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Assignment DG505 – Financial and Economical Aspects of Product Design

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DG505 – Financial and Economical Aspects of Product Design

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A section of the normal project report where the financial aspects are addressed via the models, methods and tools mentioned. See report and excel sheet on ID Compass.

Competencies developed:

5, (B), (D)


During my internship period, I was asked to work out the financial aspects of my design. I had really no idea where to start or to finish. Therefore, I selected this assignment in order to get more insight in the financials of innovation projects. During this assignment, we applied the knowledge gathered during the lectures into practice by analyzing existing companies and products and setting up our virtual commercial company for festival users by creating an investment plan, which can be viewed in the report and the attached excel sheet, were we explained our calculations.

I saw that good design is nothing without good business. I learned useful tools to get insight in the fiscal facets of new product design which are very valuable as designer to include in the design cycle. I learned it is important to start analyzing all the business’ spending and incomes. A budget, ‘a plan written in the language of money’, is a good starting point. The Activity Based Cost (ABC) Model is very useful to give insight in the relations and total contribution of the numbers. Estimations can be gathered from the KvK or competitors. A bill of materials, Total Turnover and throughput time (see pictures below) are some of the important aspects which should be covered in this analysis. Every small aspect should be covered, i.e. also the insurance of the products all these aspects are covered in the excel sheet.

Moneyflow PS3 click to zoom

I learned there is a difference between direct and indirect costs, as well fixed and variable costs. I learned how the cost structure is build up and learned to come up with proposal for sales price and additional services. Bottom up and top down are two strategies to analyze current business. In order to give structure to all these variables I learned that the ‘money flow’ tool is very useful to see who pays for what, how much, how and to whom. By creating a money flow for Sony’s PlayStation 3 (click on picture to zoom), I really understand the pronunciation ‘geld moet rollen’; companies create complex and creative constructions in order to create a net profit. The workshop ‘business modeling I did this semester can be very handy for this.

I learned there are different aspects to calculate the breakeven point and learned how to calculate the ‘pay-back’ time for investments. The income from operations (IFO) and Cost of Non Quality are both included in these calculations. I saw that no project starts without an investment/project budget. I learned as project investor, it is important to know what the profit will be eventually. Therefore, detailed and clear information in the financial aspects is important to trigger investors. Now I also understand why my internship’s boss was so reticent with some cool projects.

Pictures from our final presentation/report (click to zoom)

This assignment builds up on the knowledge I gathered from the previous marketing assignments like Assignment DA511 The Context of New Product Development and DG502 – Analysing and Modelling NPD: Medical Systems, which focus more on analyzing the market position of a design. By attending to this assignment, I am also capable of analyzing the financial aspects of design within the market position.