read the Electrolux and GE Appliances case study, which offers an analysis of the Electrolux's valuation process during its acquisition of GE Appliances in August of 2014. The Electrolux team was tasked with completing a valuation and crafting a final offer for the GE appliance division. In your short paper, you will describe the circumstances of the deal for these two companies, conduct basic valuation calculations, and make a recommendation that would be communicated to senior management.
Prompt: To complete this third part of the final project, you will continue your analysis by conducting a risk assessment. Specifically, you will:
Identify the potential business risks that apply to the projects being considered by the New Heritage Doll Company,
Quantify the financial impacts of the risk (i.e., price the risk), and
Select appropriate methods for mitigating those risks.
To do this, locate the relevant numbers from the case study and perform profitability index calculations. A profitability index can be used as an arbiter when capital constraint effectively makes two projects mutually exclusive. In this instance, the NPVs of the two projects are nearly the same, but one project creates more NPV per dollar of the capital budget expended. It is also an index maximizing choice.
Document your results in the “Milestone Three” section of each specific project tab on the spreadsheet template you used for the previous two milestones. The module resources may also be useful. Provide a written analysis of the risks associated with each project. For example, what if the computer system malfunctions? What would be the cost to fix it? What would be the cost of an upgrade? Each identified potential risk should be discussed in your analysis and priced and referenced, by item, on your spreadsheet. Cite specific evidence from the case study and employ at least
two scholarly articlesto support your claims.
Risk Assessment
A. Identify the risks to your firm for each of the projects. For example, you should consider possibilities such as cannibalization of current products, new software, issues with development, customer impact, and so on.
B. Next, quantify the identified risks in terms of their potential financial impacts (i.e., price the risks). Justify your estimations and values with specific evidence.
C. For each of the identified risks, select appropriate methods for mitigating those risks. Illustrate your recommended strategies with specific examples.
No table of contents, just the material, and the reference page. Edit material on the spreadsheet as needed to perform the PI calculations.