study guide 6

Question 1

Projects can be evaluated through so called discounted cash flow methods. Two of such methods are highlighted now

Answer 1

Net present value (NPV) - given a particular level of expenditure, rate of cash flows, and discount rate what is the value of the project

Internal reate of return (IRR): given a particular level of expenditure, rate of cash flows, and discount rate, what rate of return does this project yield?

Question 2

The product development process aims to manage three conflicting goals: these include

Answer 2

1) maximizing the product/service offerings fit with customer requirements

2) minimizing the development cycle

3) Controlling development costs. The product development process itself is displayed in the figure below

Opportunity identification, concept development, product design, process design, commercial production

Question 3

A customer centric approach helps better

Answer 3

coordination of resources and activities for innovation. This approach aims to manage product and technological innovations by engaging with sophisticated consumer (lead users). Likewise, close cooperation with suppliers expands firms knowledge and helps improve production efficiencies.

The need for external sourcing of innovation originates from pressure that firms face due to environmental changes and competition. Within firms there exist limited capabilities to adjust to changes which further presses the need for external sourcing