Performance Boating Products

Topics: Net present value, Discounted cash flow, Internal rate of return Pages: 15 (3677 words) Published: September 11, 2011
|Case 9 | |Performance Boating Products, Inc. | Performance Boating Products, Inc

I. Situation Analysis

• Performance Boating Products, Inc (PBP) manufactures attachments for boat hulls and motors that aid watercraft in reducing drag and maintaining ‘plane’.

• PBP attachments can be integrated as part of new boats or retrofitted to older boats and motors.

• PBP’s primary installion base includes clients wanting an extra degree of performance from their boats and boat manufacturers offering PBP products as options.

• The PBP executive team has been working for the last few months to put together a plan for expansion projects to increase future revenue flow

• A brief summary of the three individual projects can be viewed in the table below:

|Melville |Broadside |Turbine | |Project Plan: |Project Plan: |Project Plan: | |Construction of new warehouse in a |Construction of new production facility |New apparatus development | |strategic geographic location | | | | |Potential Benefits: |Potential Benefits: | |Potential Benefits: |Increase production to alleviate backlog|Increase future revenues | |Increase sales in the selected |of orders |Expand existing product lines | |geographic region | | | |Reduce distribution costs | | |

SWOT Analysis

|Strengths |Weakness | | | | |Able to command high prices in the market |Products easily replicable | |Design protected by copyright |Inefficient functional managers | |High profit margin due to high markup |Limited production Capacity | |Cheap raw materials (metal and fiberglass) | | |Demand exceeded production | | |Flexible design that can be adapted to existing boats or | | |could be integrated with new boats | | |Opportunities |Threats | | | | |Expansion opportunity present |Development of competition | |New Product Development |Designs can be easily duplicated with minor changes | |Enlarge Production Capabilities |Market will mature and reduction in profit margins | |Restructure corporate environment | |

• All three projects have the same amount of...
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