Business Case Risks for Promotional Calendar Project
Question
Scenario - Additional Information - During the initiation stage the Project Manager met with the Marketing Director to find out more about the requirements of the promotional calendar and recorded the following notes: There has been a reduction in the order numbers at the MNO Manufacturing due in part to the increased marketing activities of its competitors.
10% of customers have not re-ordered in this financial year and staff morale is poor.
A number of skilled staff have left as a result and replacement staff have not been recruited due to the reduced operation.
If the project is successful, a recruitment campaign will be required to fill the existing staff vacancies and there may be a requirement for additional staff.
Operational costs are likely to increase because skilled staff are expensive and difficult to find.
In financial terms, there were a total of 1,500 orders in the last financial year, each with an average profit of 2k.
The Marketing department believes that sending a promotional calendar to our current and prospective customers would increase orders by at least 10% with a minimum of 10 further orders from the list of prospective customers within 12 months from the date of distribution.
The Marketing Director will be funding the project from the business marketing budget.
She believes that the effect of a good company image portrayed by a successful calendar would last into a second year.
She has forecast the same increase in orders for a second year and predicts that the annual employee satisfaction survey will show a measurable improvement in staff morale.
A number of alternatives were explored, including: -> 20% discount for all repeat customers - not cost-effective and very short term -> A promotional calendar as a free Christmas gift - would target current and prospective customers and the benefits would last into a second year -> A series of television and press advertisements was too expensive -> A direct mail shot to all customers - benefit would be short term -> Creation of an internet website - would not suit all customers The calendar is seen as the favored option, as long as the company's competitors do not increase their marketing activity.
Whilst the Marketing department wants a very high quality, glossy product, the project management team must be aware of the cost this will incur.
Which 2 statements correctly define a Business Case risk which should be recorded under the Major risks heading?
Answers
Explanations
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The Business Case is a document used in project management that outlines the rationale for initiating a project, and it includes an analysis of potential benefits, costs, and risks associated with the project. A risk is an uncertain event or condition that, if it occurs, may have an effect on the project's objectives.
Based on the given scenario, the following two statements correctly define Business Case risks that should be recorded under the Major risks heading:
Operational costs will increase as a result of the recruitment campaign. The project involves increasing sales by creating a promotional calendar to be sent to current and prospective customers. If the project is successful, there may be a need to recruit additional staff to meet the demand for products. However, recruiting skilled staff is expensive and difficult, and this could increase operational costs. This risk should be recorded as a Major risk because it has the potential to significantly impact the project's financial viability.
If any competitors launch a calendar at the same time this will reduce the impact of the MNO calendar and benefits will be reduced. The MNO Manufacturing has been experiencing a reduction in order numbers due to the increased marketing activities of its competitors. If any of these competitors launch a calendar at the same time as the MNO calendar, it could reduce the impact of the MNO calendar and its benefits would be reduced. This risk should be recorded as a Major risk because it has the potential to significantly impact the project's success.
The other options given are not appropriate as Major risks for the following reasons:
The prepared calendar pack is to be delivered to the printers by the first week in December. This is not a risk, but rather a requirement for the project's success.
If the calendar quality is poor, customers will not use it, creating the reverse effect and reducing orders further. While poor calendar quality may have a negative impact on customer orders, it is not a Major risk because it is within the project team's control to ensure quality is maintained.
Staff morale will improve as a result of the promotional calendar. While it is expected that staff morale will improve as a result of the promotional calendar, this is not a risk. Rather, it is an expected benefit of the project.
