Example Answers to a Strategic Investigation Project

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Size and growth prospects of the country: It is normally assumed that if the country has a big market, it can grow quickly from an economic point of view and it is concluded that the investors would be able to make the most of their investments in that country.

Availability and quality of human resources: The status of the human resources in a country is also instrumental in attracting direct investment from overseas. There are certain countries like China that have taken an active interest in increasing the quality of their workers.

Availability of natural resources: If a particular country has plenty of natural resources it always finds investrs woilling to put their money in them. A good example would be Saudi Arabia and other oil rich countries that have had overseas companies investing in them in order to tap the unlimited oil resources at their disposal.

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Economies of Scale: MNCs enter the new markets with the objective to realize the full benefits of economies of scale.

New sources of demand: When there is a limited growth in home country, the companies which aspires for additional growth, can invest in the form of FDI.

Proposed proposals for market development in is very simple.  In number of markets, already minimum necessary requirement of construction has been met out and only a small addition or change will take place.  In other cases markets would come up in a reasonable time.  Therefore, it has been assumed that three-years period will be sufficient for completion of the proposed construction to make the new market yard fully operational.  The full revenue in the form of ground rent is expected to flow after a gestation period of three years only. 

Discuss the aim, scope and objectives of the project

Sol:

The aim of the Projects:

systematic and comprehensive review of the economic, environment, financial, social, technical and other such aspects of a project to determine if it will meet its objectives. It is a process of selecting best alternatives out of various other alternatives of investment which results in optimum profits.

The scope of the projects:

Fostering a conducive climate: A conducive climate should be created to harness the creativity of people and entrepreneurial qualities. This kind of climate helps the employees in contributing new ideas to the organization and emerging out with the new business.

The objectives of the projects:The firm should come out with the objectives such as:

Cost reduction

Productivity improvement

Increase in capacity utilizationss

Improvement in contribution margin

Expansion into promising fields

To promote the smooth operation of payment systems

Justify the topic of investigation and its aim, scope and objectives

Sol: The firm requires investigating in order to eliminate the ideas which are not promising and fruitful. The following are some of the factors which can be considered for investigation of project are:

Compatibility with the promoter

Availability of inputs

Consistency with governmental priorities

Adequacy of the market

Reasonableness of cost

Acceptability of risk level

Compatibility with the promoter:

The idea developed must be compatible with the interest and resources of the entrepreneur. A real opportunity is the one which the personality of the entrepreneur and squares with his abilities, training and proclivities; it is easily accessible to him; it offers him the prospect of rapid growth and high return on the invested capital.

Consistency with governmental priorities:

The ideas must be feasible with the national goal and governmental regulations. It not be against the national and government goal and priorities should not cause environmental effects. The project should able to get the license easily.

Availability of inputs:

The inputs required for the projects should be easily available. The inputs should be available preferable at the lower cost. So of the major inputs are technical knowhow, raw material, power, labour etc.

Adequacy of the market:

The size of the market must give space for adequate sales volume. Further there should be enough potential for growth and reasonable return. Some of the factors to be considered to judge the adequacy of the market are:

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Competitor and their market share

Export opportunities

Barriers to the entry and exit

Sales and distribution system

Economic, social and demographic trends

Present domestic market

Expected increase in consumption

Reasonableness of cost:

The cost of the project should come within the budget of the firm. The firm should be able to have minimal expenditure and investment. Some of the aspects to be considered in this regard are:

Cost of material input

Ladour cost

Factory overheads

General administration expenses

Selling and distribution cost

Economies of scale

Acceptability of risk level:

The level of the risk in the project should also be analyzed. The amount of risk which the firm is ready to accept and the amount of return which the firm should also be considered. Some of the aspects under this are:

Technological changes

Competition

Government control over prices

Competition for substitutes

Cyclical variation in business

1.4 Evaluate the project research methodology, including the project structure and research base

Sol:

A suitable and realistic research method is required to appraise the corporate strengths and weakness. This help in exploiting the investment opportunities, the important aspects to be considered for corporate appraisal are:

Marketing and distributions

Production and operation

Research and development

Corporate resources and personnel

Finance and accounting

Marketing and distributions:

Various aspects of appraisal under this head are:

Structure of market

Quality of product

Information of market in product

Cost of advertisement and distribution

Satisfaction of customer

Design of product line

Production and operation:

Various aspects of appraisal under this head are:

High condition and good quality of plant and machinery

Availability of labour

Supply of raw material

Proper location

Cost structure

Research and development:

Various aspects of appraisal under this head are:

Keep maintaing of updateing on new product

Keep on new information product development

Laboratories and testing facilities

Market corporate and association

Coordination between research and operations

Corporate resources and personnel:

Various aspects of appraisal under this head are:

Competence and commitment of employees

State of industrial relations

Corporate image

Clout with government and regulatory agencies

Dynamism of top management

Finance and accounting:

Various aspects of appraisal under this head are:

Financial support

Capital on project cost

Government Tax condition

Proper relation partners share holders and creditors

Accounting and auditing system

Cash flows and liquidity.

LO2: Conduct research, using sources, and synthesise data and options

Assessment Criteria

2.1 Identify sources of data and information that will support the aim of the project

Sol:

The sources of data and information that will support the aim of the project from the point of view of marketing, technical, financial, economic, managerial aspects. The relative criteria with respect to such appraisal are as follow:

Market aspects

Technical aspects

Financial aspects

Economic aspects

Managerial aspects

Market aspects:

The importance of marketing in the potential marketing and developing the marketing strategy is one of the important activities. Some of the aspects in this regard are:

Demand projections

Judge the knowledge, experience and competence of the key marketing personnel

Assessing the adequacy of marketing infrastructure in terms of promotional effort,stock levels, transport facilities etc.

Technical aspects:

The technical review done by the financial institution focuses mainly on the following aspects:

Product mix

Capacity

Process of manufacture

Building

Location and site

Raw material and consumables.

Breakeven point

Financial aspects:

The aspects considered in financial appraisal are:

Reasonable estimate of cost of capital

Reasonable estimate of working results

Adequacy of return

Appropriateness of financing pattern.

Economic aspects:

Economic analysis looks the project from the point of social cost benefit analysis. It looks for the economic indicators such as effective rate of production, economics of scale, rate of protection, domestic resource resource cost ect.

Managerial aspects:

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Under this, the various aspects considered are:

Resourcefulness of the promoters

Sound understanding of the project by the promoters

Commitment of the promoters

Managerial ability of the promoters

2.2 Synthesise the data and information for options or alternatives that support the project aims

Sol:

The firm has to analyze various environment factors in order to find out the various data and information for options or alternatives that support the project aims are:

Economic environment

Government environment

Technological environment

Social-demographic environment

Competitive environment

Supply environment

The factors to be considered are:

The fundamentals of the country such as country specific, economy specific and company specific

The growth prospects of the country

The economic cycle of the company such as boom, recession etc.

The policies of the host country government

Past performance of the country and company

Volatility, liquidity and other related features of the security

2.3 Determine an option or alternative that supports the project aims

Sol:

For this purpose, business environment can be studied under six heads:

Economic environment

Government environment

Technological environment

Social-demographic environment

Competitive environment

Supply environment

Economic environment:

This environment includes the study of the factors such as:

State of the economy

Linkage with world economy

Growth rate of primary, secondary and tertiary sectors

Overall growth rate

Balance of payment situation

Trade surplus/deficits

Cyclical fluctuations

Government environment

This environment includes the study of the factors such as:

Import and export policies

Tax frame work

Financing norms

Lending condition of banks and financial institution

Industrial policies

Government programmers and projects

Subsidies, incentives and concessions

Technological environment

This environment includes the study of the factors such as:

Emergence of new technologies

Receptiveness on the part of industry

Access to technical knowhow, foreign as well as indigenous

Social-demographic environment

This environment includes the study of the factors such as:

Education level

Employment

Population trends

Income distributions

Age shifts in population

Attitudes towards consumption and investment

Competitive environment

This environment includes the study of the factors such as:

Number of firms in the industry and the market share

Entry barriers

Degree of homogeneity and differentiation among the products

Marketing practices and policies

Comparison with substitutes in terms of quality, price appeal and functional performance

Supply environment

This environment includes the study of the factors such as:

Availability and cost of money

Availability and cost of raw material and sub-assemblies

LO3: Draw conclusions and make recommendations that achieve the project aim

Assessment Criteria

3.1 Evaluate the research analysis to enable conclusions to be made

Sol: The firm has to analysis the key criteria which enable conclusions to be made are:

Environment analysis

Internal analysis

SWOT analysis

Environment analysis:

Environment analysis consists of following aspects:

Customers

Competitors

Suppliers

Regulation

Infrastructure

Social/political environment

Internal analysis:

Internal analysis consists of following factors:

Technical know how

Manufacturing capacity

Marketing and distribution capacity

Logistics

Financial resources

SWOT analysis:

Swot analysis should be done to find out internal strength and weakness and external opportunities and threats. It consists of following aspects:

Strength

Weakness

Opportunities

Threats

3.2 Recommend a course of action that achieves the project aim

Sol: Time and cost over are very common in most of the projects. In order to avoid such problems and make the projects successful, the following aspects have to be considered.

Adequate formulation

Sound project organization

Proper implementation of planning

Advance action

Timely availability of funds

Judicious equipment tendering and procurement

Better contract management

Effective monitoring

3.3 Analyse the impact of the recommendations

Sol: The impact of the recommendations is:

The success or failure of any project is highly depends upon its employees.

Attracting the new investors towards the products is not an easy task.

Effective marketing of the product is very much necessary.

Implementing aggressive business development plans & achieves profitability levels.

Manage customer/ investor relationship.

Planning & developing the branches in a cost efficient way.

Client acquisition

Client retention

Managing term

Revenue generation

Reporting to managing director

Responsible for developing of business.

Provide research based recommendation

Arranging for limit/safe guarding client

Acts as support system.s

We must work cohesively with our colleagues across the Group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.

It is very important that appraisal and reward systems support the types of behaviours the organization desires from employees. Project links compensation to actual job performance through merit rating system.

We must continue to be responsible, sensitive to the countries, communities and environment in which we work, always ensuring that what comes from the people goes back to the people many times over.

To conduct the business fairly, with honesty and transparency. Everything the company does must stand the test of public scrutiny. Prospecting, Recruiting Interviewing, Training, Formulating company policies, Staffing, Computation of staff planning, Evaluation & reporting to higher authority.

LO4: Review the results of the investigative project

Assessment Criteria

4.1 Produce the results of the investigative project

Sol: The results of the investigative project are:

Strategies of the investigative project

Project Structure

System which leads the project

Influencing people towards the project

Staffing for the project

Skills required accomplishing the project

Strategies of the investigative project:

Strategy is the course of actions through which organization relates to itself with its environment so as to attain its objectives.

Project Structure:

Structure is an additional to the organizational tool kit. It is comparable with the super structure of an organization, which indicates to what extent the activities are specialized, and the ways in which the organizational tasks are integrated and coordinated. It can also be defined as the way in which organization's unit relates to each other.

System which leads the project:

A system is not merely the totality of parts and sub-parts but their arrangement is more important. The whole becomes greater than the total of individual parts, because of the type of arrangement made in these parts and sub-parts. Thus, a system is an interdependent framework in which various parts are arranged.

Influencing people towards the project:

It is another variable, which may determine the effectiveness of the project. It tries to explain the culture and style of work of the project. It also explains about the behavior and attitude of key person or manager in achieving the project goals. It is the process of influencing people so that they will contribute to the project and at the same time in achieving its goals.

Staffing for the project:

Staffing is the process of acquiring, developing, employing, appraising, remunerating, and retaining people so that right type of people are available at right positions and at right time in the project. It is clear that staffing must be closely linked to organizing, that is, the setting up of intentional structures of roles and positions.

Skills required to accomplish the project:

Skill refers to distinctive competence; which reflects the dominant skills of an organization and may consist of competence in terms of customer services, quality commitments, market potentiality and so on. Skills refer to expertness, practical ability or facility in an action or doing something. It is also the capacity of doing or performing something individually, independently, or in a group so as to attain some pre-determined goals.

4.2 Evaluate the impact of the investigative project

Sol: The impact of the investigative project

INTEGRITY: To conduct the business fairly, with honesty and transparency. Everything the company does must stand the test of public scrutiny.

UNDERSTANDING: Must be caring, show respect, compassion and humanity towards colleagues and customers around the work, and always work for the benefit of the communities we serve.

EXCELLENCE: Must constantly strive to achieve the highest possible standards in our day to day work & in the quality of the goods and services we provide.

UNITY: We must work cohesively with our colleagues across the Group and with our customers and partners around the world, building strong relationships based on tolerance, understanding and mutual cooperation.

RESPONSIBILITY: We must continue to be responsible, sensitive to the countries, communities and environment in which we work, always ensuring that what comes from the people goes back to the people many times over.

Rules, regulations and procedures constitute System can be described as the procedures, process, and routines that characterize all the important work is to be done. A system is an assemblage of things connected or interrelated so as to form a complete unity; a whole composed of parts and sub-parts in orderly arrangement accordingly to some scheme or plan.

A system is not merely the totality of parts and sub-parts but their arrangement is more important. The whole becomes greater than the total of individual parts, because of the type of arrangement made in these parts and sub-parts. Thus, a system is an interdependent framework in which various parts are arranged.

The analysis and action that provides a structure with which to consider a company as a whole, so that the organization problems may be diagnosed and a strategy may be developed and implemented. It is very important that appraisal and reward systems support the types of behaviours the organization desires from employees. Project links compensation to actual job performance through merit rating system.