Should Ciba-Geigy make the Newport investment? Which option should it pursue?

Question: Should Ciba-Geigy make the Newport investment? Which option should it pursue?

To decide if Ciba-Geigy should make the investment into Newport and to what degree, one need to investigate what strategy the corporation is pursuing and how Pigment production fits into it. Ciba-Geigy’s corporate goal is to have a diversity of businesses with one common aspect: a focus on its core competencies biology and chemistry. In 1982 the company has been divided into 30 corporate segments and those segments have been sorted in five categories: development, growth, pillar, core and niche. Ciba’s definition of core businesses is “being in a low growth industry”, and “being a cash provider” for Ciba’s other businesses in growth industries. Businesses in the core category are supposed to defend their leading market position, and to maximize productivity and efficiency.
Ciba has five divisions in its “core”-category. Beside Pigments that are Chemicals, Polymers, Dyes and Met...