Nucleon Case

We did Cash Flow analysis first because we believe this is the most important factor Nucleon should consider. However, Cash Flow analysis is not the only factor that guarantees the success of the project. Since all the four alternatives have good patterns of cash flow, we involved more issues, for example, the flexibility of the plan, which alternative can help Nucleon to build up their competitive strategy, as well as other advantages and disadvantages brought by the three options. The three options offered Nucleon 5 alternatives to choose from, which were showed in Exhibit 2. First of all, the decision Nucleon makes for the Phase I/II will affect the options available for Phase III. For example, according to the characters of new pilot plant, if Nucleon builds a new pilot plant for Phase I/II, the facility cannot meet FDA manufacturing standards to be used for Phase III. Therefore, Alternative 1 should be eliminated. Nucleon just has to consider the remaining four alternatives.Secondly, from the financial aspect, Alternative 4 had the highest cash flow every year.

Thirdly, besides financial analysis, we believe other advantages and disadvantages of all the three options should also be considered.

• New pilot plant. It can enable the firm to develop the nucleus of a future larger-scale, in-house manufacturing capacity. It will help Nucleon become the exclusive provider of the CRP-1. Also, by applying this in-house manufacturing, Nucleon can keep control over process and quality procedures firmly in its hands. However, it also involves high risk. Recruiting people with the appropriate skills is needed because Nucleon lacked supervisors and technicians who could ensure the smooth launching. If CRP-1 does not perform well, even if this facility can be used for other applications, it is still a huge cost to Nucleon. And another risk is related to process uncertainty. It is not quite feasible to manufacture commercially