Domus Developments: To Build or Not to Build?
(6 pages of text)
The project manager at a development company is contemplating the future of the firm’s next innovative development project, which had originally been conceptualized in 2008, but for various reasons, had not yet come to fruition. The project manager wants to evaluate the venture from a financial viewpoint, including the company's ongoing cash position should the company go ahead with the building process; he also wants to assess other relevant qualitative considerations. Alternatively, the company could sell the land, which has appreciated considerably in value. All decisions would take into account the company’s goals and reputation in the industry.
Students are introduced to future-oriented decision-making and cash budgeting as a quantitative analysis tool. Students must weigh the implications from both their qualitative analysis and quantitative analysis in their decision. The case can also be used to introduce students to spreadsheet software and its uses as a business tool for decision-making. Students are asked to perform the following tasks:
- Identify corporate strengths and weaknesses.
- Analyze the company’s potential customers and the demand for North Point’s offering within the current market.
- Assess the pros and cons of developing versus selling the land, and suggest implications that can be drawn from this analysis.
- Prepare a 24-month cash budget for the development.
- Make a decision and defend it.
Canada, Small, 2013
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