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MBA 580 Module Two Report
Southern New Hampshire University
MBA-530 Innovation & Strategy for High Performance Organizations
Dr. Paula Offutt
October 21, 2024
Sales Forecast Data
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Analyzing the data provided we can see that Year 10 sales for traditional cars will be the
same with either Option A or B, at approximately $273.9 billion. Data shows that in Option A the
company will grow it’s connected car sales by 10.2% in year one and two and then steadily at
25% the subsequent years. However, Option B will grow it’s connected car sales by a set 10.2%
for all ten years. Further analysis of the data shows that Option A will provide higher total sales
by year 10 than Option B by an estimated $17.47 billion.
Gross Margin Forecast Data
In both Options A and B gross margins on traditional cars remain the same at
approximately 3.94% change each year. However gross margins on connected cars in Option A
remain small at the beginning and then increase more significantly toward the end of the ten year
analysis. Comparatively, Option B has a steady change year over year for all 10 forecasts years.
Gross Margin Less R&D and Capital Costs Data
Looking at gross margin less research and development and capital costs data we can see
that Option A provides a larger gross margin by year ten than Option B by approximately $3.67
billion. Option B starts out with the larger gross margin, but by year seven Option A overtakes
and end the ten year forecast with the higher gross margin less research and development and
capital costs. Interestingly year two through six see gross margins that are very similar.
Conclusion
Given the data available for sales, gross margin, and gross margin minus research and
development and capital costs it makes more financial sense to move forward with Option A.
This option provides the company with a larger increase in sales. Even though there are largest
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upfront R&D and capital cost at the beginning of Option A, they quickly are made up in
subsequent years and create a larger margin for the company by year ten.
