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Digital Technology Expansion Proposal for LBS Textile Firm

Current Situation

LBS is a textile firm that designs fabrics for the wholesale market in the Northeast. The company over the last decade experienced modest growth after importing goods from the East, but is now encountering much more significant competition from Asia. Almost all weaving plants in the U.S. have closed, and price discounts from the East are forcing many firms to consider importing fabrics from abroad and to go directly to the weavers, as opposed to LBS.

LBS needs to consider a number of ways to expand its operation, but will need to invest in digital technology expansion. It has little experience with technology and currently has a 500 users system running a Microsoft network (they currently have 600 employees). The firm has a homegrown wholesale distribution and accounting system using a very old legacy system. LBS is thinking of replacing the system to help support a business proposal to expand operations to the West coast. The expansion requires a 25% increase in personnel. There is also a need to consider more e-business and digital systems to operate with weaving plants in China. The current network infrastructure is outdated, machines need to be replaced, telephone systems need to be updated, and delivery/import systems need to be constructed.

LBS only has an operating budget of $50 million and a capital budget of $5 million. After careful analysis of the business proposal, you as the Technology executive have determined that the following cost investments are required: Capital investments in equipment and operating systems $8 M Personnel additions in IT $1 M Application Software (accounting, fulfillment, etc.) $2 M E-business systems $4 M R&D in textile design and new advanced products $3 M Telephone and wireless technology $.5 M Travel, training and misc $1 M Total Funding $19.5 M Thus, the investment in relation to the budgets is enormous. You have been asked to issue a report to management on your proposal; no one knows these numbers. Obviously LBS will need to finance this level of investment. You expect there to be many questions relating to why these investments are needed. You recognize that you would have no more than 30 minutes to present your report. Based on the limited information you have, provide your report broken into the following sections: Direct Revenue investments: what are the investments that can be measured against financial returns? You can assume such returns will be feasible and meet company standards.

You must reference the financial measurements that we have reviewed in class and in your readings. Indirect returns: using Lucas’ methods of non-monetary valuation, show the benefits from those investments that can be allocated to returns in some way—and how you will do it. Cost of business issues: using Lucas’ Garbage Can Model and Conversion effectiveness, provide your argument as to why these investments are important. Focus on what we have discussed in class and what you have read. Although you have some understanding of the amount of investment related to normal operating and capital investments, concentrate on the generic issues of what is challenging the business and what brings value.

You can assume that you are 100% convinced of your plan—so you must reflect an enthusiasm and confidence in your report. You do not need to use the Lucas calculation metric. Further your report cannot contain any diagrams or charts--that is, it must be descriptive in nature. Assessment Your paper should be able to reflect what you would want to cover during a 30-minute presentation—so you should stay between 5 and 10 pages for this assignment.

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