jaya. The new factory will be located in Johor or Kedah to meet the demand from Southern and Northern regions by March 2023. Both locations are the most densely populated areas and demand is expected to be good. Given the information below, you are required to evaluate the new factory that Nestle Malaysia plans to open.
The projected development costs for both outlets are expected to be $300,000 and there is a 65% chance that the Johor factory will be successful, and a 35% chance that it will fail. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as follows, depending on whether the outlet’s popularity is high, medium or low:
Probability Profits
High: 0.3 $650,000 per annum
Medium: 0.4 $550,000 per annum
Low: 0.3 $410,000 per annum
If it is a failure, there is a 0.50 probability that the research and development work can be sold for $55,000 and a 0.50 probability that it will be worth nothing at all.
However, for Kedah factory, the chances for success will be 70% and the chance of failure is 30%. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as follows;
Probability Profits
High: 0.4 $600,000 per annum
Medium: 0.3 $820,000 per annum
Low: 0.3 $410,000 per annum
If the project fails, there is a 0.60 probability that the research and development work can be sold for $65,000 and a 0.40 probability that it will be worth nothing at all.
Finally, as alternative Nestle may expand its current plant in Petaling Jaya. The expected expansion cost is of $220,000, with 70% chance that it can be sold successfully, and a 30% chance that it will fail. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as below and if it fails it will be worth only $25,000.
Probability Profits
High 0.75 $650,000 per annum
Low 0.25 $300,000 per annum
Based on the above information:
a) Construct a decision tree for the above investment alternatives and determine all the probabilities suggested in the marketing plan.
b) Calculate the expected value of the three factories.
c) Which of these locations should Nestle Malaysia develop its new factory to expand its business in Malaysia?
C. Assignment Structure/Marks Allocation
i) Executive Summary (5 marks)
ii) Introduction (5 marks)
Brief information of the company, management team and the products offered.
i) Introduce a new product for Nestle Malaysia.
ii) You are also required to support your new marketing plan with sales forecast, pro forma cash flow for June 2022 – May 2023, Break Even analysis and Return on Investment for the new product launched.
iii) Apart from preparing a marketing plan to improve the sale and increase the market share, Nestle Malaysia is also planning to open a new factory as one of its expansion plan or expand its current plant in Petaling Jaya. The new factory will be located in Johor or Kedah to meet the demand from Southern and Northern regions by March 2023. Both locations are the most densely populated areas and demand is expected to be good. Given the information below, you are required to evaluate the new factory that Nestle Malaysia plans to open.
The projected development costs for both outlets are expected to be $300,000 and there is a 65% chance that the Johor factory will be successful, and a 35% chance that it will fail. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as follows, depending on whether the outlet’s popularity is high, medium or low:
Probability Profits
High: 0.3 $650,000 per annum
Medium: 0.4 $550,000 per annum
Low: 0.3 $410,000 per annum
If it is a failure, there is a 0.50 probability that the research and development work can be sold for $55,000 and a 0.50 probability that it will be worth nothing at all.
However, for Kedah factory, the chances for success will be 70% and the chance of failure is 30%. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as follows;
Probability Profits
High: 0.4 $600,000 per annum
Medium: 0.3 $820,000 per annum
Low: 0.3 $410,000 per annum
If the project fails, there is a 0.60 probability that the research and development work can be sold for $65,000 and a 0.40 probability that it will be worth nothing at all.
Finally, as alternative Nestle may expand its current plant in Petaling Jaya. The expected expansion cost is of $220,000, with 70% chance that it can be sold successfully, and a 30% chance that it will fail. If it is successful, the levels of expected profits and the probability of each occurring have been estimated as below and if it fails it will be worth only $25,000.
Probability Profits
High 0.75 $650,000 per annum
Low 0.25 $300,000 per annum
Based on the above information:
a) Construct a decision tree for the above investment alternatives and determine all the probabilities suggested in the marketing plan.
b) Calculate the expected value of the three factories.
c) Which of these locations should Nestle Malaysia develop its new factory to expand its business in Malaysia?
C. Assignment Structure/Marks Allocation
i) Executive Summary (5 marks)
ii) Introduction (5 marks)
Brief information of the company, management team and the products offered.