The Procter and Gamble CompanyCrest Whitestrips Advanced SealCase #23March 3, 2014
Recommendation: The recommendation is that Procter and Gamble should follow the Whitman proposal for several distinct reasons. Quantitatively, the most important reason that the Whitman proposal should be accepted is because of the NPV. The Whitman proposal has the highest NPV at $4,794.99; this means out of the three proposals, Whitman has the best valuing investment opportunities according to the Net PresentValue. The IRR is also the highest at 30.8%; the internal rate of return shows that thereturn on the Whitman proposal in regards to the capital budgeting, which measuresand compares the profitability of investments, is the highest of the three.It is the only proposal of the three that is insensitive to all of the key inputs other than cannibalization. The two main inputs are the sales units and cannibalization, yet the other two proposals are sensitive to the sales unit number, whereas the Whitman proposal is only sensitive to the cannibalization input. In regards to qualitative reasoning, Procter and Gamble will be the first in the market in respect to this new technology. After they launch this new product, which will not slip off of the users teeth when applied, they will have about a four-year window head start. The competitors will need about four years of R&D in order to copy this science and therefore Procterand Gamble will make a large amount of sales in this premium product category. In conclusion to the NOAC Group, Procter and Gamble should launch the Whitman proposal of the Advanced Seal whitestrips because of the favorable NPV and IRR, being less sensitive in comparison, and being a first-mover in the premium whitestrips market. This will bring the most value to investors. Economic Viability and Motivation:
The economic viability concentrates on the sustainability of the proposal on the basis on current and projected revenues equal to current and planned expenditures. In others words, it focuses on if the proposal will actually be able to financially support itself. Issues regarding the economic viability are poor sales and reputation.