MBA 5200 Group Project

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  1. Identify yourself and your team members on the top of the first page.
  2. Begin the proposal with a discussion of Chipotle’s strengths, weaknesses, opportunities, and threats. There should be a paragraph at least for each of the four topics.
  3. Next discuss Chipotle’s strategy. This should be a couple of paragraphs in length.
  4. Introduce your first project proposal. This project should have some impact on the environmental stakeholder, the societal stakeholder, the employee stakeholder, the supplier stakeholder, as well as the traditional stockholder.  In other words, this project should show a win, win, win.  The first win is typically for the customer, the second win is one of the other stakeholders, and the last win is the stockholder.  This will probably be your more difficult project to develop.  Be creative but constrained by reality. Several paragraphs should be used to describe the project.  In this description include the parties that benefit and why you believe this fits the strategy of Chipotle.
  5. Introduce your second project. This project can be a more traditional project that benefits the customer and one other stakeholder or the stockholder. Again, try to be creative but constrained by reality. Several paragraphs should be used to describe the project.  In this description include the parties that benefit and why you believe this fits the strategy of Chipotle.
  6. This write-up should be a Word document and should be submitted by Sunday 11:59 PM. Good luck with this worthwhile exercise. 

Capital Budgeting Proposal  Overview

Capital Budgeting Proposal for Chipotle Mexican Grill Team Project

Project Introduction:

For this project, you and your teammates will act as the project proponents for two projects (of your invention) for consideration by the capital budgeting committee at Chipotle Mexican Grill.  During the first three weeks of this course in the discussion exercise you will read and research the actual real company on Chipotle Mexican Grill and three of their competitors in the restaurant industry.   Beginning in the fourth week, teams will meet; you and your teammates will identify two different projects that your team believes will exploit a strength, ameliorate a weakness, take advantage of a perceived future opportunity, or neutralize a potential threat for Chipotle.  In the fifth week your team will identify relevant cash flows related to each project and build a spreadsheet for each project projecting these cash flows into the future.  In the sixth week, you and your team will “run the numbers” using the five decision models discussed in the course.  During the seventh week you and your team will discern the appropriate cost of capital to use for each project.  During the eighth week you and your team will conduct sensitivity analysis on your project to determine the sensitivity of net present value to changes in assumptions and conclude with suggestion on ways management can mitigate the risk for each project.  For the ninth week, you and your team will integrate feedback comments into the final write-up of the project, assemble the spreadsheets for each project, and record a 10 minute presentation of the two projects (roughly five minutes on each project).

Suggestions on how to make your project experience more productive:

Actual due dates for the project begin in week 4 but you (and your team) may want to “brainstorm” after the first week. You will work in groups of 3 or 4 students.  Each student is expected to meaningfully participate with the others in the group on each section of the project.

Do your own work and be imaginative or creative in your project ideas.  Where you use external sources to support your proposal, please cite the source either in footnote form or at the end of the proposal.

When running your numbers, understand that there is no single correct solution to capital budgeting proposals but understand there are better proposals than others.  Stated differently, pay more attention to having an estimate of the number “in the proposal” than to having a precise or “accurate” number.  When you deal with the future “accurate” numbers are next to impossible.  There are only numbers that you can justify base on the past, trends that you observe, and new information.  The more glaring mistake to make in putting together the proposal is to leave meaningful revenue, cost, working capital or other numbers “out of the proposal”.

There are hundreds of capital budgeting help tools on the internet.  You should look at these to get ideas but do not claim other’s work as your own.

You may find it helpful to use some of the spreadsheets that we build over the course as starting points in your analysis.  Remember, these are starting points and need to be modified (often substantially) to fit your proposal.  Please do not turn in an analysis that does not extend and modify the analysis over what we did in the course. More direction is provided in the weekly assignment breakdown.

This project is broken into sections with different sections due in different weeks.  Instructions are provided for each portion of the project in the week in which that portion is due. You will be provided feedback with the grading of each section.  You should incorporate this feedback (if any) into your final report, spreadsheet, and presentation.   The total project is worth 100 points.

Summary: Capital Budgeting Proposal for Chipotle Mexican Grill Team Project by Week

  • During weeks 1 to 3you should get to know your teammates and discuss the competitive environment, Chipotle’s strategy, and kick around possible project ideas.
  • Week 4:Your team will be meet and you (and your teammates) will identify in words two different projects that your team believes will exploit a strength, ameliorate a weakness, take advantage of a perceived future opportunity, or neutralize a potential threat for Chipotle.
  • Week 5:Your team will identify relevant cash flows related to each project and build a spreadsheet for each project projecting these cash flows into the future.
  • Week 6:You (and your team) will “run the numbers” using the five decision models discussed in the course.
  • Week 7:Your team will discern the appropriate cost of capital to use for each project.
  • Week 8:Your team will conduct sensitivity analysis for each project and suggest ways management can mitigate the risk for each project.
  • Week 9:Your team will integrate feedback comments into the final write-up of the project, assemble the spreadsheets for each project, and record a 10 minute presentation of the two projects (roughly five minutes on each project).Perform a financial statement analysis based on 10 years of historical data.

 

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