The Chicken or The Egg: Hatching a New and Innovative Product By Robert Rankin and Martin Stuebs.
Case Questions:
Would you decide to “hatch” Chicken Sensations? Put yourself in Vicki’s shoes. Prepare an analysis that will guide PFVC’s decision on whether to launch Chicken Sensations.
1. Economic feasibility analysis: Perform an economic cost-benefit analysis of whether PFVC should launch Chicken Sensations. Clearly state your decision and conclusion from your analysis.
(You can use an Excel spreadsheet to complete these tasks in an organized, neat appendix to your case analysis. A reader of your case should be able to follow your work and computations. The results of your appendix analyses can be referenced in the body of your case to support your decision.) To aid your analysis, perform the following tasks:
a. Quantity, revenue, and cost conversions: Take Vicki’s data from Table 1 and compute the quantity, revenue, and cost conversions to complete Table 1. For example, calculate annual sales revenues (in cases), sales revenue and variable cost amounts per case, and annual fixed cost amounts.
b. Forecasted contribution margin income statement: Prepare a forecasted Chicken Sensations contribution margin format income statement for year 1 based on the projected data gathered by Vicki.
c. Breakeven analysis: Prepare a breakeven point analysis (in cases and sales dollars) for the year 1 forecasts of Chicken Sensations.
d. Margin of safety: Prepare a margin of safety analysis (in cases and sales dollars) for the year 1 forecasts of Chicken Sensations.
e. Sensitivity analyses: Prepare sensitivity analyses to examine how robust year 1 results are to changes in projections for (1) the sales volume of cases, (2) the sales price per bag, and (3) the cost per pound of chicken.
Assume that these amounts can change for three different projection levels as reported in Table 2: (1) a pessimistic level, (2) the original level, and (3) an optimistic level.
Table 2 shows that the sales volume (in cases) will be 75% of the original year 1 sales forecast, the sales price per bag will only be 90% of the original forecast (or $2.70/bag = $3.00/bag × 90%), and the cost per pound of chicken will rise to 112.50% of the original forecast (or $2.25 /lb. = $2.00/lb. × 112.50%) for the pessimistic level.
The original level reports the results using the original projections in the case. Under the optimistic level, the sales volume forecast (in cases) will be 125% of the original year 1 sales forecast, the sales price per bag will increase to 110% of the original forecast (or $3.30/bag = $3.00/bag × 110%), and the cost per pound of chicken will decrease to 87.50% (or $1.75 /lb. = $2.00/lb. × 87.50%).
2. Impacts: Assess the impacts of your decision:
a. Benefits and harms: What benefits/harms result and to whom?
b. Rights: What rights are being exercised or denied and by/to whom?
c. Result: Do these impacts modify or change your decision? How?
3. Responsibilities: What responsibilities are present and how do these responsibilities influence your decisions and actions?
a. PFVC management: What responsibilities do Richard Lawson and PFVC management have in this situation and to whom?
b. Vicki Hoerning: What are Vicki’s responsibilities in this situation and to whom? You can apply the general standards in the IMA
Statement of Ethical Professional
Practice to help you identify specific responsibilities for Vicki in this situation.
Attachment:- The Chicken or The Egg.rar