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Purpose: Provide experience in using a project priority system Used in industry for many purposes Ranking job candidates, decisions within a project, Profile Film division for large entertainment conglomerate Main offices in Anaheim, CA Includes feature films, theme parks, home videos, television channel, interactive games, and theatrical productions Steady growth over last 10 years: last year revenues increased by 12% to $21.28 Film division generated $274M in revenues (one year increase of 7%) Profit margin was down to 3% to 16% due to poor response to five major film releases Engaged in negotiations to expand its theme part empire to mainland China and Poland Mission Our overriding objective is to create shareholder value by continuing to be the world's premier entertainment company from a creative, strategic, and financial standpoint." Film division supports the mission by producing four to six high-quality, family entertainment films for mass distribution each year CEO advocates that the firm take a leadership position in championing environmental concerns Company "Must" Objectives Every project must meet the must objectives of strategic priority to the company . All projects meet current legal, safety, and environmental standards All film projects should receive a PG or lower advisory rating . All projects should not have an adverse effect on current or planned operations within the larger company Company "Want" Objectives Want objectives are assigned weights for their relative importance Top management is responsible for formulating, ranking, and weighting the objectives to ensure the projects support the strategy and mission. Be nominated for and win an academy award for Best Picture of the Year Create at least one new animated character each year that can start in a cartoon or TV series Generate additional merchandise revenue (action figures, dolls, interactive games, music CDs) Raise public consciousness about environmental issues and concerns . Generate profit in excess of 18% Advocate the state of the art in film animation, and preserve the company's reputation Provide the basis for the development of a new ride at a company-owned theme park You are a member of the team in charge of evaluating and selecting film proposals o Use the evaluation form to formally evaluate and rank each proposal Be prepared to report your rankings and justify your decisions Assume all projects have passed the estimated hurdle rate of 14% ROI o Proposal is comprised of: . Brief film synopsis Financial projections of the theater and video sales 80% chance ROI, 50% chance ROI, 20% chance ROI Example #1 Dalai Lama: 80% chance that it will earn at least 8% ROI 50-50% chance that it will earn 18% ROI 20% chance it will earn 24% ROI