DIVERSIFIED CRISIS

A UK-based conglomerate facing financial hurdles across its

diverse sectors is seeking a strategic shift through US market entry.
To ensure a well-informed decision, they employ a meticulous
evaluation process that blends qualitative and quantitative data
to pinpoint the most promising sector for their expansion. This
strategic move aims to revitalise their financial health and propel
them towards future success.

Sectors under Consideration

Real Estate IT FMCG Healthcare

Key Results

Investment Operational Market Regulatory

Potential Efficiency Liquidity Landscape

Methodology

1. Qualitative Analysis and KRA Scores:

1.1. Review and analyze qualitative statements for each sector

(Industrial Products, Real Estate, Manufacturing, Operations &
Engineering).

1.2. Assign Key Result Area (KRA) scores for each sector based on
the qualitative evaluation. Utilize the scale
 Statement Weight

Higly favouable 5

Favourable 4

Neutral 3

Unfavourable 2

Highly Unfavourable 1

1.3. Calculate the average Sector Score using the formula:

Sector Score = (KRA1 + KRA2 + KRA3 + KRA4) / 4

2. Multiplier Calculation:

2.1. Determine the Industry Growth Multiplier (IGM) and Industry

Stability Multiplier (ISM) for each sector. (Formula Given Later in
the Doc)

2.2. Allocate a percentage out of a pool of 100% to each of the four

sectors based on the assumption that these sectors constitute
100% of the USA's GDP
 3. CAGR and Stability Index Calculation:

3.1. Calculate the Compound Annual Growth Rate (CAGR) for

each sector using the formula provided.

3.2. Compute the Stability Index for each sector based on the
given formula. (This formula will be provided separately)

3.3. Multiply the CAGR with the respective Sector Score to obtain
the IGM for each sector:
IGM = CAGR*Sector Score

3.4. Multiply the Stability Index with the Sector Score to obtain the
ISM for each sector:
ISM = Stability Index * Sector Score

4. Final Score Calculation:

4.1. Sum the IGM and ISM for each sector to obtain the Final Score
Final Score = IGM + ISM

KRA
GDP
Scor Stabil
Cont CAG Final
Sector es ity IGM ISM
ribut R Score
(Av Index
ion
g)

Health
care

Techno
logy

Real
Estate

FMCG

By completing these calculations for each sector, you will have a

comprehensive set of values to fill out the table and make informed
investment decisions.
Key Result Areas (KRAs)

Healthcare:
1. Investment Potential (IP): An ageing population and rising
healthcare needs point towards sustained long-term growth, but
navigating regulatory hurdles will be crucial.

2. Regulatory Landscape (RL): The American healthcare sector

boasts substantial medical research, technology, and
pharmaceutical advancements, driving significant growth.
However, rising costs, accessibility issues, and an ageing
population necessitate strategic solutions.

3. Market Liquidity (ML): The healthcare sector generally exhibits

favorable liquidity. Large-cap healthcare companies often have
high trading volumes and readily available shares, making it easier
for investors to enter and exit positions.

4. Operational Efficiency (OE): Ageing infrastructure, high

administrative costs, and workforce shortages hinder efficiency.

Technology:
1. Investment Potential (IP): Rapid innovation and technological
advancements offer significant growth potential, although intense
competition and data privacy concerns need to be addressed.

2. Regulatory Landscape (RL): America's leading role in

technological innovation and development, supported by a thriving
tech industry and skilled professionals, generates substantial
growth potential.

3.Market Liquidity (ML): The technology sector typically enjoys

highly favorable liquidity. Many tech companies are large-cap and
highly followed, resulting in significant trading volumes and tight
bid-ask spreads. This makes it easier for investors to trade in and
out of these stocks.

4. Operational Efficiency (OE): Continuous innovation,

automation, and focus on streamlining processes contribute to
high efficiency
 Real Estate:
1. Investment Potential (IP): Established markets provide stable
cash flow through consistent demands, yet adapting to economic
fluctuations and changing consumer preferences is essential.

2. Regulatory Landscape (RL): Vast and diverse nature of the

American real estate market presents numerous investment and
growth opportunities. Nonetheless, affordability concerns, rising
interest rates, and potential economic downturns demand
proactive planning.

3.Market Liquidity (ML): Real estate investment and trusts (REITs)

within the sector can offer a medium of liquidity. While some REITs
trade actively, others may have lower trading volumes, especially
smaller or niche players. Additionally, some real estate investments,
like physical properties, are inherently less liquid compared to
stocks.

4. Operational Efficiency (OE): A fragmented market, complex

regulations, and reliance on manual processes can limit efficiency.

FMCG:
1. Investment Potential (IP): Mature and potentially overvalued
markets offer limited growth potential, necessitating a focus on
exploring new avenues for expansion and innovation.

2. Regulatory Landscape (RL): The American FMCG market,

characterized by established brands and a diverse consumer base,
offers a solid foundation for growth. However, evolving consumer
preferences, competition from private labels, and potential supply
chain disruptions necessitate ongoing adaptation.

3. Market Liquidity (ML): The fast-moving consumer goods

(FMCG) sector generally demonstrates favourable liquidity. Many
FMCG companies are established and well-known, leading to
hightradingvolumesand readily available shares for investors.

4. Operational Efficiency (OE): Established supply chains,

economies of scale, and investments in automation lead to high
efficiency.
Multipliers

Multiplier Calculation Flow: IGM and ISM with Growth

Trajectory Weighting

Step 1: Assign Percentage from Growth Trajectory Pool

Review the previous growth trajectory of each sector.

Allocate a percentage from a pool of 100% to each sector
based on its historical growth performance and the
statements given. This allocation should be subjective and
based on the participant's assessment of growth potential.
They also have to assess the qualitative statements which
will affect the current year GDP weightage of each sector.

Step 2: CAGR Calculation (Industry Growth Multiplier- IGM)

2.1. CAGR Calculation:

The Compound Annual Growth Rate (CAGR) reflects the

average growth rate of an investment over a specific
period. It is calculated using the following formula for each
sector:

Normalize the calculated CAGR to a 0-5 scale:

IGM is derived from the normalized CAGR, reflecting the

growth potential of each sector.

Step 3: Stability Index Calculation (Industry Stability

Multiplier- ISM)
Use the Standard deviation formula for a sample to calculate
the Stability Index:
SQRT(Σ(x- μ)^2 / (n- 1)),where:
Σ(sigma) represents the sum.
x is each data point.
μ(mu) is the average of the data points.
n is the number of data points.
 Month
ly
Year 1 Year 2 Year 3 Year
Perfor
GDP GDP GDP 4 GDP Curre
manc
Sector Contri Contri Contri Contri nt
e Data
bution bution bution bution Year
(Hypo
(%) (%) (%) (%)
thetic
al)

[100,
102, 98,
101, 99,
103,
Health
24 25 26 25.5 105,
care
104, 97,
102,
100,
106]

[120,
125, 118,
123, 121,
127,
Techn
28 30 32 31.5 130,
ology
128, 119,
124,
122,
132]

[80,
82, 78,
81, 79,
Real
22 21 20 20.5 83, 85,
Estate
84, 77,
82, 80,
86]

[90,
92, 88,
91, 89,
FMCG 26 24 22 22.5 93, 95,
94, 87,
92, 90,
96]
 Qualitative Statements:

Healthcare:
While the healthcare sector has shown consistent growth,
recent advancements in medical technology may lead to
increased competition and disrupt market stability, impacting
future growth.

Technology:
Despite consistent historical growth, the technology sector is
known for its volatility and susceptible to rapid changes in
consumer trends and regulations. This uncertainty makes
future growth prediction challenging.

Real Estate:
Although the real estate sector has shown a slight decline, a
recent surge in demand for remote work setups could lead to
a renewed interest in specific property types, potentially
triggering an unexpected turnaround.

FMCG:
While the FMCG sector has faced recent challenges, a growing
focus on sustainability and ethical sourcing among
consumers could create new opportunities for brands with
strong social and environmental commitments, potentially
boosting growth

Sector IGM ISM Final Score

Stability
Heaalthcare CAGR*Sector Score IGM+ISM
Index*Sector Score

Stability
Technology CAGR*Sector Score IGM+ISM
Index*Sector Score

Stability
Real Estate CAGR*Sector Score IGM+ISM
Index*Sector Score

Stability
FMCG CAGR*Sector Score IGM+ISM
Index*Sector Score