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After 6 years from graduation, you became a general manager, and now you have to invest your limited fund into the most profitable internal projects...
After 6 years from graduation, you became a general manager, and now you have to invest your limited fund into the most profitable internal projects in your hotel. There are Spa renewal project, Customer Relationship management system project, and Electronic check-in& out projects. All requires the same amount of initial investment. Director of Spa, director of Marketing, and director of Rooms department are all your former classmates, and asking your extra favor to choose each project. You have only enough money to support one project. Which action of yours will keep your career unstained in the long run?
A. Because CRM is a hot topic, you are interested in doing someting about CRM. Besides, you like the director of marketing because she is your tennis partner.
B. No matter any project looks profitable, you will not choose one over the others, because you want to keep good friendship among directors. That way, you can also invest into US Treasury Bills which will give you the safest return with no risk.
C. Because you enjoy SPA very much, unless other projects' NPV are horribly negative, you will love to choose SPA project over the others, even though you do not like director of SPA personally.
D. Forget about personal preference of yours, and just do the Net Present Value analysis based on the best estimates of future cash flows from each directors. Then pick up the project with the highest NPV.
