HASAN DOSANI NOTES Flashcards
Context of Change ModeL
Scope:
Means SIZE of the change.
Is it a small change (Realignment) or a big change (Transformation)
Big Change: If the change affects senior management / culture, business model or core business strategy, then
it is a big change (transformation), otherwise its small change (transformation)
▪ Reason:
The reason / justification for bringing the change
▪ Timing:
When the change will be implemented from?
Urgently or Immediately (Big Bang) or slowly and gradually (incremental)
▪ Capacity / Resources:
Does the Org has the required resources, such as Human Resource, Financial Resource, Technology, etc.
▪ Capability:
Has the Org implemented such change in the past or is it the first time (prior experience)
▪ Power
The change manager (person implementing the change) should have sufficient power and authority to
implement decisions
▪ Preservation:
Strengths from ‘existing environment’ needs to be retained
▪ Readiness:
Are the employees ready to accept the change or will there be significant resistance
▪ Resistance:
Who will be the people or stake holders who will resist the change, reason for resistance, how you would
handle those people / stakeholders
risk management strategies
Transference: Transfer risk to third party, e.g. insurance, outsourcing or franchising
Avoidance: Eliminate risk by totally avoiding activities which causes risk
Reduction: Reduce the impact and probability of the risk by implementing controls
Acceptance: Accept the consequence of the risk, should it happen. Normally adopted for small risks
Financial projections checklist
-Discounted Cash Flow method must be used
-using a sensible discount rate, risk element must be incorporated
-NPV should be positive
-Calculate ‘Simple’ payback period = investment/ inflows
-Review assumptions see if they are realistic
(and mention in your answer that the adequacy of the assumptions needs to be re-validated)
-ask breakup and basis of assumptions
-Mention in your answer that “tax implications” needs to be considered (if any)
-Mention in your answer that a “sensitivity analysis” should be done
factors to decide which source of finance to use
▪ Purpose and amount
▪ Duration of requirement
▪ Equity financing:
o variable cost i.e. dividend are paid if company makes profit
o dilution in ownership
o No collateral is required
o No affect on gearing level
o May affect the culture or strategies of the company due to presence of outsiders
▪ Debt financing:
o Cost of fixed i.e. Interest not linked with business profitability
o Does not affect the ownership or culture of the company
o Require collaterals
o Affects or depends on current gearing level
3 things to remember about budgets
1- Flexed Budget
▪ You CANNOT compare Actuals numbers directly with Budgeted numbers because actual volumes are normally
different than budgeted volumes
▪ Whenever Actual numbers are given, you first calculate FLEXED budget and then you compare with Actuals
2- Compare Actuals With
▪ FLEXED Budget
▪ Prior Year Actuals
3- Reasons for Variances should be explained
project
Project
A project is a one-off special activity which is other than organization’s usual day-to-day operations or business
post project review
How the project was managed? Focuses on mistakes and lessons learnt for future projects
Post implementation review
Whether project objectives were achieved? Focuses on determining whether the project was successful or not
business case
▪ A business case provides justification for undertaking a project
▪ It is prepared by the Project Sponsor and presented to the Board for approval
Content of a Business Case
▪ Current situation:
✓ identify and analyse the problem
▪ Evaluate Various Options:
✓ Pros and cons for each option
✓ Feasibility analysis for each option (human resource, financial resource, technical resource)
✓ Risks & constraints
▪ Selected option:
✓ Justification
project initiation document
▪ prepared after business case is approved
▪ prepared by the Project Sponsor to communicate details of the project with Project Manager & Project Team
▪ includes objective, and summary of the Business Case so that the Project Manager & Project Team can understand what is expected from them
Contents of a PID
▪ introduction
▪ objective and scope
▪ Cost and Benefit Analysis
▪ Key stakeholders
▪ Project timelines
▪ Project Risks (e.g. quality, timeline, costs)
▪ Project Constraints (human resource / expertise, financial resource, technical resource)
▪ Major assumptions used
▪ Project monitoring and reporting procedures
ROLE OF PROJECT BOARD / COMMITTEE
▪ Ensure Business Case is justified
▪ Approve the Business Case
▪ Approve major decisions and oversight of the project
ROLE OF PROJECT SPONSOR
-define scope
▪ leadership and guidance to project manager
▪ Arrange resources
▪ Monitoring progress
▪ Problem solving
▪ Accountable to the Project Board / Committee
ROLE OF PROJECT MANAGER
▪ Detailed project planning and execution
▪ Day to day running of the project
▪ Monitoring of the project team
▪ Ensuring project is on track (with deadlines)
▪ Accountable to the Project Sponsor
Advantages of E Business: and disadvantages
-integrating e biz tech in business processes can help speed up response times and business times
-website can be linked with customer database and provide insights
-2 way interaction, customisation, dialogue
▪ No geographical limitations, More revenue (globalization) amd business opportunities
▪ Lower costs (e.g. less physical locations / fewer staff)
▪ Customer convenience (faster response times and delivery times
▪ Improved marketing, as wider audience
-websites can be linked with customer databases and provide much greater insights into customer buying behaviour and needs.
Disadvantages
The nature of the business means that face‐to‐face contact is crucial in moving customers from awareness to action (AIDA – awareness, interest, desire and action). There are therefore limits to the ability of e‐business to replace such contact.
disadvantages
▪ Not all customers use internet
▪ One-time setup cost:
✓ Hardware cost
✓ S/W license cost
✓ Website development
✓ Increasing IT Staff
✓ Integration with current systems
▪ Security risks
✓ Hacking
✓ Virus
✓ Cyber fraud / crimes
✓ Data privacy
▪ Legal complexity due to globalization
▪ Redundancy costs
adv disadv of big data
Advantages (Opportunities) of Big Data
▪ Deeper insight into data
▪ Better marketing and pricing strategies
▪ Improved customer service and relationship
▪ Increased competitiveness
▪ Development of customized / personalized products
▪ New sources of revenue
Disadvantages (Threats) of Big Data
▪ Data security / leakage
▪ Data storage and management issues (hardware and software)
▪ Costly
▪ Legal issues / regulations
Customer Relationship Management (CRM)
CRM are specialized software to maintain customer relationship through regular communication with customers electronically
Customer Acquisition :
▪ Collect email data
▪ Sending relevant emails and articles
▪ Sending Demos / Videos
Customer Retention
▪ Reminders / notifications
▪ Order placing and tracking
▪ Auto payments
▪ Reports and summaries
adv of CRM
▪ Better interaction / communication with customer
▪ Marketing and relationship building (emails, notifications, individualization)
▪ Sales management (inquiries, order placing, order tracking, auto payments)
▪ After sales service (feedbacks, complaints, reminders, FAQs)
▪ Analysis (trend analysis, data mining, intelligence, big data)
IT RISKS AND SECURITY- HARDWARE
RISK
Unauthorized access to servers
▪ Damage / malfunction
▪ Theft
▪ Power failure
▪ Fire / Flood / Earthquak
SECURITY
Physical access controls:
o Security Guards
o Biometrics
o Swipe cards
o CC TVs
▪ Fire protection
▪ Generators / Power supply alternates
RISKS AND SECURITY FOR DATA/ SOFTWARE
RISKS
▪ Unauthorized access
▪ Hacking
▪ Virus
▪ Cybercrimes / frauds
▪ Data loss
▪ Software malfunction / errors
SECURITY
▪ Logical access controls (passwords):
o Atleast 8 digit (Alpa numeric character)
o Change regularly
o Don’t write or share with anyone
o Lock down after 3 incorrect attempts
o OTP (One Time Password)
▪ Backups
▪ Firewalls
▪ Audit Trails
▪ Anti virus
▪ Segregation of duties
IMPORTANCE OF IT SECURITY
▪ Business disruption
▪ Reputational issues
▪ Loss of customers / revenue / market share
▪ Legal cases by customers
▪ Regulatory fines (e.g. breach of Data Protection Act)
▪ Incorrect decision making based on erroneous data
chairman role and responsibilities
Main role: Running the Board
▪ Link between company and shareholders / stakeholders
▪ Communication with shareholders (e.g. Annual Report)
▪ Protect shareholder interests and increase long term shareholder wealth
▪ Ensure smooth running of board, such as:
Appropriate size, knowledge, skills, experience, and independence of directors
Balance between executive and non-executive directors
Effective functioning of Board Committees
Regular meetings
Directors’ nomination, performance and remuneration
CEO role and responsibility
Main role: Running the Company
▪ Propose strategies to the board
▪ Implement decisions of the Board
▪ Monitor day to day running of business and all departments
▪ Manage resources effectively and efficiently
▪ Risk management and internal control systems
▪ Timely and accurate reporting
▪ Legal and regulatory compliance
▪ Interact with external parties, such as Government, key customers, key suppliers, Stock Exchanges
Splitting of Roles Between Chairman & CEO
The Chairman runs the Board. The CEO runs the company. The running of the Board should be separate from
the running of the Company. Hence the role of Chairman and the role of CEO should not be performed by one
person, as this concentrate excessive power in the hand of one person. The Chairman should be independent
just like a NED.
pros of role splitting
o Segregation of duty leading to improved governance
o Chairman able to challenge CEO
o Other directors / employees can communicate with Chairman if they have concerns relating to CEO
o Higher shareholder confidence as Chairman is normally a NED
cons of role splitting
Chances of disagreement or clash between Chairman and CEO
o Chairman may not have in-depth knowledge of business
NEDS
▪ NEDs are part-time outside directors who are ‘independent’ i.e. they are not employee of the company.
▪ They get a fixed fee for being NEDs and are not entitled to any bonus or share options as it will create conflict
of interest and threaten their independence.
role of neds
▪ Strategy: discuss strategies, bring external experience and leadership
▪ scrutinize the performance of Executive directors
▪ Risk: ensuring risk management is done properly
▪ People: nomination, remuneration and succession planning of executive directors and senior executives,
providing added comfort to shareholders
NED pros
▪ Brings independence / adds confidence to shareholders
▪ Have external experience and wider perspective
▪ Scrutinize / challenge performance of CEO and executive directors
▪ Employees can discuss confidential or sensitive matter with NED directly (whistle-blowing)
▪ Company can comply with Regulatory / Listing requirements
cons of NEDs
▪ May lack independence
▪ Smaller remuneration as compared to executive directors (no incentive)
▪ May not give sufficient time to business
-difficult to recruit the perfect person for the role
independence of NEDS
▪ Not an employee of the company for last 5 years
▪ No business or financial relationship with the company for last 3 years
▪ Not an NED in same company for more than 9 years
▪ Not have close family ties or friendship with executive directors
▪ No family members working in the company in senior position
▪ No share in profit or having share options of the company
nomination committee
-majority NEDs
a. Decide the size of the board
b. Ensures sufficient knowledge, skills and experience is available
c. Balance between EDs and NEDs
d. Appointment of new directors
e. Training and succession planning
