Page 429 - Operations Strategy

404 case stuDy 6 • Developing ‘savory rosti-crisps’ at DreDDo Dan’s
table 4.1 preliminary ‘profit stream’ projections for the project orlando offering,
assuming launch in 24 months’ time

Time period* 1 2 3 4 5 6 7
Profit flow ($ million) 10 20 50 90 120 130 135
*6-month periods

important, I am not sure that we should subcontract anything which would compro-
mise safety, and increasing the amount of work we send out may do that. No, it’s got to
be the extra cash or the project could overrun. The profit projections for the Orlando
products look great (see Table 4.1), but delay or our inability to respond to competitor
pressures would depress those figures significantly. Our competitors could get into the
market only a little after us. Word has is that marketing’s calculations indicate that a
delay of only six months could not only delay the profit stream by the six months but
also cut it by up to 30 per cent.’
Monica was keen to explain two issues to the management committee when it met
to consider her request for extra funding. First, that there was a coherent and well-
thought-out strategy for the innovation project over the next two years. Second, that
saving $5m on Project Orlando’s budget would be a false economy.

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