PPT 10 Flashcards
Project Appraisal
Minimizes risk and uncertainty in project decisions due to external turbulence.
Macro and micro-environmental factors influence decisions (e.g., economic, social, political, customer preferences).
Macro-Environmental Factors in Project Appraisal
Economic
Demographic
Social & Cultural
Technological
Political & Legal
Micro-Environmental Factors in Project Appraisal
Customer preferences
Competitor actions
Supplier services
Firm’s internal environment
Risk Management in Project Appraisal
Identifying risk-prone events and corresponding probabilities.
Incorporating these risks into the prediction model.
Conservative Project Appraisal Methods
Shorter Payback Period: Choose the project with a faster return on investment.
Risk-Adjusted Discount Rate: Add a premium for risk to the cutoff rate of return.
Modern Project Appraisal Methods
Marketing Research
Operations Research
Network Analysis
Ratio Analysis
Market Research Types
Primary Market Research: Collecting original data from consumers (focus groups, interviews).
Secondary Market Research: Using existing data (internet, government, media).
Operations Research
Uses mathematical techniques to solve business problems.
Key components: Algorithms, Optimization, Simulation.
Network Analysis
Visualizes project activities and milestones to ensure timely completion.
Techniques:
PERT (Program Evaluation and Review Technique)
CPM (Critical Path Method)
Ratio Analysis Categories
Liquidity Ratios
Solvency Ratios
Profitability Ratios
Efficiency Ratios
Market Prospect Ratios
Other Risk Analysis Techniques
Sensitivity Analysis
Probability Analysis
Decision Tree
Risk Factors in Project Appraisal
Product or process obsolescence
Declining demand
Government policy changes
Price fluctuations
Foreign exchange restrictions
Inflation
