Business Case

Group members: Neil Mason, Colleen MacDonald, Liam Tettman, Rajvi Patel, Raj Bhinder

1.0 Introduction / Background

ABC Inc. manufactures several industrial products and it currently has 450 employees. It is an industry
leader but have found that sales have been flat for the last six quarters while contribution margin has
decreased 10%.

Senior management feels that training is an essential component in getting ABC Inc. back into growing
profitability. Currently, ABC Inc. has a program in place where each employee gets a training subsidy of
$2,000 annually. There is not a job development path or focus on which courses an employee should
take, it is just up to the employee to suggest to management which class they would like to take and it is
at the discretion of the manager to approve or deny the course.

Many employees have expressed that they were not aware of the company subsidy for courses. There
has not been much succession planning or development in the following departments: sales,
engineering, customer service and management.

ABC Inc. needs to educate employees about: new products, soft skills, inventory management and sales
in order to bring it back to satisfactory profit growth.

2.0 Business Objective

In order to bring ABC Inc. to a contribution margin of 25%. Training has been identified as the largest
variable expense that may not be adding value in its current form. A uniform and targeted online
training program in the following departments: sales, customer service, product design and inventory
management is expected to provide the growth required to manage the variable expenses needed to
drive revenue.

With the implementation of a new training program with a strong key focus on challenging
departments, the company will be able to see an increase in efficiency and sales.

3.0 Problem/Opportunity

The processes that are required to run the company efficiently are not uniformly enforced/known. This
issue has created several instances of miscommunication and missed sales opportunities. The current
training program is being underutilized due to the lack of awareness of its depth and opportunity. The
new program that will be rolled out will enable a universal approach to key aspects of business in order
to create a more streamlined and efficient company. 83% of employees are not using the full $2,000
annual allowance that they are budgeted for. The sporadic usage of the fund has created an
unmeasurable return on investment.

4.0 Critical Assumptions/Constraints

Employees have expressed an interest in the new training program in order to create a more uniform
working environment. A benchmark study has been conducted of our competitors within the industry
that states that an investment in uniform training resulted in a 10% growth year over year.

At this time training is not tied to employee performance. Employees do not have a clear focus on
specific courses/programs to learn and use. This has led to several instances with employees not being
aware of basic functionality in key programs. Of the 83% of employees not using the full $2,000
allowance some employees have not used any of the budgeted money for several years. This is due to a
combination of lack of awareness and absence of interest in continuous learning.

5.0 Analysis of Options and Recommendations

5.1 Do nothing. ABC Inc. is still a market leader and its competitors are experiencing the same
decrease in revenue;
5.2 Redesign the training program with the lens of developing ABC Inc. employees within each line of
business (LOB) including succession planning; and
5.3 Hire an external firm to manage ABC Inc. training needs.

6.0 Preliminary Project Requirements

The main requirements of this project include the following criteria:

6.1 Each LOB within ABC Inc. will be required to submit a well defined and developed career path and
training program.
6.2 Consultants, with an expertise in Training and Development, will need to be hired for a three-
month period to assist each LOB with the development with the career path and training program.
6.3 The current process of reimbursement of training for any courses taken needs to change to the
requirement of the course being either directly job related or related to a future career path.
6.4 An on demand training program needs to be developed for each of the following areas:
Specific to each LOB;
Annual Health and Safety legislative requirements; and
Annual HR compliance requirements.
7.0 Budget Estimates and Financial Analysis

The estimated costs for the entire project is $1.25 MM in the first year and an additional cost to
maintain the program of $25,000 in each subsequent year. The costs are distributed as follows:

7.1 Costs for Training and Development Consultants $500,000

7.2 Costs for internal labour $225,000
7.3 Costs to develop training and development portal $250,000
7.4 Costs to train staff on new program $25,000
7.5 Costs for tuition reimbursement external to ABC Inc. $85,000 (professional fees and conferences)
7.6 Budget allocated for miscellaneous expenses $165,000

These costs may be revised within 5% as the actual costs are known or as requirements are better
understood as the project is scoped.

8.0 Schedule Estimates

The project sponsor is Sales and they would like to have the scoping and business development
requirements completed within six months of the project approval date.

The on demand training should be completed, staff trained, and operational within three months of the
business requirements being signed off by the stakeholders.

Once managers and key personal are trained and informed of the improved training program
documentation will be sent out to all staff informing them of the updated training program.

The next three months will consist of scheduled meetings with employees, their manager, and Human
Resources to ensure that all staff are fully utilizing the new training platform.

9.0 Potential Risks

Lack of interest in the online or training and development career path may be a challenge for staff
nearing retirement or those not interested in furthering their career.

The training and development career path is maintained by an outside company and should the
company suffer loss or bankruptcy the program may become obsolete to market demands and trends.

Data breach of the online website; compromising users personal data leading to potential financial loss
to ABC Inc.
10.0 Exhibits

Net Present Value Calculation

ABC Inc. Training

Year 0 Year 1 Year 2 Year 3 Year 4 Total

Costs -$ -$ -$ -$ -$ -
1,250,000.00 25,000.00 25,000.00 25,000.00 25,000.00 1,350,000
Benefits 0 500000 550000 605000 665500 1,820,500
Cash Flow -100,000 -50,000 100,000 100,000 100,000 150,000
Discount 0.9091 0.8264 0.7513 0.683 0.6209
Factor
DB-DC -100,000 -41,500 69,000 58,000 48,000 33,500
NPV 33,500.00