Identify the ROI and NPV of the wireless order-taking system. Discuss some of the intangibles Lisa needs to consider and make a recommendation as to whether Lisa should order such a system.
To calculate the Return on Investment (ROI) and Net Present Value (NPV) of the wireless order-taking system, you will need some financial information and assumptions. Here are the steps to calculate these measures:
1. Gather financial information: Identify the relevant costs and benefits associated with implementing the wireless order-taking system. Costs may include the initial investment, recurring expenses (such as maintenance and training), and any additional costs related to the system. Benefits may include increased sales, reduced labor costs, improved efficiency, and customer satisfaction.
2. Calculate the ROI: ROI is calculated by dividing the net profit (benefits minus costs) by the total investment and multiplying by 100 to get a percentage. The formula is: ROI = ((Net Profit / Total Investment) * 100). The higher the ROI, the better the return on investment.
3. Calculate the NPV: NPV is a measure that takes into account the time value of money by discounting cash flows back to the present value using a predetermined discount rate. The formula for NPV is: NPV = (CF1 / (1 + r)^1) + (CF2 / (1 + r)^2) + ... + (CFn / (1 + r)^n) - Initial Investment. CF represents net cash flows in each period, r represents the discount rate, n represents the number of periods, and the initial investment is subtracted at the end.
To discuss some of the intangibles that Lisa needs to consider, there are a few things to keep in mind:
1. Customer satisfaction: The wireless order-taking system may improve the customer experience by providing faster and more accurate order processing, which can lead to increased customer satisfaction and loyalty.
2. Competitive advantage: Implementing such a system may give Lisa a competitive edge by enabling her to differentiate her business from competitors who do not have similar systems.
3. Employee productivity: The wireless order-taking system may streamline operations and reduce manual tasks, enabling employees to focus on other important activities, such as customer service.
4. Scalability and future-proofing: Lisa should consider whether the system can adapt and scale as her business grows, and whether it can accommodate potential future technologies and customer demands.
Based on the ROI, NPV, and intangibles, it is recommended that Lisa considers ordering the wireless order-taking system if the financial analysis demonstrates a positive ROI and a favorable NPV. However, it is important for Lisa to carefully evaluate the costs, benefits, and intangibles in light of her specific business situation and objectives before making a final decision.