Whirlpool Europe

Case “Whirlpool Europe”

You should download the case following this link

https://cb.hbsp.harvard.edu/cbmp/pl/56490145/56490147/21662726de6b3d099c50531e53363892

Questions:

1. Discuss the sources of cashflow benefits from investing in the enterprise resource planning (ERP) system. → working capital requirements, gross margin and other operating costs
2. Calculate the relevant cashflows from this project. Please explain and justify your answer. → compute the P&L table
3. Compute the NPV, the IRR and the payback of the project and discuss the results. → Positive NPV, IRR near 29%, Payback: 3,6 years
4. Should this project be undertaken? Explain briefly the method you are using to support your decision. → yes, NPV is positive
5. What is the most relevant source of cashflow benefits (from the ones indentified in the first question)? In other words, which one creates more value for the shareholder?  → computations show that the margin is the most relevant source of cashflow benefit
6. Present an additional sensitivity analysis to other key value drivers (maximum 2). → we have to compare the initial situation with two changes in the margin – the 1st one in a recession scenario and the 2nd one in a boom-period scenario

General guidelines for written assignments:

> Do not deliver just some non-transparent collection of exhibits (tables and figures) – always explain what you are doing.

> Number and name all your exhibits so that you can refer to them easily in the text.

> Always justify your assumptions and conclusions, comment on your results.

> Be concise – write to the point.