number of investment appraisal techniques available such as
payback, the accounting rate of return, discounted cash flow and
net present value. The case for a new product idea can be based
on answers to the following questions:
- Does it meet a well-defined consumer need?
- In what segment of the market can this product be sold?
- In what way does this product provide more value to cus-
tomers than existing products with which it would compete? - Can it be differentiated adequately from alternative prod-
ucts? - How well does it fit in with the existing product range?
- Does it exploit the company’s existing skills and resources?
- What investment is required in developing and marketing
the new product? - What is the likely return on that investment?
Making the business case can be more difficult in areas where it
is hard to generate convincing estimates of future income, for
example, when justifying investment in training. But an attempt
should be made. In this example training investment was justi-
fied because it would:
■ improve individual, team and corporate performance in
terms of output, quality, speed and overall productivity;
■ attract high-quality employees by offering them learning and
development opportunities, increasing their levels of compe-
tence and enhancing their skills, thus enabling them to
obtain more job satisfaction, to gain higher rewards and to
progress within the organization;
■ improve operational flexibility by extending the range of
skills possessed by employees (multiskilling);
■ increase the commitment of employees by encouraging them
to identify with the mission and objectives of the organiza-
tion;
■ help to manage change by increasing understanding of the
reasons for change and providing people with the know-
ledge and skills they need to adjust to new situations;
■ provide line managers with the skills required to manage
and develop their people;
■ help to develop a positive culture in the organization, one,
for example, which is orientated towards performance
improvement;
130 How to be an Even Better Manager