Project Management (lecture 2)

1. Case Study on Wind farm cost: 120 Mw at a cost of 300m pounds, 7 years to decide
2. Assignment 1: Essay not to exceed 1000 words
1. Subject: What would you consider the most appropriate style (theory) of Leadership for a Project Managaer.
2. Submission Deadline: Thursday 16th of February
3. Assignment 2: Case Study
1. Group Report on:
1. project appraisal
2. project life cycle
3. stakeholder analysis
2. Submission Deadline: Thursday 15th of March
4. Stakeholder map with PM in the center
1. corporate management
2. team members' managers (for matrix structure)
5. Identify each stakeholder or stakeholder group
1. past reactions
2. expected behavior
3. impact of project on them
4. likely reactions, possible actions
5. impact on project success, extent of buy-in
6. Manage Stakeholder relationship
1. 2 by 2 matrix with Power on the Vertical, Interest on the horizontal
7. The Leader's Role (Forming, Norming, Performing)
1. Task Definition
2. Alignment- individuals with team, team with organization
3. Role Definition-
4. Communication- Reluctance to say anything initially
5. Decision-making- discuss with individual member
8. Planning Tools



3 level Work Break Down Structure

1. if the planning is done properly, the execution can succeed
2. WBS - work break down structures. Pin down scope. The scope goes through 2-3 stages: prelim., semi-detail, final scope. Identify all the work that must be carried out on a project. Knowledge of the project area is key here.  Scope must be managed. "Scope Creep" must be avoided at all costs. Ensure that enough but only enough work is undertaken to deliver the project's purpose successfully. Say Yes, but there are time and cost implications. Give a proper cost estimation, timelines, extra resources required, additional software packages required. Monitor the scope, but change will occur. Changes must be evaluated and approved.  This requires WBS. All of the work that is required is broken down into manageable tasks. Work packages are groups of tasks that are allocated to people. Resources and costs are then identified. Level 0 is a program, Level 1 is a project, Level 2 is a task, Level 3 is a sub-task (5-6 levels maximum) A unique code for each task is possible. WBS codes can be used to track costs. Can you build the project life cycle into the WBS?
3. Responsibility Assignment Matrix
4. decision tree analysis- 
5. Product Breakdown Structure
6. Network- identify a critical path. Focuses only on time.
7. Tornado chart - greatest effect on project at the top (sensitivity analysis, @Risk, predictive tool)
8. Activity on Arrow-  nodes joined by arrows. Arrow represents the activity.
9. Gantt charts
10. Precedence network- logical link line. Certain attributes given to lines (like flow charts) Task boxes. Task duration, id, description, resources, start/finish, etc...
11. Bar chart, Histograms
12. S-Curve- cost vs. time
13. Critical path analysis- developed in the US in 1950's, used by most industries. Called also network analysis, PERT (Program, Eval, and Review Technique) analysis.  PERT is related to quantitative risk analysis. Dupont were concerned with reducing shutdown time of a chemical processing plant.

CS: Strategy with Chris Carr: Lecture 2

1. Presentations should not be like Brad's. There are different requirements for this class.
1. All members should present, those that don't should field questions
2. only case specific information should be used so that you can use templates
3. start with performance analysis (critical leverage) from the get go. (ex: grade them 8/10)
4. at least 5 years of figures (must be an accountant)
1. financial performance (is it looking good)
2. for Walmart, see page 559 (get ratios)
2. Discussion on the usefulness of the Ipad - searching data is much easier. The Kindle is powerful too. Bloomberg is another powerful tool. Put your positions for each company that we will cover in this class.
3. Walmart Presentation: Steve and Graham answering questions for this presentation



Quote from Sam Walton Biography

1. Sarah, Frank, Aaron and George will present.
2. Analyze strategy of the world's largest retailer: Walmart
3. 2 numbers 
1. US $400 billion in sales
2. Sam Walton believed the best method was the cheapest method (never took a taxi)
3. Cost efficiency is key of Walmart's success
4. Cost vs. differentiation
5. principles of cost leadership
6. walmart's cost leadership strat.
7. conclusion
4. Porter's generic strat. Walmart is a cost leader. In order to have leadership, you need to win on cost. Walmart is a discount retailer "everyday low prices". Competitive advantage is related to low cost 
5. cost drivers
1. economies of scale- great logistical control. Own own trucks and warehouses. Cross-docking (receiving, sorting and shipping), hub and spoke (with distribution center at the center), low ad spend, non-union. Revenue per employee is very high.
2. economies of learning- simplify each task, Sam Walton's 4th rule (communicate with partners because the more they understand the more they care, info travels up and down chain of command freely), employee commitment (everyone is called an associate) (Mike Duke is the current CEO, criticized for not changing what works)
3. simple design- discount store, supercenters, neighborhood markets (I've never seen one of these) homogeneity of layout, offerings, and service.  Customers know what they are going to get, and where they will get it. Sundown rule: every issue(possible) solved within the day. One stop shop.
4. Input cost controls- direct negotiations with their vendors. Asymmetric negotiation. 18% of PG sales comes from Walmart sales, but only 3% of Walmart sales come from PG. Walmart purchases direct from Chinese manufacturing firms. Truck loading technology (backhauling to return defective products) Inventory turnover (Costco has a larger turnover)
5. Retail-Link- developed by Cisco. How do suppliers ERP systems interact?
6. International business- in US and Mexico very successful but not in Europe (cultural differences, size constraints)
7. Customer data mining- commitments to IT
6. Porter's 5 forces: Suppliers: Supply Chain is key to Walmart's success 
7. 1946 Peter Drucker
8. For next week: Ryan Air

Financial Analysis (Tom Brown, Lecture 2)

1. Determining a company's strategy is of utmost importance
2. Predicted buy-out (small pharmaceutical Co's)
3. Porter Generic Strategies
1. segmentation
2. differentiation
3. cost leadership
4. Porter Value chain - related to lean? (customer pays for value)
1. primary and secondary value creation
2. limited use as a strategic tool
5. Valuation
1. value forecasting difficult
2. valuation by comparison- ratio analysis (sales is important here)
1. but no two firms are alike, especially as firms become more complex
2. good for valuing closely held companies  (compare to private or listed companies)
3. private-public conversion can generate value
3. intrinsic or theoretical valuation
1. Dividend Discount Model (DDM) using required rate of return (secret within firms)
2. only works if a firm pays dividends! (trend in some US firms)
3. Discounted Cash Flow (DCF) originally used to compare investments (projects)
1. Weighted Average Cost of Capital- WACC is the opportunity cost of capital (calculated on basis of current debt and equity value)
2. asset disposal cost (future value of assets) is also important (Terminal Cash Flow)
3. works well in assessing whether or not a share is overvalued
4. which cash flow should be used? Operating? Free Cash Flow? (no consensus on definition of free cash flow)
4. Residual Earnings Model
1. Book Value + A Premium (Premium determined by economic value added)
1. book value from accounts (Net Assets/ Capital and reserve figures)
2. Bearn Stearns notion of "EVA"- economic value added "super-profits" producing income above and beyond economic rent.
3. Bear Stearns bought Journal of Applied Corporate Finance (debate ended)
4. BoA recent purchased this journal
5. Shop Example: 12,000 available in rent, but 36,000 if shop used for a business.  EVA = 24,000 in this case, and if shop's book value was 100,000 then 124,000 is the true value
6. Residual Earnings (RE) RE=Actual Earnings - (Investment * RRR)
7. Economic Accounting - considers "comprehensive income" (clean surplus income) which includes for example exchange rate gain.
8. What about a loss making business? RE model can be used
9. What about a company which pays no dividend? RE model can be used.
6. Whether to Buy/Sell or Hold (watch on the fence)
1. Price-Earnings multiplier PEm
2. look at cash position (companies fail when the run out of cash) can they pay a dividend?
3. look at the quality of earnings (what is generating them?)
4. gearing (look at cover and spread if gearing is high)
5. margin of safety? what profit sensitivities?
6. bottlenecks: production and marketing (can the strategy cope?)
7. Value based on: book, market cap, PEm, ROI, discounted earnings
8. Donald Rumsfeld and "known knowns"
9. risky CEOs - arrogance before the fall
1. don't consult or take advice
2. failure to recognize own mistakes (can't treat as early opportunity)
1. Avoid complexity - where does the complexity come from?
2. Quality of management (prized by VCs, "can we work with them?")
7. Cash flow cycle (3 cycles) Ops Cycle: Investor Cash-> Inventory -> sold for Cash -> back to investor
1. Financing: Cash from Owners/Investors or External Lenders -> return earned
2. A = L + C (must ensure that assets are utilized efficiently)
8. Use change in turnover (sales) to compare firms activities
9. See page 9 of the handout regarding Break-Even-Points
10. Gross Margin (GM )= Gross Profit/Sales -> Sales-COS/Sales *100%
11. Operating Margin or Profit (OP)=Operating Profit/Sales
12. Cost of Sales (COS) = Variable Costs, Other Expenses = Fixed Costs
13. Gearing Ratios: Loans/Capital (description of a state, risk related)
14. COS = costs required to bringing a product to market -> don't use Gross Margin to compare among sectors
15. Two types of ratios: causal and risk-state
16. Current Ratio has conflicting interpretations: too many assets good or bad? Tesco's ratios (based on financing business off creditors)
17. Better Ratio: OCF/Creditors and other debt
18. Working capital management, (working capital requirement) WCR
1. Credit cycle (shorter is better)
2. see example on p6-7
19. Next week: Gearing

Business Finance (Lecture 2)

1. January 18th: Volatility modeling and forecasting
1. Questions: Is volatility forecasting important? Why?
2. Do you think that volatility can be forecasted?
3. What other parameters do you think should be taken into account in the volatility forecasting process?
4. Does research on volatility forecasting conflict with the Efficient Market Hypothesis (EMH)?
2. January 25th: Technical and Fundamental Analysis (Today's Lecture)
1. How tomorrow's managers utilize information in order to make sound financial decisions.
2. Credit rating agencies comes to mind. They carry out tech. and fundamental analysis in order to rate debt.
3. Efficient Market Hypothesis - (Chapter 14 of text) Prices reflect all relevant information
1. semi-strong form
4. Do prices actually move in trends?
5. Does history repeat itself?
6. Do patterns become self fulfilling prophecies?
7. How subjective are TA rules?
8. Moving Averages: basically the sum of the closing prices over a certain period divided by that period
1. Example: 20 closing prices of an index  (dollars) / 20 (days)
2. when the price meets the MA line from above, sell
3. when the price meets the MA line from below, buy
4. Does MA work? Empirical evidence
1. 1988 Lucak
9.  Price Patterns: (Head and Shoulders)
1. stock price resembles a head and shoulders, very subjective
10. Fundamental Analysis- define a securities intrinsic value
1. compare with Peers, use accounting data
2. qualitative data such as SWOT analysis
3. industry life cycle
4. value investors, activist value investors
11. FT on Rating agencies
12. Misreading the data: "If you interrogate the data too much it will confess."

Statistics (Decision Analytics) with Wouter Verbeke

1. Chebyshev's theorum: (Page 65 in James R Evans (2010), Statistics, Data Analysis and Decision Modeling 4/e (International Edition), Pearson, New Jersey. ISBN 978-0-13-701903-8.
2. Monte-Carlo simulations (P119)
3. Issues of Notation
4. Random variable: X
5. Value of random variable: x
6. prob. mass fxn: f(x)
7. cumu. dist. fxn: F(x)
8. sampling distribution of the mean- characterizes the populations of means
1. of all possible samples of given size
2. standard error of the mean- addresses certainty in mean, estimates standard deviation (which can't be known)
3. if the population is normal, the sampling distribution is also normal

Jeremy Webster Management Consultancy, Lecture 3

1. Preparatory Reading:
1. http://davidmaister.com/articles/2/4/
2. http://blog.huntswood.com/2011/10/25/the-uk-consulting-industry-buying-trends-update/
3. http://www.scribd.com/doc/78995630/Datamonitor-2007-Managment-and-Marketing-Consultancy-0199-0424

Jeremy Webster Management Consultancy, Lecture 2, Part 2

1. Client
1. Kellogg-Champion: CEO Royce Kellogg- entrepreneur
2. Mort Meyer- partner, people person, died of heart attack
1. death prompted merger
3. Stan Carpenter- CEO Champion. Former Kellogg rival who invited merger
1. Champion young upwardly mobile professionals
4. Merger between Kellogg-Meyer (KM)and Champion Securities
5. "merger of equals"
6. "finalize common operating policies" (no need for new policies)
7. Carol Ludwig- HR director Kellogg-Meyer (short on time)
1. had just reorganized compensation policies before merger
8. Tom Flynn-HR director of Champion
1. out of the communications "loop"
2. agreed to use KM computer tracking program
9. John Tucker- Senior marketing VP KM
10. Greg Masters- marketing VP Champion
1. believed that Tucker and Masters were on the same level of org chart
11.  
2. Consultancy
1. Statler Group (SG)
2. Susan Barlow
1. tasked with reconciling the policy and practices of the two firms.
2. 6 years consulting exp, securities industry background
3. securities industry is a growth market for SG
4. agreed to an optimistic schedule (before a true evaluation of documentation took place)
5. interview schedules was a rate limiting step
6. strategy was to target the most difficult issue first: compensation policy
7. 
   
3. Jim Roussos- younger consultant