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Question 4

From a general point of view, it has been documented in the literature and evident in the case that cash flows upcoming from the diminished sales of laundry to the existing products must not be incorporated in the cash flows. The cash flows in the case study are not increasing; is the project is no approved, that may occur or appear. If there is any probability that a competitor the same product in the market, there exist a change of the market erosion from the existing line of products. This causes a direct change of the approach of market erosion. In this case, the market erosion must exist whether or not there exist a shift or change to a new project; thus the cash flow may be incremental at this face. Introduction of sales erosion by the competitor does not mean a change in the cash flows as it assumes positive and negative change in the cash flow.

For the case of the laundry industry as indicated in the case study, when the competition is tight or vigorous, this may be a rational assumption in the market. Therefore, the cash flows evidently in the market sales erosion are not considered. This may result in the project rejection that would in return be acceptable by the competitors. This offers the competitors a chance to depict the target market hence influencing the market erosion of the product. Rejection of the project may lead to subsequent prefacing of the products by competition. Thus, the sales of erosion of the current product lines may not be dependent upon the opening of blast. In summary, question four seems to test the ability of competitors introducing a similar product in the market.