Using this criterion, XYZ Steel undertook a major plant rebuilding project in the late 1960s in its steel-bar-manufacturing facilities near Chicago. It had become apparent to XYZ's management that the company's bar mill needed modernization if the firm was to maintain its competitive position in the Chicago market area. Although the planning process for the project was quite sophisticated, the decision to undertake the project was based on a desire to maintain the company's competitive position in that market.
In a similar manner, many business schools are restructuring their undergraduate and MBA programs to stay competitive with the more forward-looking schools. In large part, this action is driven by declining numbers of tuition-paying students and the stronger competition to attract them.
Investment in an operating necessity project takes precedence over a competitive necessity project, but both types of projects may bypass the more careful numeric analysis used for projects deemed to be less urgent or less important to the survival of the firm.
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