Problem Diagnosis

There are a number of barriers, which are faced by multinational corporations, and one of the most significant barriers, which are faced by them, is their inability for financing the growth initiatives of their business in a number of key business areas. This is probably due to the lack ofpeople and money and thus the businesses are restrained from winning. This challenge is underpinned by the conflict, which is created by the financing of the current legacy businesses of the company, which are the cash generators and the new initiatives, which might generate zero or even negative financial returns in the short term.

The same challenge is faced by Danaka Corporation and Gloria Manning, the general manager of the company. The management of the company has been looking forward to fund eight new initiative projects for the year 2012, which were critical to the future growth plans of the company. Moreover, there were 32 other current projects, which were under progress by the company. Therefore, the challenge was to finance the new eight projects by reducing the dollar research and development expenditure from those 32 projects. However, the company did not have a formal portfolio management process to deal with this issue.

All the projects of the company have been divided into many subcategories, which include lagging projects, fight the fade projects, share growth projects and the accelerated growth projects which were also more like the share growth projects. The challenge for Danaka Corporation now is to free up $ 300 million in funds from the existing ongoing projects of the company so that all the eight new projects of the company are funded internally. Apart from this, the only way to achieve the five-year growth plans of the company is to fund these projects and achieve minimum-targeted revenue of $ 5 billion in 2012. Optimal techniques and portfolio screening model needs to be developed to achieve this target and make a decision on a project-by-project basis.

DANAKA CORPORATION Harvard Case Solution & Analysis

Case Analysis

The optimal funding allocation decision is the main challenge, which is currently being faced by Danaka Corporation. This optimization process has been performed by creating a screening model in which the products sold under each of the businesses have been evaluated and then based on a number of factors. The optimization has been performed in order to free up $ 300 million of funds to fund the new eight projects of the company. However, not all the new eight projects would be generating any revenues or financial returns until the end of the year 2012. Therefore, a financial constraint has been set up by the management of Danaka where the revenues of all the existing projects are optimization based and need to be equal to or greater than $ 5 billion.

The weighting scorecard has been provided in the excel spreadsheet and we have re-assessed this weighting scorecard based on the demand and the growth prospects of those particular products within the market....................

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