Presentation On

Tools 73 to 77 of
100 Business Tools
By
Sheikh Md Siyam
 TOOL NO. 73

MAPPING AND MITIGATING RISK

MAPPING RISK
QUANTIFYING POTENTIAL RISKS
 TOOL NO. 74

SHAREHOLDER VALUE ANALYSIS

PROPOSED BY: ALFRED RAPPAPORT
 We Need to Focus on
Consistently increasing the value of A business for shareholders

Formulas:

1. Return = (Total Net Worth – Liabilities) ÷ Number of Shares

2. Shareholder Value= Equity Return – Cost

 Importance of Shareholder Value Analysis

* Determining Company’s Direction

* Evaluating progress
* Dealing with long-term profit forecasts
 Limitations

• It involves painstaking assessment, valuation and analysis – these take

considerable time and money.
• Predictions about future cash flows and costs can never be accurate.
• It can skew strategy to only considering shareholder value as a measure of worth.
Not all value in a company lies in its return to shareholders such as corporate social
responsibility, customers and employees.
 TOOL NO. 75

SIX LEVELS OF STRATEGIC

AGILITY AND COST CONTROL
6 LEVELS OF COST-CUTTING
EXAMPLE
 TOOL NO. 76

DISCOUNTED CASH-FLOW
ANALYSIS
 3 Considerable Questions
at Taking New Investment Decision

* Is the risk worth the investment?

* Are there other projects that would be
more lucrative?
* Will the return, over the estimated
timescale, outdo inflation?
 5 STEPS OF
DISCOUNTED CASH-FLOW ANALYSIS

1. Identifying exactly how the investment will be used – including the timing
of all costs and likely sales.
2. Determining both the positive and negative cash flows over time.
3. Estimating the cash flow for when the project has been fully implemented.
4. Applying the discounted cash-flow figure. This will reveal how much risk is
involved, the cost of loans and impact of inflation.
5. Comparing discounted cash flow with each year of operations to decide
whether the returns justify the investment.
 TOOL NO. 77

ECONOMIES OF SCALE
 Economics of Scale
(The Increment of Profit Margins by Decreasing the Average Cost)
THE BENEFITS OF
ECONOMIES OF SCALE

• boost profitability
• may lead to price reductions
• enable resources to be used efficiently
• optimize output
• emphasize a focus on costs
• enable us to question current methods
and look for improvements.
THANKS TO EVERYONE