ST.

MARY’S TECHNICAL CAMPUS,KOLKATA

MBA 3rd Semester
THIRD INTERNAL ASSESMENT, OCTOBER, 2019
FULL MARK-25 (For each Paper)

SPECIALIZATION:Finance(Major) & HR(Minor)

Finance Specialization:
FM 301 : Taxation
Q1 Write short notes on (Any Five)-

Ans: a) GST:• GST (Goods and Services Tax) is a indirect tax levied on goods and
services.GST is a single tax on the supply of goods and services.Goods and services
tax (GST) is a tax on goods and services with value addition at each stage having
comprehensive and continuous chain of set of benefits from the producers/service
provider’s point up to the retailers level where only the final consumer should bear
the tax.GST improve overall economic growth of the Nation It will replace all indirect
taxes levied on goods and services by states and Central.

b) Tax Avoidance: Tax avoidance is the use of legal methods to modify an

individual's financial situation to lower the amount of income tax owed. This is
generally accomplished by claiming the permissible deductions and credits. This
practice differs from tax evasion which uses illegal methods, such as under
reporting income, to avoid paying taxes.Most taxpayers use some form of tax
avoidance. Even though it may seem negative, it really isn't. In fact, tax avoidance is
a legal way for people or other entities to minimize their tax liability. These can be
in the form of deductions or credits used to their advantage to lower their tax
bills.For example, individuals who contribute to employer-sponsored retirement
plans with pre-tax funds are engaging in tax avoidance because the amount of taxes
paid on the funds when they are withdrawn in retirement is usually less than the
amount the individual would owe. Furthermore, retirement plans allow taxpayers to
defer paying taxes until a much later date, which allows their savings to grow at a
faster rate..

c)Perquisite: Perquisites is defined as a benefit which one enjoys or is entitled to on

account of one’s job or position in the dictionary. Hence, perquisites are added to
the head Salaries while filing income tax return. Under section 17(2) of the Income
Tax Act, perquisites include:
 1. Value of rent free accommodation provided to the assessee by his
employer.
2. Value of any concession in the matter of rent in respect of any
accommodation provided to the assessee by his employer.
3. Value of any benefit or amenity granted or provided free of cost or at
concessional rate in any of the following cases:
1. By a company to an employee who is a director thereof.
2. By a company to an employee being a person having substantial
interest in the company; or
3. By any employer, including a company, to any employee whose
income under the head ‘salaries’ excluding the value of all benefits or
amenities not provided for by way of monetary payments exceeds
fifty thousand rupees.
However, use of any vehicle provided for journey by the assessee
from his residence to his office or other place of work and back to his
residence shall not be regarded as a benefit or amenity granted or
provided to him free of cost or at concessional rate.
4. Amount paid by the employer in respect of any obligation which, but for
such payment, would have been payable by the assessee.
5. Amount paid to affect an assurance on the life of the assessee or to
effect a contract for an annuity otherwise through a specified or approved
fund.

d) MAT:. Minimum Alternate Tax (MAT) is a tax effectively introduced in India by

the Finance Act of 1987, vide Section 115J of the Income Tax Act, 1961 (IT Act), to
facilitate the taxation of ‘zero tax companies’ i.e., those companies which show zero
or negligible income to avoid tax. Under MAT, such companies are made liable to
pay to the government, by deeming a certain percentage of their book profit[1] as
taxable income.MAT is an attempt to reduce tax avoidance; it was introduced to
contain the practices followed by certain companies to avoid the payment of income
tax, even though they had the “ability to pay”.MAT is applied when the taxable
income calculated as per the normal provisions in the IT Act is found to be less than
18.5% of the book profits.MAT is levied at the rate of 18.5% of the book profits. MAT
rate has been progressively increased from 7.5% in 2000 to 18.5% in 2015. In other
words, the tax computed by applying 18.5% (plus surcharge and cess as applicable)
on book profit is called MAT.Normal tax rate applicable to an Indian company is 30%
(plus cess and surcharge as applicable), which has been decided to be progressively
reduced to 25% by 2019. A company has to pay higher of normal tax liability or
liability as per MAT provisions.MAT is applicable to all corporate entities, whether
public or private. However, it does not apply to any income accruing or arising to a
company from life insurance business. Nor does it apply to shipping income liable to
tonnage taxation[2] as provided in section 115V to 115VZC of the IT Act

e) Capital Gains: Capital gains tax is a levy assessed on the positive difference
between the sale price of the asset and its original purchase price. Long-term capital
gains tax is a levy on the profits from the sale of assets held for more than a year.
The rates are 0%, 15%, or 20%, depending on your tax bracket. Short-term capital
gains tax applies to assets held for a year or less, and is taxed as ordinary
income.Capital gains can be reduced by deducting the capital losses that occur
when a taxable asset is sold for less than the original purchase price. The total of
capital gains minus any capital losses is known as the "net capital gains."Tax on
capital gains is triggered only when an asset is sold, or "realized." Stock shares that
appreciate every year will not be taxed for capital gains until they are sold, no matter
how long you happen to hold them.

Q2 Discuss the economic effect on direct and indirect taxes.

Ans: Taxes may be classified as direct and indirect. Direct taxes are levied on a person’s or a
firm’s income or wealth and indirect taxes on spending on goods and services. Thus, direct
taxes are paid directly by the person or firm on whom the assessment is made, while indirect
taxes are paid indirectly by consumers in the form of higher prices. Direct taxes cannot be
legally evaded but in direct taxes can be avoided because people can reduce their purchases of
the taxed goods and services.

Direct Taxes:
Examples of direct taxation include income tax, corporation tax (on companies’ profits),
capital gains tax (a tax on the profits of sales of certain assets), wealth tax (which is a tax on
ownership of property or wealth) and a capital transfer tax (a tax on gifts to replace death
duties). Direct taxes are mainly collected by the central government.

Advantages:

(i) It is easy to determine the incidence of the tax – a person or institution who actually pays
and suffers the burden of tax.

(ii) Direct taxes tend to be progressive – people in the higher income group pay a greater
percentage than poorer people, e.g., income tax is graduated so that high income earners pay a
larger percentage; also a selective wealth tax would only apply to those owning more than a
certain level of wealth.
(iii) Direct taxes are easy to collect. Consider, for example, the PAYE system which is used to
collect income tax from most wage and salary earners.

(iv) Direct taxes are important to the government’s economic policy. If the government is
fighting inflation it can impose, for example, high levels of income tax to restrict consumer
demand. If the government is concerned about unemployment it can reduce the levels of
income tax to increase consumer demand and increase production.

Disadvantages:

(i) Direct taxation may be a disincentive to hard work. High rates of income tax, for example,
may discourage people from working overtime or trying to gain promotion at work. Some
economists blame the ‘brain drain’ (i.e., the emigration of highly qualified persons, such as
scientists and doctors) on India’s high levels of taxation.

(ii) Direct taxation discourage savings because, after paying tax, individuals and companies
have less income available to save. This means that investment, which relies on the level of
savings, is low and this could cause less production and employment.

(iii) This type of taxation encourages tax evasion – to avoid paying so much tax.

(iv) There is no element of choice about paying the tax – it is unavoidable.

Indirect taxes:
Examples of indirect taxation include customs duties, motor vehicles tax, excise duty, octroi
and sales tax. Indirect taxes are collected both by the central and state governments but mainly
by the central government.

Advantages:

: (i) Indirect tax is fairly easy to collect.

(ii) It is easy to determine the incidence of an indirect tax.

(iii) The government can use it to discourage certain types of consumption. A high rate of tax
on tobacco can, for example, affect smoking habits.

(iv) Indirect taxation is a good way of raising revenue when levied on goods with an inelastic
demand, such as necessities.

(v) Tourists do not pay income tax. But they spend money on goods and services. This adds to
the tax revenue of the government.

(vi) Consumers have a choice as to whether they pay the tax. They can avoid paying the tax by
not consuming the goods which are being taxed.

(vii) Indirect taxes do not have a discentive effect on work.

Disadvantages:

(i) Indirect taxes are regressive. A regressive tax is one which causes a poor person to pay a
higher percentage of his or her income as tax than a rich person. For instance, the tax
ingredient of the price of a new television set would be the same for the poor and the rich
person, but as a percentage of the poor person’s income, it is far greater.

(ii) These taxes are not impartial. In recent years, certain groups of consumers have
complained that they are being heavily penalised by taxation, e.g., drinkers, smokers and
drivers.

(iii) Indirect taxes may contribute to inflation. The imposition of an indirect tax on an item
like petrol will increase its price. Since petrol is an essential input in a large number of
industries, this may set off an inflationary spiral. Moreover, trade unions demand higher
wages to maintain the real incomes of workers.

(iv) Conclusion:

So, the conclusion is that, in a good tax system there should be a proper balance between direct
and indirect taxes. The revenue will be optimum and loss of incentives minimum.

FM 304 : Corporate Finance

Q1) Discuss about different methods of Capital Budgeting.

Ans: The following points highlight the top five methods of capital budgeting.

The methods are: 1. Degree of Urgency Method 2. First year’s Performance Method
3. Pay Back Period Method 4. Rate of Return Method 5. Present Value Method.

Capital Budgeting Method # 1. Degree of Urgency Method:

The project work which is most urgent i.e., which cannot be postponed is taken first.

For example—If there is a break-down in the production process due to loss of any
parts of the machinery which requires immediate replacement in order to avoid
disruption in production.

It shall be given first priority over all their projects pending consideration with the
management without any delay. This capital budgeting method is very simple. The
urgent project or work may be undertaken first. But this is not a scientific method for
evaluating the economic worth of the project.

Defects:
The important defects of this method are as follows:

(a) This is not a Methodical Analysis:

The action taken may be correct in most cases which have been considered as
coincidence. Urgency cannot be a convincing influence in case where projected
outlay is large and far reaching in effect.

(b) Here, there is Role of Persuasion:

In this each department in charge persuades the top management to assign priority
for his department project. In this decisions are taken not on economic
consideration but on the basis of ‘Power of persuasion’ of the individual concerned.

Capital Budgeting Method # 2. First Year’s Performance Method:

In this the investment projects are evaluated on the basis of their impact on
evenness and expenses in the first year. If the increased revenue from added sales or
equipment exceeds the expenses resulting from the improved techniques or
equipment, the investment is accepted, otherwise it is rejected.

This capital budgeting method is simple though not popular. It takes into
consideration only the first year’s results and ignores subsequent revenues and the
value of money.

Capital Budgeting Method # 3. Pay Back Method:

This is also known as payoff, pay out or replacement period method. This is widely
recognised as traditional method of evaluating capital projects. It is based on the
principle that every capital expenditure pays itself back over a number of years, it
attempts to measure the period of time. Further, the pay-back period is that period
where the total earnings or net cash inflow from investment equals the total outlays.

Taking into account a number of considerations standard recoupment period is fixed

by the management. This period of recoupment of investment known as the
pay-back period is fixed by a Rule of Thumb. This period varies from 3 to 5 years.

This method is useful in evaluation of projects with high uncertainty caused by

political instability, rapid technological changes and quick limitation possibilities etc.
This makes it clear that no profit arises till the pay-back period is over:

Formula:

Pay Back Period = Original Investment/Annual Cash Flow

The calculation on pay-back period takes a cumulative form if the annual cash inflow
is uneven. The annual cash inflow is accumulated till the recovery of investment. An
asset or capital expenditure that pays back early is comparatively preferred.
Capital Budgeting Method # 4. Average Rate of Return Method:
This method is also known as:

(i) Accounting rate of return method, or

(ii) Financial statement method, or/as

(iii) Un-adjusted rate of return method.

In this capital projects is prepared in order of earnings, selecting projects which yield
the highest earnings and rejecting others.

This can be explained in the following ways:

(i) Average rate of return,

(ii) Earnings per unit of money invested,

(iii) Return on average amount of investment.

(i) Average Rate of Return:

Under this method all the earnings after depreciation are added and divided by the
project’s economic life. After this figure of average earnings over the period is
obtained it is divided by average investment over the period which is the simple
arithmetic mean of the values of assets of the beginning and end of the useful life of
the asset which is always zero at the latter point of time.

While adopting this method it should be kept in mind that average investment in a
project is always one half of the original investment.

Accepted Formulae is:

Thus, the average rate of return method considers whole earnings over the entire
life of the asset. A project which shows higher percentage of return will be
acceptable.

(ii) Earnings per Unit of Money Invested:

In this, the total net earnings are divided by the total investment to arrive at the
average rate of return per unit of amount invested in the project as per the formulae
written under:
This project deserves to be selected which has higher earnings per unit.

(ii) Return on Average Amount of Investment:

The percentage return on average amount of investment is calculated as per the

following formulae:

Or

When the equipment has no scrap value.

Here, Average Annual Net Income = Average Annual Cash Inflow – (minus)
Depreciation.

Capital Budgeting Method # 5. Present Value Method:

This method is also known as:

(a) The adjusted rate of return, or

(b) Internal rate of return method, or

(c) Required earning ratio.

This method has been recognised as the most meaningful techniques for financial
decisions regarding future commitments and projects. It is based on the assumption
that future rupee value cannot be returned or cash inflows with the amount of
investment or cash outflows, both must be stated on a present value basis if the
time value of money is to be given due importance.

There are four types of Present Value method:

(a) Net Present Value Method

(b) Internal Rate of Return Method

(c) Profitability Index Method

(d) Terminal Value Method.

(a) Net Present Value Method:

This is also called as Net Gain Method or Excess Present Value Method. It takes into
account all income whenever received. A required rate of return is assumed and a
comparison is made between the present value of cash flows at different times and
original investment order to determine the prospective profitability.

It is based on the principle that if the present value of cash inflow discounted at a
specified rate return equals or exceeds the amount of investment required the
investment proposal should be accepted.

(b) Internal Rate of Return Method:

This is also known as:

(i) Time Adjusted Rate of Return method

(ii) Yield Rate Method,

(iii) Investors Method,

(iv) Marginal Efficiency of Capital Method.

According to the National Association of Accounts U.S.A.; Time Adjusted Rate of

Return is the maximum rate of interest that could be paid for the capital employed
over the life of an investment without loss of the profit. In this method rate of
interest or discount is calculated.

Internal rate of return is the rate of interest or discount at which the present value of
expected cash flows is equal to the total investment outlay. This rate is usually found
by trial and error method. For example—Select an arbitrary rate of interest and find
the present value of cash flows during the life of investment at the selected rate.

(c) Profitability Index Method or Benefit Cash Ratio:

The present value profitability index is prepared to establish relationship between

cash-inflows and the amount of investment. In this, the higher the profitability index,
the more desirable is the investment. The index provides a ready compatibility
indices for various projects the financial manager can rank them in order to their
respective rates of profitability.
 (d) Terminal Value Method:

In this method, the timing of the cash flows and outflows are separated more
distinctly. It is assumed that each cash inflow is re-invested in another asset at a
certain rate of return from the moment, it is received until the termination of the
project.

Q2 Discusson about the importance of Cash Flow Analysis regarding

investment decision.

Ans: The cash flow statement is a financial report that records a company’s cash
inflows and outflows at a given time. It is one of the most essential elements in the
financial management of a company since it is an important indicator of the firm’s
liquidity.To prepare a cash flow statement, it is essential to have information on the
company’s income and disbursements. This information can be found in the
company’s accounting records and it is important to order them in such a way to be
able to determine the balance for the period (generally one month), and to estimate
future cash flows.If the balance is positive, it means that income for the period was
higher than disbursements (or expenses); if it is negative, it means that
disbursements were higher than income. According to the Inter-American
Investment Corporation (IIC), the importance of preparing a projected cash flow
statement is that it allows us to, for example:

 Anticipate future deficits (or lack of) cash, and hence make a financing
decision beforehand.
 Establish a solid base for requesting credit; for example, introduce it in our
business plan or project or management strategy.
 If we have accumulated positive balances in any period, part of this balance
can be invested in the capital market to generate an additional source of income.
This income is recorded as interest income in one of the income lines. It can also
be invested in technologies or equipment to improve the company’s management.

The cash flow statement is characterized by identifying and documenting what

effectively enters and exits the business, such as sales income or the payment of
accounts (disbursements). The cash flow does not use terms such as “profit” or “loss”
since it is not related to the income statement.

Income examples: income from sales, debt collection, leases, collection of loans,
interest, etc.

Expenses or cash disbursements: invoice payments, tax payments, salary payments,

loans, interest, debt write-offs, water or electricity services, etc.
 The importance of the cash flow statement is that it allows us to rapidly know the
company’s liquidity, delivering key information that helps make the following
decisions:
 How much input can we buy?
 Can we purchase in cash or is it necessary to request credit?
 Should we collect in cash or can we grant credit?
 Can we pay off debts when due or must we ask for refinancing?
HR Specialization (Minor)
HR 302 : HR Metrics and Analytics

Q1 Write about different modules of HR Operations like – HR Planning, Hiring,

Learning and Development, Performance Management, Compensation & Rewards,
Employee Engagement.
Ans: The different modules of HR Operations:
HR Planning: Human resource planning (HRP) is the continuous process of
systematic planning ahead to achieve optimum use of an organization's most
valuable asset—quality employees. Human resources planning ensures the best fit
between employees and jobs while avoiding manpower shortages or surpluses.

There are four key steps of the HRP process. They include analyzing present labor
supply, forecasting labor demand, balancing projected labor demand with supply,
and supporting organizational goals.

HRP helps companies is an important investment for any business as it allows

companies to remain both productive and profitable.

Hiring: Recruitment is the process of identifying and hiring the most suited candidate
for a job vacancy. This process involves shortlisting the best suited candidate for the
job role. When a vacancy arises in the organisation, the human resource department
have to spread the word about the vacancy being present, attract eligible individuals
to apply for the post, once the applications have been received thoughtful screening
of these applications takes place, of which the deserving candidates shall be called
for the interview process, amongst them the top shortlisted shall be considered for
the job role.
The recruitment process is highly complex and should not be carried out manually in
organisations. In today’s fast moving world it is difficult to hire the right talent, and
in case already found the right candidate for the role to retain the same. With the
changing times the solution for recruitment is also expected to be change and be as
comprehensive, collaborative, responsive, predictive and usable on the go.
Learning and Development: Learning and development, a subset of HR, aims to
improve group and individual performance by increasing and honing skills and
knowledge. Learning and development, often called training and development,
forms part of an organisation’s talent management strategy and is designed to align
group and individual goals and performance with the organisation’s overall vision
and goals. On a practical level, individuals responsible for talent development must
identify skills gaps among groups and teams (often through SMART objectives,
one-to-one interviews and performance appraisals) and then finding suitable
training to fill these gaps.

Performance Management- Performance management is an ongoing process

of communication between a supervisor and an employee that occurs throughout
the year, in support of accomplishing the strategic objectives of the organization.
The communication process includes clarifying expectations, setting objectives,
identifying goals, providing feedback, and reviewing results.

Compensation & Rewards- Compensation management is a strategic

matter.Compensation would include rewards when you offer monetary payment
such as incentives, various bonuses and performance bonus. Organisations reward
their staff when they attain the goals or targets that they have jointly set with the
employees.Rewards can be non-monetary such as a paid vacation for two.When we
mention about compensation, we would refer to a salary scale for different levels.
Generally, we would classify the salary scale into non-executive, executive and
managerial before the salary range is established.

Employee Engagement- Employee engagement is a workplace method designed

to improve an employee’s feelings and emotional attachment to the company, their
job duties, position within the company, their fellow employees, and the company
culture. HR departments can use employee engagement tactics to boost wellbeing
and productivity across all company levels.

Through various measures, initiatives, and approaches, employee engagement

encourages all members of a company to put their best foot forward, day in and day
out. Employee engagement in HR also helps to ensure that each and every employee
is fully committed to the company’s mission, goals, and values and that they remain
encouraged and inspired to contribute the overall success of the business. At the
foundation of all employee engagement tactics is the intent to enhance the
well-being of each and every employee.

Q2 How Information Technology plays important roles in Human Resource

Management?
Ans: Living in such a fast paced society, technology is ever changing. With
developments such as ATM machines, self checkout registers, and online shopping,
technology has always been evolving to make our lives better and easier. This
statement can be said for all business industries, as well as in our everyday lives.

For the human resources industry in specific, HR technology is used to attract, hire,
retain and maintain talent, support workforce administration, and optimize
workforce management. The goal from automating the following functions is to help
managers work faster and more efficiently. HR technology is used by managers,
employees, HR professionals, IT and operations departments all in different ways to
improve the way they do business.

Implementing HR technology within an organization enables managers to gather,

collect, and deliver information, as well as communicate with employees more easily
and efficiently. Automating certain business processes can greatly reduce the
amount of administrative work and allow managers to focus more of their time and
energy on managing their workforce. HR technology also provides managers with the
necessary decision making tools to allow them to make more effective HR-related
decisions.

Achieving a strong relationship between HR and technology can help companies

achieve the following key objectives.

1. Strategic alignment with the business objectives

2. Business intelligence – providing users with up to date, relevant data and

reports

3. Effectiveness and efficiency – changing how HR work is performed by

reducing lead times, costs, and service levels.

Overall, HR technology provides managers with decision making tools to help

manage costs and enables them to reduce the time spent on administrative and legal
compliance work, while maintaining an efficient and effective workforce to deliver
quality service.

HR 304 : Organisational Design

Q1 Discuss Boundary Less Organization.
Ans: While traditional organizational structures have defined vertical and horizontal
borders and hierarchies, boundary less organisations are defined specifically by a
lack of structures and an approach to business that is based on the free flow of
information and ideas to drive innovation, efficiency and growth in a world that’s
constantly changing. The concept was pioneered by well-known management
thinker and former General Electric chairman Jack Welch, who wanted to break
down existing barriers between different parts. Adaptability and flexibility are
important criteria of boundary less organisations.
Boundary less organizations will often make use of the latest technology and tools to
facilitate the breaking down of traditional borders, such as virtual collaboration and
flexible working. With regard to employees, they may have more responsibility for
their own projects and targets and be more able to achieve results in a way that’s
appropriate for the project at hand. Because many boundaryless organizations are
dispersed across geographic borders, employees may be from different cultures and
countries but must work together.
Q2. How does globelizations change the
organizational design?

Ans: The world's economy is increasingly integrated, in which – to cite a famous

example – a butterfly's wings in Brazil can affect a tornado in Kansas. We are now,
more than ever before, "a piece of the continent, a part of the main," and what
happens anywhere in the world eventually affects us. If you own a small U.S.
business, this requires that your approach to business include an awareness of global
trade, an understanding of how it affects your business and strategies for your
business that include global markets.
Globalization is the increasing internationalization of national economies. The
automobile industry serves as a clear, well-understood example. At one time,
imports of foreign cars into the U.S. were relatively rare and were regarded as
exotic. In the 21st century, many well-known brands – Fiat-Chrysler, for instance –
have management, manufacturing and sales divisions in several countries.
The Significance of Globalization for Small Business
As indicated by the stock market's response to a feared trade-war between the U.S.
and China, nearly every business is affected by global events – even if the business is
located entirely in the U.S. When the Chinese responded to the Trump
administration's tariff increases, they targeted businesses in the so-called "Red
States" – the same states whose voters favored Trump in the 2016 election.
If you have a pig farm in North Carolina, the threatened Chinese 25-percent tariff on
pork imports directly hurts your business. But, as your exports decrease – bringing
down profits with it – you, as well as other farmers, will be less able to afford new
equipment. This affects American farm machinery manufacturers, such as Georgia
farm equipment manufacturer AGCO, and all of its suppliers. These suppliers include
the same U.S. steel manufacturers the Trump administration's tariffs were designed
to protect.
This tariff also affects Italian farm equipment manufacturer CNH Global, which sells
into the American market. Not to belabor the point, but this serially affects all of
CNH Global's suppliers worldwide and all the companies that sell services and goods
to those suppliers. A single large trade event – in this instance the threatened
trade-war between the U.S. and China – is immediately felt all over the globe. The
butterfly can be felt globally.

MB 301: Entrepreneurship and Project Management

Q1 What are the major problems faced by the management during Project Life Cycle.
Ans: Every project is different and unique – however projects that fail usually do so as a
result of similar types of problems. Finding examples of failed projects is not difficult,
but making a fair assessment of the issues that caused failure may not be quite as
easy. Projects can be completed on time and within budget and still fail – if a project
does not deliver the expected results and quality, it can hardly be judged as
successful. We’re taking a look at the ten most common problems that derail projects.

1. Poor Planning – includes not prioritizing effectively, not having a proper

business plan, not breaking down the development into phases.

2. Lack of Leadership – If the Project Manager lacks the relevant

business/management expertise this will lead to poor decision making.
3. People Problems – leads to unresolved conflicts which could have a detrimental
effect on the project. A Project Manager needs expert communication skills to keep
everybody on board and in agreement.

4. Vague/Changing Requirements – it’s essential that the project requirements

are defined clearly and completely from the start. Change requests can cause the
project to drift and miss deadlines.

5. Lifecycle Problems – often caused by poor planning or changing

requirements. Initial testing techniques should be rigorous in order to avoid repeated
errors.

6. Inefficient Communication Process – it’s vital to keep everybody informed on

the project status at all times. Lack of efficient communication will lead to errors and
delays.

7. Inadequate Funding – this issue is most likely to affect projects with changing
requirements.

8. Stakeholder Approval – effective stakeholder management is the ability to

identify individuals affected by/likely to affect the successful outcome of the project. A
skilled project manager will ensure a collaborative working environment where project
phases can be analyzed and discussed by all stakeholders.

9. Schedule absence – no Established Schedule for tasks, operational activities

and objectives.

10. Missed Deadlines – delays in phases of the project leading to a missed

deadline for the project.

Q2 What is the Gantt Chart? How CPM and PERT analysis related with Project Planning?

Ans: A gantt chart is a horizontal bar chart that visually represents a

project plan over time. Modern gantt charts typically show you the status
of—as well as who’s responsible for—each task in the project.In other
words, a gantt chart is a super-simple way to keep you out of a project
pinch!

PERT and CPM: Techniques of Project Management (Advantages

and Disadvantages)!
PERT and CPM are techniques of project management useful in the basic
managerial functions of planning, scheduling and control. PERT stands for
“Programme Evaluation & Review Technique” and CPM are the abbreviation
for “Critical Path Method”. These days the projects undertaken by business
houses are very large and take a number of years before commercial
production can start.

The techniques of PERT and CPM help greatly in completing the various jobs
on schedule. They minimise production delays, interruptions and conflicts.
These techniques are very helpful in coordinating various jobs of the total
project and thereby expedite and achieve completion of project on time.

PERT is a sophisticated tool used in planning, schedu ling and controlling

large projects consisting of a number of activities independent of one another
and with uncertain completion times. It is commonly used in research and
development projects.
The following steps are required for using CPM and PERT for
planning and scheduling:
(i) Each project consists of several independent jobs or activities. All
these jobs or activities must be separately listed. It is important to
identify and distinguish the various activities required for the
completion of the project and list them separately.

(ii) Once the list of various activities is ready the order of precedence for
these jobs has to be determined. We must see which jobs have to be
completed before others can be started. Obviously, certain jobs will have to
be done first.

Many jobs may be done simultaneously and certain jobs will be dependent
upon the successful completion of the earlier jobs. All these relationships
between the various jobs have to be clearly laid down.

(iii) The next step is to draw a picture or a graph which portrays each of these
jobs and shows the predecessor and successor relations among them. It shows
which job comes first and which next. It also shows the time required for
completion of various jobs. This is known as the project graph or the arrow
diagram.

The three steps given above can be understood with the help of an example.
Suppose, we want to construct a project graph of the simple project of
preparing a budget for a large manufacturing firm. The managing director of
this company wants his operating budget for the next year prepared as soon as
possible.

To accomplish this project, the company salesmen must provide sales

estimates in units for the period to the sales manager. The sales manager
would consolidate this data and give it to the production manager.

He would also estimate market prices of the sales and give the total value of
sales schedules of the units to be produced and assign machines for their
manufacture. He would also plan the requirements of labour and other inputs
and give all these schedules together with the number of units to be produced
to the accounts manager who would provide cost of production data to the
budget officer.
 MB 302 : Corporate Strategy
Q1 Briefly discuss BCG Matrix and Portfolio Management.

Ans: The Boston Consulting Group (BCG) growth-share matrix is a

planning tool that uses graphical representations of a company’s
products and services in an effort to help the company decide what it
should keep, sell, or invest more in.

The matrix plots a company’s offerings in a four square matrix, with the
y-axis representing the rate of market growth and the x-axis representing
market share. It was developed by the Boston Consulting Group in 1970.

The BCG growth-share matrix breaks down products into four categories:
dogs, cash cows, stars, and “question marks.” Each quadrant has its
own set of characteristics. See below:

Dogs (or Pets)

If a company’s product has a low market share and is in a low rate of
growth, it is considered a “dog” and should be sold, liquidated, or
repositioned. Dogs, found in the lower right quadrant of the grid, don't
generate much cash for the company since they have low market share
and little to no growth. Because of this, dogs can turn out to be cash
traps, tying up company funds for long periods of time. For this reason,
they are prime candidates for divestiture.

Cash Cows
Products that are in low-growth areas but for which the company has a
relatively large market share are considered “cash cows,” and the
company should thus milk the cash cow for as long as it can. Cash cows,
seen in the lower left quadrant, are typically leading products in markets
that are mature.

Generally, these products generate returns that are higher than the
market's growth rate and sustain themselves from a cash flow
perspective. These products should be taken advantage of for as long as
possible. The value of cash cows can be easily calculated since their
cash flow patterns are highly predictable. In effect, low-growth,
high-share cash cows should be milked for cash to reinvest in
high-growth, high-share “stars” with high future potential.

Stars
Products that are in high growth markets and that make up a sizable
portion of that market are considered “stars” and should be invested in
more. In the upper left quadrant are stars, which generate high income
but also consume large amounts of company cash. If a star can remain a
market leader, it eventually becomes a cash cow when the market's
overall growth rate declines.

Question Marks
Questionable opportunities are those in high growth rate markets but in
which the company does not maintain a large market share. Question
marks are in the upper right portion of the grid. They typically grow fast
but consume large amounts of company resources. Products in this
quadrant should be analyzed frequently and closely to see if they are
worth maintaining.

Q2 Discuss the Strategic actions for Mergers, Acquisitions, Diversifications, Joint

Ventures and De-Mergers.

Ans: Merger and Acquisition Strategy Process

The merger and acquisition strategies may differ from company to company and also
depend a lot on the policy of the respective organization. However, merger and acquisition
strategies have got some distinct process, based on which, the strategies are devised.

Determine Business Plan Drivers

Merger and acquisition strategies are deduced from the strategic business plan of the
organization. So, in merger and acquisition strategies, you firstly need to find out the way to
accelerate your strategic business plan through the M&A. You need to transform the
strategic business plan of your organization into a set of drivers, which your merger and
acquisition strategies would address.

While chalking out strategies, you need to consider the points like the markets of your
intended business, the market share that you are eyeing for in each market, the products
and technologies that you would require, the geographic locations where you would
operate your business in, the skills and resources that you would require, the financial
targets, and the risk amount etc.

Determine Acquisition Financing Constraints

Now, you need to find out if there are any financial constraints for supporting the
acquisition. Funds for acquisitions may come through various ways like cash, debt, public
and private equities, PIPEs, minority investments, earn outs etc. You need to consider a
few facts like the availability of untapped credit facilities, surplus cash, or untapped equity,
the amount of new equity and new debt that your organization can raise etc. You also need
to calculate the amount of returns that you must achieve.

Develop Acquisition Candidate List

Now you have to identify the specific companies (private and public) that you are eyeing for
acquisition. You can identify those by market research, public stock research, referrals
from board members, investment bankers, investors and attorneys, and even
recommendations from your employees. You also need to develop summary profile for
every company.
Build Preliminary Valuation Models

This stage is to calculate the initial estimated acquisition cost, the estimated returns etc.
Many organizations have their own formats for presenting preliminary valuation.

Rate/Rank Acquisition Candidates

Rate or rank the acquisition candidates according to their impact on business and
feasibility of closing the deal. This process will help you in understanding the relative
impacts of the acquisitions.

Review and Approve the Strategy

This is the time to review and approve your merger and acquisition strategies. You need to
find out whether all the critical stakeholders like board members, investors etc. agree with it
or not. If everyone gives their nods on the strategies, you can go ahead with the merger or
acquisition.

 Diversification strategies are used to expand firms' operations by adding

markets, products, services, or stages of production to the existing business.
The purpose of diversification is to allow the company to enter lines of business
that are different from current operations. When the new venture is strategically
related to the existing lines of business, it is called concentric diversification.
Conglomerate diversification occurs when there is no common thread of
strategic fit or relationship between the new and old lines of business; the new
and old businesses are unrelated.
Diversification is a form of growth strategy. Growth strategies involve a
significant increase in performance objectives (usually sales or market share)
beyond past levels of performance. Many organizations pursue one or more
types of growth strategies. One of the primary reasons is the view held by many
investors and executives that "bigger is better." Growth in sales is often used as
a measure of performance. Even if profits remain stable or decline, an increase
in sales satisfies many people. The assumption is often made that if sales
increase, profits will eventually follow.There are many reasons for pursuing a
diversification strategy, but most pertain to management's desire for the
organization to grow. Companies must decide whether they want to diversify by
going into related or unrelated businesses. They must then decide whether
they want to expand by developing the new business or by buying an ongoing
business. Finally, management must decide at what stage in the production
process they wish to diversify.

A strategic joint venture is a business agreement that is actively

engaged by two companies who make a concerted decision to
work together to achieve a specific set of goals.
 Joint ventures are instrumental in helping companies establish a
presence in a foreign country or gain a competitive advantage in a
particular market,
 Joint ventures have helped numerous companies achieve access
to emerging markets that they would otherwise have difficulty
breaking into.
Some strategic joint ventures are structured to dissolve when a project is
completed or an objective is met. All strategic joint ventures have
separate liability from their founding member companies and can be
sued—or bring litigation against another party.

A de-merger is a corporate restructuring in which a business is broken

into components, either to operate on their own, to be sold or to be
liquidated. A de-merger (or "demerger") allows a large company, such
as a conglomerate, to split off its various brands or business units to
invite or prevent an acquisition, to raise capital by selling off components
that are no longer part of the business's core product line, or to create
separate legal entities to handle different operations.

De-mergers are a valuable strategy for companies that want to refocus

on their most profitable units, reduce risk, and create greater
shareholder value. Analysts tend to discount parent companies that hold
multiple subsidiaries by roughly 15-30% due to less than transparent
capital allocation. De-merging also affords companies the ability to have
specialists manage specific business units or brands rather than
generalists. It is also a good strategy for separating out business units
that are underperforming and creating a drag on overall company
performance. De-mergers can create some complicated accounting
issues but can be used to create tax benefits or other efficiencies.
Government intervention, such as to break up a monopoly, can spur a
de-merger.
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