mba 2 course outline - stm aug 2010

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STM School of Technology and Management

Course Outline

MBA Semester 2

August 2010

Assignment Deadline 20th October 2010.

MBA Course Leader: Dr. Rajendra Kumar: [email protected]

Course Administrators: Phil Downing: [email protected] Helen McQuillan: [email protected]

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Contents Page Business Strategy in the Global Environment 3 Module Description 3 Indicative Content 3 Indicative Reading List 4 Lecture Sequence 5-7 Case Studies 8-23

Research Methodology 24 Module Description 24 Indicative Content 24 Assessment and Assignment 25 Indicative Reading List 26-27 Lecture Sequence 29

International Business and Policy 30 Module Description 30 Indicative Content 30 Indicative Reading List 31 Lecture Sequence 32 Sample Questions 33-38 Marketing Strategies 39 Module Description 39 Indicative Content 39-40 Indicative Reading List 40-41 Lecture Sequence 42 Sample Questions 43-44

International Marketing Management 46 Module Description 46 Indicative Content 46 Indicative Reading List 47 Lecture Sequence 48 Sample Questions 49-52 Corporate Finance 53 Module Description 53 Indicative Content 53 Indicative Reading List 53 Lecture Sequence 55 Sample Questions 56-57 Investment Management and Capital Markets 58 Module Description 58 Indicative Content 58 Indicative Reading List 58 Lecture Sequence 60 Sample Questions 61-67 Assignment

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Module Title: Business Strategy in the Global Environment

Module Lecturer: Mervyn Sookun

1.Module Description This module provides students with a forum in which to apply and integrate business theories, practices, skills and strategies used by organisations in the corporate world. The module examines a range of multifaceted issues that business people must handle in order to be effective, and explores how various business disciplines interact with each other in today’s global environment. 2. Learning Outcomes Upon successful completion of this module the students will be able to: Think strategically about a company, its business position, and how it can gain sustainable competitive advantage. Develop skills in conducting strategic analysis in a variety of industries and competitive situations. Use their hands-on experience in crafting business strategy; reason carefully about strategic options; use what-if analysis to evaluate action alternatives, and initiate the changes necessary to keep the strategy responsive to newly emerging market conditions. Improve their ability to manage the organization process by which strategies get formed and executed. Develop their powers of managerial judgment that is how to assess business risk, and gain a stronger understanding of the competitive challenges of a global market environment. Demonstrate the ability to design and continuously revise strategies in turbulent and hyper-competitive situations. 3. Indicative Content The strategy concept; corporate strategy. The role of the general manager in the strategy process. Models of how organisations formulate strategy. Formal strategy analysis. Strategy formulation. Forms of organisational structure; organisational analysis The role of culture and power in strategy. Managerial styles and their impact on strategy and operations. Process by which strategy is formulated and formed in particular situations. The impact of the internal and external environments. Strategic changes; leadership requirements for strategic change. Working in collaboration with others to implement strategic change. Learning from others; appreciating and leveraging differences. Appropriate case studies.

4. Delivery Teaching methods employed include lectures, case analyses, strategy simulation games, seminars and teamwork.

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Notional Student Workload Lectures 22.5 hours Seminars 7.5 hours Directed learning 40 hours Independent Learning 74 hours Formal Assessment 6 hours

Total 150 hours

5. Assessment

The formal assessment of this module will be conducted through a closed book examination.

Closed book examination 100% The closed book examination will be of three hours duration

6. Concise Indicative Reading List

Core text: Mintzberg H, Quinn J. and Ghoshal S (2004) The Strategy Process (European Edition) (4th edn). Prentice Hall, UK Recommended Reading: Johnson G. and Scholes K. (2008) Exploring Corporate Strategy, (8th Edn) Prentice Hall, UK, Lynch R. (2006) Corporate Strategy, (4th edn) Pitman Publishing, London Stacey R. (2007) Strategic Management and Organisational Dynamics, (5th edn) Pitman, UK Rosen R (2006) Strategic Management: An Introduction, Pitman, UK Rugman A and Hodgetts R (2006) International Business: A Strategic Management Approach, (7th edn) McGraw-Hill, UK

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7. Lecture Sequence for Business Strategy in the Global Environment

Lecture No

Topic(s) Covered Readings Formative and summative assessment

1

The Conceptual Paradigm.

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 1 ; Ch 3.1 Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 1

Case: Ministry of Sound Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: Text and Cases, P. 617

2

Corporate and business-level strategy.

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 2 Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 5, 6, 9

Case: The News Corporation Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: Text and Cases. P. 760

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The strategic and planning focus. Models of how organisations formulate strategy

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 3; Ch 5

Case: Chem Tech www. Booksites.net/ecs

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Seminar 1

Revision

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The changing strategic context. Formal strategy analysis

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 4

Case: Marks & Spencer Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: Text and Cases, (8th Ed.) P. 966

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Lecture No

Topic(s) Covered

Readings

Formative and summative assessment

6

Critical evaluation of strategic management.

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 4, 5 & 6

7 Strategy formulation

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 4, 5 & 6

8 Seminar 2:

Group Presentation

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Organisational analysis

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 7, 8 & 9 Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 8

Case: Sony Arts Council Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: Text and Cases, P. 924; 937

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The role of culture and power in strategy

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 17 Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 4

Students identify elements and dimensions of national culture, and engage in effective cross-cultural communication, to analyse the indicated case, and make a brief presentation of 10 minutes each.

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The internal environment focus- Group Seminar-3

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 16, 17 & 18 Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 3

Cases: Amazon The Formula One Constructors Baan Company Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: Text and Cases, (P. 647; 673; 685

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Lecture No.

Topic(s) Covered

Readings

Formative Summative Assessments

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Seminar 3: Group Presentation

13 The external environment focus. The impact of the internal and external environments

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 2, 6

Cases: SAAB Miller Ryanair Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: Text and Cases, (8th Ed.) P. 807; 832

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Strategies for change-

Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 10

Case Study/Simulation

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Leadership requirements for strategic changes

Mintzberg, H. Lampel, J. Quinn, J. and Goshal, (Eds). (2004). The Strategy Process Ch 10, 11 &12 Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: text and cases, (8th Ed.) Ch 11

Case: Eden Project Johnson, G., Scholes, K. & Whittington, R. (2007), Exploring Corporate Strategy: Text and Cases, P. 979

16 Seminar 4:

Group Presentation

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Implementation of strategic changes. Contemporary issues in strategy

Interactive session to provide an overview of contemporary issues in strategy management. Self managed study to explore in more depth a contemporary issue in strategy of particular interest to the individual students.

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Managing Diversity The Diversified Organisation

Mintzberg et al. (2007) Chapter 17. Pp 432-451

19 From Competitive Advantage to Corporate Strategy

Mintzberg et al. (2007) Chapter 17. Pp 432-451

20 Seminar 5 Topics Revision

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Case Studies 1. ASOS

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2. Legal Services Commission

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3. Corus

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4. Syngenta

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Module Title : Research Methodology

Module Lecturers: Stephen Malone The aim of the module is to equip students to plan and conduct a research project leading to the production of a Masters level dissertation. The general goal is to introduce and develop the skills needed to conceptualise a problem and a viable research topic. Students will make use of available literature, design a research strategy, evaluate, organize, and integrate relevant data (both existing and new), derive useful solutions, and communicate those solutions in an appropriate form to clients and colleagues. The module will prepare students to continue their own professional education and contribute to the development of the profession as a whole, at a standard commensurate with the current level of knowledge. The module surveys the basic processes of research methodology as practised in the social sciences. Underlying principles of science and logic are emphasized and special attention is directed toward the recognition of common sources of error and bias in the implementation and interpretation of research studies as it affects the outcomes of research utilization. 1. Learning Outcomes On successful completion of the module the students will be able to:

understand the scientific process, its application in the social sciences, and its utilisation in the problem-solving approach to academic and professional practice

demonstrate the skills necessary to assess, interpret and critically evaluate existing research as a prelude to carrying out further investigation.

demonstrate knowledge and understanding of a range of research designs and their appropriate utilisation.

conceptualise a problem; formulate objectives and derive research hypotheses/research questions.

design a research strategy and design to collect, analyse, and interpreting both quantitative and qualitative data, including commonly encountered statistical procedures.

understand the theoretical principles underlying inferential statistics understand and use descriptive statistics analyse datasets appropriately integrate the findings of existing research to ask a new research question write a formal written research proposal engage in critical thinking when reading and comprehending research articles choose the most appropriate statistical analyses, interpret the results, and write

up the results accurately and completely.

2. Indicative Content

the nature and types of research problem identification and research question/hypothesis generation the use of library resources and the review of the related literature

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research design and planning research in an ethical manner (protection of human subjects)

strategies to enhance the validity of qualitative and quantitative designs descriptive statistics and graphical presentations measurement issues including reliability and validity procedures for planning qualitative and quantitative research studies procedures for collecting and analyzing data for qualitative and quantitative

research studies introduction to statistical inference and hypothesis testing introduction to the computer as a research tool.

3. Delivery A variety of teaching approaches is used, including lectures, seminars, case analysis, teamwork and extensive student self-managed research. 4. Assessment The assessment breakdown will depend upon your chosen MBA route. For UWIC progression the mark allocation is as follows: Research Proposal and plan - 100% [Assignment] To pass, a mark of 40% or more must be achieved. You are required to construct and present a comprehensive plan of the research programme. The plan will include the following elements:

– a clearly specified research aim with objective(s) – an initial review of the literature relating to the theme you have chosen.

– a description and justification of the methodology to be used, – a justification of the methods employed

– a research timetable (‘project plan’) and an appraisal of the resource needs for

the project

The Proposal should be 2,500 to 3,000 words in length. Half of this should be devoted to your literature review. The Proposal should specify your research topic and the rational for choosing it. In addition to the literature review, it should present a schematic model of your proposed research, describe your research methodology, the access you have for carrying out the research, and the planned analyses of the data.A pass mark must be achieved as a prerequisite to continuing on to the Dissertation in the 3rd semester.

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5. Indicative Reading List: RESEARCH METHODOLOGY INDICATIVE BIBLIOGRAPHY CORE TEXT: Bryman A and Bell E. (2007) Business Research Methods,

2ND Ed, Oxford: Oxford University Press. Recommended ‘starter text’:

Saunders M., Lewis P. & Thornhill A. (5th ed 2009) Research Methods for Business Students. London: FT Prentice-Hall.

This is an introductory text and is a good starting point for study. In addition to Bryman and Bell other useful more advanced texts include: Gill and Johnson (2002), Easterby-Smith, Thorpe and Jackson, (2008), Creswell (2009). General

Denscombe, M. (2007), The Good Research Guide,(3rd ed.). OUP.

Easterby-Smith, M., Thorpe, R., Jackson, P. (2008) Management Research An Introduction, London: Sage

Gilbert, N. (2008) Researching Social Life (3rd ed.)London, Sage

Gill, J. and Johnson, P., (2010), Research Methods for Managers,(4th ed.) London: Paul Chapman Publishing

Collis, J. & Hussey, J. (2009), Business Research: A Practical Guide for Undergraduate and Postgraduate Students, (3rd ed.). London: Macmillan

Murray, R. (2002) How to Write a Thesis, Maidenhead, Open University Press

Partington, D. ed. (2002), Essential skills for management research, Sage.

Remenyi, D, & B. Williams & A. Money & E. Swartz (2005) Doing Research in Business and Management: An Introduction to Process and Method, London; Sage

White, B., 2000, Dissertation Skills, Cassell

Quants

Bryman, A. and Cramer, D. (2008) Quantitative Data Analysis with SPSS 14,15 and 16: A Guide for Social Scientists,(1st ed.). London, Routledge

Field, A. (2009) Discovering Statistics using SPSS (3nd Ed) London, Sage

Morris, C. (2008) Quantitative Approaches in Business Studies,(7th ed). FT/Prentice

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Hall.

Oppenheim, A. (2000) Questionnaire Design, Interviewing and Attitude Measurement, London, Continuum

Rees, D. (2001) Essential Statistics 4th ed, London, Chapman-Hall

Sapsford, R. (2001) Survey Research, London, Sage Quals

Flick, U. (2009) An Introduction to Qualitative Research,(4th ed). London, Sage

Goulding, C. (2002) Grounded Theory: A Practical Guide for Management, Business and Market Researchers, London, Sage

Silverman, D. (2004) Doing Qualitative Research,(2nd ed). London: Sage

Mixed Creswell, J.W. (2009) Research Design: Qualitative, Quantitative and Mixed Methods approaches

Useful Websites http://www.geocities.com/orgscience/home.htm - Charles Booth’s site, a good start for research methods information on the web http://www.socialresearchmethods.net - Bill Trochim of Cornell University’s Research Methods Knowledge Base and more http://www.shef.ac.uk/~scharr/triage/index/qualit.htm - useful qualitative site http://www.sysurvey.com/tips/arsham.htm - comprehensive survey design & analysis site http://onlineqda.hud.ac.uk/ Outcome of an ESRC project – a really useful qualitative site that explains clearly qualitative methodology and QDA – qualitative data analysis http://www.rds-eastmidlands.org.uk/index.php This is the National Institute for Health Research website with lots of useful information on various methods, analysis, statistics… Look under ‘resources’ and then ‘resource packs’ (2009) Others Monette D.R., Sullivan, T.J. and Dejong, C.R. (2010) Applied Social Research: Tool for the Human Services, (8th edn). Cengage Learning Cameron, S (2007) The MBA Handbook. Skills for Mastering Management, Pitman

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6. Lecture Sequence (Indicative)

Reading Plan For Your Research Plan to read through at least one of the research methods texts. Invest

additional reading time to the areas pertaining to your research For example, Qualitative or Quantitative methodologies depending upon the

focus of your research.

This content is indicative. Precisely what will be delivered depends upon you and how we are progressing, responding to your particular needs. This means that sometimes the lecture sequence may be adjusted. There will also be slides, exercises, questions, and other support materials (and me!), all of which are not in the textbook, though slides and notes will be accessible on the portal. Classes are crucial to your development and you MUST attend all classes. You cannot replicate the discussion, debate, challenge and critical thinking that take place inside a classroom, in a textbook.

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7. Lecture sequence for Research Methodology

Lecture Topics Indicative Readings

1. Introduction to Research Methodology

Ch1,Pp3-36

2. Selecting a research topic Ch2, Pp38-72

3. Generating Research ideas Ch3 Pp74-92

4. Seminar-1

5. Proposal development and management Ch3, Pp74-92

6. Fundamentals of research design Ch4, Pp93-124

7. Data collection and analysis Ch24, Pp625-639

8. Seminar-2

9. Sampling design Ch7, Pp179-206

10. Primary data collection Ch21 Pp 553-576

11. Observations, in-depth interviews and other qualitative techniques

Ch18, 471-508

12. Seminar-3

13. Critical literature review Ch4, Pp93-124

14. Writing proposals and projects: Referencing Ch3, Pp74-92

15. Basic analytical methods Ch6, Pp 155-177

16. Seminar-4

17. Negotiating Access and Ethics Ch6, Pp 168-210

19. Quantitative Data Analysis Ch12, Pp 414

18. Qualitative Data Analysis Ch13, Pp 480

20. Seminar-5

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Module Title : International Business and Policy

Module Leader: Dr. Bernadette Warner

1. Module Description

This module aims to provide a comprehensive approach to international business issues and their relationship to domestic practice.

2. Learning outcomes

Upon successful completion of this module students will be able to: describe international business practices and discuss how they are being shaped

by economic theories, financial, socio-cultural and political forces; with particular emphasis on the business practices of UK’s major trading partners;

identify general, and special problems, issues facing managers of international business operations;

discuss the appropriate criteria for the form and location of international operations;

discuss the strategies, tactics and manoeuvres of international marketing as they relate to managing an international business enterprise;

demonstrate an understanding of UK’s international performance, position, and problems, as well as opportunities and alternatives;

recognise trends and reactions in worldwide companies based in industrial or less developed countries.

3. Indicative content

Introduction to international business and forces for globalisation Theories of international trade The regulatory environment: Political, legal and human resources management The cultural environment International co-operation and the role of ethical and social responsibility in

international business International entry strategy: Strategic planning and managing risk Global marketing and control Competitive strategy and international production and supply International alliances and organisational design for international business Trends and new directions in international business

4. Delivery

A variety of teaching approaches is used, including lectures, seminars, case analysis, teamwork and extensive use of self-managed learning for guided research.

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Notional Student Workload

Lectures 22.5 hours Seminars 7.5 hours Directed Learning 40 hours Independent Learning 78 hours Formal Assessment 2 hours Total 150 hours

5. Assessment



6. Indicative Reading List

Core texts

Hill, C. (2009) International Business (7th edn) McGraw-Hill Higher Education,

Recommended Additional Reading Bartlett, C. A. and Beamish, P.W. (2010) Transnational Management: Text,

Case & Readings in Cross-Border Management( 6th ed). McGraw-Hill Education

Burnes, B. (2009) Managing Change. (5th Ed) London: Prentice Hall Cavusgil, S., Knight, G., Riesenberger, J.R. (2008). International Business:

Strategy, Management and the New Realities. Upper Saddle River: Pearson/Prentice Hall.

Hofstede, G. (1984) Culture’s Consequences. International Differences in Work Related Values. London: Sage.

Hofstede, G. (1994) Cultures and Organisations. Software of the Mind. London: Harper Collins. McKenna, E. (2006) Business Psychology and Organisational Behaviour (4th

edition) London: Psychology Press Mullins L (2009) Management and Organisational Behaviour (8th edition)

London: FT Pitman Trompenaars, F & Trompenaars, A & Hampden-Turner, C. (1998) Riding The

Waves of Culture: Understanding Cultural Diversity in Global Business. McGraw-Hill

Porter M.E. (1998) Competitive Advantage of Nations Basingstoke: Palgrave Macmillan

Tayeb, Monir (2000). International Business: Theories, Policies and Practices. Pearson Education Ltd.

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7. Lecture Sequence for International Business and Policy

Lecture Topics Indicative Readings

Refer to Sample Question(s) No

1.

Introduction International Business and Globalisation

Trompenaars et al Ch 1 Hill (2007) Ch 1 & 2

Question 1

2.

International Business Approaches Theories of International Trade

Hill (2007) Ch 5 Question 2

3.

International Market Entry Methods

Hill (2007) Ch 6 & 14

Question 3

4. Seminar 1 Question 4

5. International Market Analysis Hill (2007) Ch 6 & 14

6. Global marketing and control.

Hill (2007) Ch 6 & 14

Question 8

7.

Culture International Cultural Differences;

Hofstede’s Cultural Analysis (1984) Hill (2007) Ch 3

Question 11

8. Seminar 2

Question 9

9. Cultural Issues in International Business Hofstede’s Cultural Analysis (1984) Hill (2007) Ch 3

Question 12

10.

Strategic International Human Resource Management

Hill Ch 18 Trompenaars et al Ch 2

Question 14

11.

International Operations Management: Hill (2007) Ch 12;Ch 13


13. Strategic Planning and Managing Risks. Hill (2007) Ch 12;Ch 13

14. Competitive strategy and International Production and Supply

Hill (2007) Ch 12;Ch 13

Question 16

15.

International Monetary System ---- International Alliances and Organisational Design for International Business. Group Seminar4

Hill (2007) Hill (2007) Ch 9; 10

Question 19

16. Seminar 4

Question 12

17.

International Leadership

Buelens et al (2005) Ch 11 Buchanan and Huczynski (2007) Ch 21 Mullins (2007) Ch 10 McKenna (2000) Ch

Question 20

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18. Future Trends International Awareness

Buelens et al (2005) Ch 11 Buchanan and Huczynski (2007) Ch 21 Mullins (2007) Ch 10 McKenna (2000) Ch 8

19. Corporate Social Responsibility Hill (2007) Ch 4

20. Seminar5

Question 17

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8. IBP - SAMPLE QUESTION

Q/No QUESTIONS COVERED IN TO BE

ATTEMPTED BY STUDENT AFTER

1

Ford Case Study 1. Discuss – and justify – what you feel to be the main auto industry (global) drivers,

together with the corresponding generic marketing strategies and key success factors that the major suppliers should possess, if they are to be successful.

2. Discuss the rationale behind Ford’s ‘2000 globalisation plan’ and comment on performance over the period 1994 to 2004.

3. Drawing upon relevant issues from the case, recommend and defend a possible future marketing strategy (or strategies) for Ford.

Lecture 1 Lecture 1

2

Dell Case Study Debate the following options: Option 1: Dell could simply leave Brazil altogether Option 2: Dell could stay in Brazil but go to another state Option 3: Dell should stay put and negotiate with the new Governor

Lecture 2 Lecture 2

3

Pizza Hut in Brazil Case Study 1. What are the location-specific advantages that Brazil has to offer? How do these

advantages differ from those offered by other markets in Latin America? Should Pizza Hut put more of its efforts in expanding in Brazil or somewhere in South-East Asia? Why?

2. What dimensions of local political and economic environment have an impact on Pizza Hut’s success in Brazil in volume, revenues and profitability? How could a change in those dimensions affect Pizza Hut’s success?

3. Why did Pizza Hut decide to purchase some stores in Brazil instead of continuing to expand through issuing franchises? What are the strengths and weaknesses of this strategy?

Lecture 3 Lecture 3

4 Why do firms internationalise, and what might be three generic strategies the international firm is likely to use in this process? How do MNEs control and evaluate their global

Seminar 1 Topic

Lecture 1 Lecture 2 Lecture 3

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operations?

Seminar 1

5

Multinational enterprises are different from companies that confine their activities to the domestic market. A multinational enterprise (MNE) is a firm headquartered in one country with operations in other countries. Why would firms consider becoming a multi-national enterprise? Please describe fully a typical internationalization process for a firm producing a standardised product.

Seminar 1 Topic

Lecture 1 Lecture 2 Lecture 3 Seminar 1

6

When is the Multi-national enterprise (MNE) likely to use an international joint venture strategy and when might it opt for an international strategic partnership? What are the firm’s control and evaluation measures?

Seminar 1 Topic


7

Licensing, joint ventures and strategic alliances are becoming increasingly more important in terms of market entry strategies for multinational companies. Critically analyse each entry strategy and explain why it is becoming more popular with multinationals. Analyse the control and strategic management issues of each method.

Seminar 1 Topic


8

Why would a business seeking to go international choose export-based methods in the first instance? Explain the importance of licensing, and joint ventures as alternative market entry strategies for multinational companies.

Seminar 2 Topic


9

Porter notes that “Firms, not individual nations, compete in international markets.” How does this statement help to explain some of the major challenges facing MNEs? How do the determinants of national competitive advantage help explain how companies can maintain their economic competitiveness?

Seminar 2 Topic


10 Illustrate how the four determinants of national competitive advantage help explain how Seminar 2 Lecture 3

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companies can maintain their economic competitiveness.

Topic Lecture 4 Lecture 5 Seminar 2

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Globalisation has been instrumental in creating a common culture, especially amongst the younger generation, with tastes in consumer products and services being quite similar. Analyse if this has lead to a situation where a cultural analysis of the market is no longer required as part of the decision making process in international business.

Seminar 3 Topic

Lecture 6 Seminar 3

12 What is the link between an international business’s strategy and its human resource management policies, particularly with regard to the use of expatriate employees and their pay scale?

Seminar 3 Topic

Lecture 7 Seminar 3

13

1. What are the main advantages and disadvantages of the ethnocentric, polycentric, and geocentric approaches to staffing policy? When is each approach appropriate?

2. Research suggests that many expatriate employees encounter problems that limit both their effectiveness in a foreign posting and their contribution to the company when they return home. What are the main causes and consequences of these problems, and how might a firm reduce the occurrence of such problems?

3. What is the link between an international business’s strategy and its human resource management policies, particularly with regard to the use of expatriate employees and their pay scale?

Seminar 3 Topic

Lecture 7 Seminar 3

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Why do many Multi National Corporations (MNCs) use global sourcing as an alternative to producing all the parts and materials in-house? What challenges is the firm likely to face when it relies on external sources to provide essential components, parts and other production inputs.

Seminar 4

Topic

Lecture 8 Lecture 9 Seminar 4

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15

Identify and explain five factors, which make emerging markets attractive for international business? What strategies might the firm adopt so as to deal with the challenges associated with doing business in emerging markets? Seminar 4

Topic


16

Why are emerging economies important considerations for foreign investors? How would inward FDI help emerging economies and their domestic industries?

Seminar 4 Topic


17

Nestlé Case Study 1. How did Nestlé create shared value while lowering costs and better serving supplier

needs? 2. Exemplify the challenges involved in adding social dimensions to Nestlé’s value

proposition. 3. How corporate social responsibility is best managed, from a strategic perspective? 4. Illustrate several measures on the part Nestlé that would constitute strategic

corporate social responsibility versus responsive CSR . 5. What key factors will determine the success of the UN Global Compact

Seminar 4 Topic


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“No large international business can afford to do without an India strategy." When the argument was first made in June 2006, it was also observed that an economic crisis might be required in order to ensure continued increases in Indian productivity. Please provide a reasoned assessment of this argument and observation, while reviewing related developments within the international business environment since then.

Seminar 4 All Lectures Seminars 1,2,3

20 Critically examine Toyota’s “lean production” system - focused on manufacturing and Seminar 4 All Lectures

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supply chain management - upon the firm’s competitiveness in the international automobile sector. Critically evaluate the firm’s response to the current challenge affecting its share of the global automobile market.

Seminars 1,2,3

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Module Title : Marketing Strategies

Module Lecturer: Terry Johnson 1. Module Description The aim of the module is to equip students to plan and conduct a research project leading to the production of a Masters level dissertation. The general goal is to introduce and develop the skills needed to conceptualise a problem and a viable research topic. Students will make use of available literature, design a research strategy, evaluate, organize, and integrate relevant data (both existing and new), derive useful solutions and communicate those solutions in an appropriate form to clients and colleagues. The module will prepare students to continue their own professional education and contribute to the development of the profession as a whole at a standard commensurate with the current level of knowledge. The module surveys the basic processes of research methodology as practised in the social sciences. Underlying principles of science and logic are emphasized and special attention is directed toward the recognition of common sources of error and bias in the implementation. 2. Learning Objectives On successful completion of the module the students will be able to:

Understand the scientific process, its application in the social sciences, and its utilization in the problem-solving approach to academic and professional practice.

Demonstrate the skills necessary to assess, interpret and critically evaluate existing Research as a prelude to carrying out further investigation. Demonstrate knowledge and understanding of a range of research designs and Their appropriate utilisation. Conceptualise a problem; formulate objectives and derive research Hypotheses/research questions. Design a research strategy and design to collect, analyse, and interpret both quantitative and qualitative data, including commonly encountered statistical Procedures. Understand the theoretical principles underlying inferential statistics. Understand and use descriptive statistics Analyse datasets appropriately. Integrate the findings of existing research to ask a new research questions. Write a formal written research proposal. Engage in critical thinking when reading and comprehending research articles. Choose the most appropriate statistical analyses, interpret the results and write up The results accurately and completely.

3. Indicative Content The nature and types of research Problem identification and research question/hypothesis generation.

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The use of library resources and the review of the related literature. Research design and planning research in an ethical manner (protection of human

subjects). Strategies to enhance the validity of qualitative and quantitative designs. Descriptive statistics and graphical presentations. Measurement issues including reliability and validity. Procedures for planning qualitative and quantitative research studies. Procedures for collecting and analyzing data for qualitative and quantitative research

studies. Introduction to statistical inference and hypothesis testing. Introduction to the computer as a research tool

4. Delivery

Teaching methods employed include lectures, case analyses, strategy simulation games, seminars and teamwork.



5. Assessment



6. Indicative Reading List

Core text: Gilligan, C and Wilson RMS (2005) Strategic Marketing Management, (3rd edn) Butterworth-Heinemann,

Recommended Reading: Aaker, DA (2007) Strategic Marketing Management, (7th edn) John Wiley and Sons Keller, K. L., Aperia, T and Georgson, M. (2008) Strategic Brand Management: A European Perspective, (1st ed). F.T/Prentice Hall.

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Doole I and Rowe L. (2008) Strategic Marketing Decisions, (CIM Course book Series) Butterworth-Heinemann Kumar, N (2004) Marketing as Strategy: Understanding The CEO's Agenda for Driving Growth and Innovation, Harvard Business School Press

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1. Lecture sequence for Marketing Strategies

Lecture Topics Reading Refer to Sample Question(s) No

1. Overview of Marketing Strategy

Ch1, Pp1-37

2. Marketing Information Ch4, Pp 117-165

3. Environmental Analysis Ch4, Pp 117-165

4. Seminar-1 Question 1

5. Customer Analysis Ch 5, Pp167-215

6. Market Dynamics Ch 10, Pp 361-383

Questions 2,3

7. Competitive Strategy Ch 10, Pp 361-383


9. Marketing Audit Ch2,Pp 43-75

Question 4

10. Product Policies Ch 3, Pp 77-116

Question 6

11. Pricing Strategies


13. Distribution Planning, Segmenting Targeting and Positioning

Ch 8, Pp 315-359

Questions 7,8,9

14. Designing Communication and Promotion Mix Strategies

Ch 12 Pp 495-536

Question 10

15. Implementation of Plans Ch 7, Pp 269-536

Question 11

16. Marketing Organisations and Structures Ch 8 Pp315-335

17. Strategic Brand Management Ch11 Pp425-465

Question 13

18. Seminar 4

19. Marketing in the 21st Century Ch 13 Pp 539-585

20. Seminar-5: Revision

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Sample Questions

Lecture Topic Questions

1 Overview of Marketing Strategy

2 Marketing Information and Environmental Analysis

3 Customer Analysis

Q1Many authors claim that the key to a successful marketing strategy is for an organisation to get close to its customers. Examine how this may be achieved and the benefits this approach can provide

4 Seminar-1 Topic revision(1-3)

5 Market Dynamics and Competitive Strategy

Q2Successful competitive marketing strategy may be created by combining attacking and defensive moves in order to build a stronger position for a business in its marketplace.` With reference to this statement, use examples to describe how companies can use both offensive and defensive marketing strategies which are based on military terms Q3 With reference to the steps involved, examine why it is important for companies to undertake competitive strategy

6 Marketing Audit

Q4Management control involves evaluating performance and taking corrective actions when performance differs from plans` Detail the steps involved in this process Q5With reference to the marketing audit, show how an organisation can keep itself better informed about any internal and external changes in its marketing environment, and explain why this is an important part of marketing strategy

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7 Product Policies and Pricing Strategies

Q6Evaluate the strategic insights that are provided by one of the following marketing models: The performance / importance matrix The value chain


9 Distribution Planning, Segmenting Targeting and Positioning

Q7There are many models of the strategic marketing planning process. With reference to one of these, critically describe your chosen model and illustrate its usefulness in today`s dynamic marketplace Q8Evaluate the process of market segmentation and analyse the reasons why marketing strategists claim that it is `the core strategy Q9Basing your analysis on a market of your own choice, undertake a positioning study and comment on its strategic importance to the marketing manager

10 Designing Communication and Promotion Mix Strategies

Q10Analyse how and why strategic marketing communications campaigns should be planned in an integrated way.

11 Implementation of Plans Q11Management control involves evaluating performance and taking corrective actions when performance differs from plans` Detail and discuss the steps involved in this process.


13 Marketing Organisations and Structures

Q12Critically evaluate the point of view that a clearly developed and communicated mission statement enables an organisation to develop strategies to meet the needs of its

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stakeholders.

14 Strategic Brand Management Q13Basing your analysis on a market of your own choice, undertake a positioning study and comment on its strategic importance to the marketing manager

15 Marketing in the 21st Century

16 Seminar Topic revision(13-15)

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Module Title: International Marketing Management

Module Lecturer: Paul Reynolds

1. Module Description

Traditionally, international marketers look out from their own culture and adapt ideas that work at home to a different culture abroad. However, much of marketing is context specific so we must understand these cultural contexts in order to be successful multinational marketers. Accordingly, this module considers the various aspects of international marketing from a cross-cultural perspective, and the implications for marketing practitioners.

The overall aims of the subject are to:

provide students with an understanding of marketing in a multinational, multicultural environment;

develop their strategic decision-making skills in international marketing. 2. Learning outcomes

Upon completion of this subject students should be able to: manage the marketing function in a multinational environment; analyse the elements that influence multinational marketing; assess the importance of current issues in multinational marketing; formulate international marketing strategies.

3. Indicative content The subject will cover the theoretical foundations of multinational marketing, assessing multinational marketing opportunities, and developing multinational marketing strategies. The main parts are:

cross-cultural marketing environment developing a cross-cultural marketing strategy implementing a cross-cultural marketing strategy contemporary issues in cross-cultural marketing

4. Delivery

Teaching methods employed include lectures, case analyses, strategy simulation games, seminars and teamwork. Notional Student Workload

Lectures 22.5 hours Seminars 7.5 hours Directed Learning 40 hours Independent Learning 78 hours Formal Assessment 2 hours

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Total 150 hours 5. Assessment

Assignment 30% Closed book examination 70% The closed book examination will be of two hours duration

6. Indicative Reading List Core text: Ghauri, P, Cateora, P (2010) International Marketing, (2nd edn) McGraw-Hill, London Recommended Reading Czinkota, M, Ronkainen, I (2007) International Marketing, (8th edn) Thomson Learning Keegan, W.J. & Green, M.C. (2007) Global Marketing, (5th edn) Prentice Hall Jeannet, J.P. & Hennessey, H.D. (2005) Global Marketing Strategies, (7th edn) Houghton Mifflin,

48

7. Lecture Sequence for International Marketing Management

Lecture Topics Reading Refer to Sample Question(s)

No

1. Introduction

Ch1, Pp1-26

2. The Cross Cultural Ch4, Pp 73-93

Questions 1,2

3. Marketing Environment Ch4, Pp 73-93


5. Customer Analysis Ch 5, Pp167-215

Question 3

6. Cross Cultural Marketing Research and Segmentation

Ch 7, Pp 149-169

Questions 5,6,7

7. Seminar 2

Question 11

8. Cross-cultural Marketing Branding Ch 14, Pp331-345

Questions 8,9

9. Product Strategy

10. Cross-cultural Marketing Pricing and Channels Ch 18 Pp 435-456

Question 10


12. Cross Cultural Communications Ch 17, 415-427

Questions 12,13

13. Promotion

14. Marketing Services Across Cultures Ch4 73-93 Question 14,15


16. Relationship Marketing Across Cultures Ch 8 177-202

Question 16

17. International Marketing Ch10 Pp 243-259

Question 18

18. E- Marketing Across Cultures Ch16 Pp387-410

19. Multicultural Marketing Ch 9 Pp 209-236

Question 19

20. Seminar 5: Final Revision

49

8. Sample Questions Lecture Topics Sample Question

1. Introduction

2. The Cross Cultural-Marketing Environment

Q1. Define culture and explain why an understanding of culture is important in international marketing. Q2. Outline and discuss the principle elements of culture as they affect the behaviour of the international firm.

3. Customer Analysis

Q3. The emerging market consumers’ behaviour is moulded by low incomes, infrastructural variability, and the unique trade-offs created by the substitution of labour for capital. According to Cateora (2006) these consumers are unlikely to respond to marketing programs transplanted from developed markets. How can western marketing companies develop an effective and appropriate “emerging market strategy?” Explain the specific nature of such a strategy using an example to illustrate the points made Q4. For the inexperienced marketer, the ‘similar but different’ aspect of culture creates an illusion of similarity that usually does not exist’, (Cateora and Ghauri 2006). Discuss this statement giving specific examples to illustrate the points made.

4. Seminar 1 Topic revision(1-3)

5. Cross Cultural Marketing Research and Segmentation

Q5. Identify the financial requirements most likely to concern a smaller company when marketing internationally Q6. Discuss the breadth and scope of international marketing research. What are the main additional complexities faced by the international marketing researcher? Q7. Critically evaluate the concept of the product life cycle as a strategic marketing tool in international markets. Use examples and a diagram or figure to illustrate the points made

50

Lecture Topics Sample Questions

6. Cross-cultural Marketing Branding and Product Strategy

Q8. The world market is really a series of market segments, each with different needs and wants. Successful international market segmentation requires a careful selection of country markets, regions and customers. Discuss. Q9. Before a firm can take a decision to enter a specific foreign market there must be an awareness of the opportunities in their market. Explain how the firm can become aware of such opportunities

7. Cross-cultural Marketing Pricing and Channels

Q10 Explain why channel conflict occurs and the extent to which conflict is more likely to occur in an international context. Q11 Discuss the role of innovation in international channel management, explaining how a firm can maintain or gain market share by innovating in the channel of distribution

8. Seminar 2

Topic revision(5-7)

9. Cross Cultural Communications and Promotion

Q12What are the main factors and options management must consider when planning and organising a sales force capability for the firm in an overseas market Q13Using any international marketing communications model you feel appropriate, take each of the steps in the communications process and demonstrate how marketing management might be influenced by international factors in managing each of these steps

51

Lecture Topics

Sample Questions

10. Marketing Services Across Cultures

Q14. “Perhaps advertising is the side of international marketing with the greatest similarities from country to country throughout the world. Paradoxically, despite its many similarities, it may also be credited with the greatest number of unique problems in international marketing” (Ghauri and Cateora 2006). Discuss. Q15. Outline and discuss the principle elements of culture as they affect the behaviour of the international firm.

11. Relationship Marketing Across Cultures

Q16. Identify both local and foreign examples of cultural imperatives, adiaphora and exclusives. Explain why each of the examples you use fits into the category you have selected


13. International Marketing

Q17. Discuss the commonly held belief that there is no single market entry strategy that is appropriate in all circumstances. Q18. A rush of investment business worth more than half a billion Euros in 2008 is heralding increased interest by UK based marketing firms in the transitional economies of Eastern Europe particularly those of the former Soviet Union such as Estonia, Ukraine and Latvia. Discuss the problems international marketing researchers may face in gathering both secondary and primary data in such markets. Use examples to illustrate the points made

14. E- Marketing Across Cultures

Q19. Discuss the use and importance of multinational marketing information systems (MMIS) to marketing management. Use a diagram or figure to illustrate the points made

15. Multicultural Marketing Q20. Discuss the main reasons for firms moving from serving purely domestic markets to

52

becoming international or even multinational marketing organisations. Use specific examples if possible to illustrate the points being made.


9. Assignment

Assignment will be distributed in class by the Lecturer.

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Module Title: Corporate Finance

Module Lecturer: Makailla McConnel 1. Module Description

This module focuses on the goals, scope and methodology of the finance function and its role in corporate management. It explores the theoretical framework of finance, enabling students to evaluate a firm’s investment, financing and dividend policies. Skills are developed in the identification and analysis of financial problems, including the use of computer-based models. The institutional environment of corporate finance is presented enabling students to better understand how major participants operate, and what constitutes the main advantages and disadvantages of alternative sources of finance.

2. Learning outcomes: Upon completion of this course, you will have a clear understanding of:

The standard techniques used by corporations to assess and value capital projects. The limitations of traditional investment analysis, and how newer analytical

techniques, real options, for example, are being used to evaluate investment opportunities as distinct from the investments themselves.

How free cash flows are allocated as between retentions and dividends and how to determine the firm’s optimum capital structure.

Entry modes for international projects and their relationship to financing choices (corporate finance versus project finance).

Political and country risks inherent in international investments and their mitigation.

3. Indicative content Financial Markets Investment Selection Criteria Equity and Debt and the Optimal Capital Structure Pricing Equity Risk Payout Policy: Dividends and Share Buybacks Debt and Leasing Corporate Finance and Off-balance Sheet Financing

4. Delivery

Teaching methods employed include lectures, case analyses, strategy simulation games, seminars and teamwork.

54

Notional Student Workload Lectures 22.5 hours Seminars 7.5 hours Directed Learning 40 hours Independent Learning 78 hours Formal Assessment 2 hours Total 150 hours 5. Assessment



6. Reading List

Core text: Brealey R.A. & Myers S.C. (2008) Principles of Corporate Finance, (9th ed.) McGraw-Hill

Recommended Reading Ross S.A., Westerfield R.W. & Jaffe J (2007) Corporate Finance, International Edition (8th edn) McGraw-Hill

Brigham E.F. & Gapenski L.C. (2003) Intermediate Financial Management, Dryden

McLaney E (2009) Business Finance, (8th edn) McGraw-Hill

Van Horne J (2002) Financial Management & Policy, Prentice-Hall Inc

55

7. Lecture Sequence for Corporate Finance

Lecture Topics Indicative Readings: Core Text

Refer to Sample question No.

1. An Introduction to Corporate Finance: Ch 13 pp 328-350 1 and 2

2. Law, Agency Conflicts and Shareholder Safeguards

Ch 13 pp 328-350

3. Capital Budgeting Basics: Theory and Valuation

Ch 10 pp 239-255 2 and 3

4. Where Do Value Creating Projects Come From?

Ch 11 pp 269-271 4 and 5

5. Seminar 1 1 - 5

6. Project Failure Ch 11 pp 283-294 6 and 7

7. Limitation of Traditional Capital Budgeting Techniques

Ch 23 pp 620-639 8 and 9

8. Real Options and Ch 23 pp 620-639

9. The Valuation of Investment Opportunities.

Ch 23 pp 620-63

10. Seminar 2 6-11

11. Equity: How Much Free Cash Flow should be Retained within the Firm?

Ch 15 pp 386-400 10 and 11

12. Returning Cash to Shareholders: Dividends vs. Share Buybacks

Ch 17 pp 442-461 12 and 13

13. Debt Ch 18 pp 472-488 14 and 15

14. Group Seminar 3 12-17

15. Is there an Optimal Capital Structure? Ch 19 pp 497-517 16 and 17

16. International Capital Budgeting. Ch 28 755-774 18 and 19

17. Mode of Entry and Financial Options Ch 22 pp 588-608 20 and 21

18. Group Seminar 4

19. Issues in International Investing Ch 16 pp 414 22 and 23

20. Group Seminar 5/Revision 18 - 23

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2. Sample Questions

Lecture Topics Sample Questions

1.

An Introduction to Corporate Finance: Law, Agency Conflicts and Shareholder Safeguards

1. Why are shareholders residual claimants? 2. What is it that shareholders actually own?

2. Capital Budgeting Basics: Theory and Valuation

2. Why is the NPV the best investment selection metric? 3. If there is a conflict between strategic and financial objects how should the conflict be resolved.

3. Where Do Value Creating Projects Come From?

4. How do firms identify value creating projects? 5. Is it possible to compare using NPV projects of different scale?

4. Seminar-1

5. Project Failure

6. What are the leading causes of project failure? 7. Are technical factors important reasons for failure?

6.

Limitation of Traditional Capital Budgeting Techniques: Real Options and the Valuation of Investment Opportunities.

8. Should you always rejects NPV < 0 investments? 9. How does asset volatility add to the option value?

7.

Equity: How Much Free Cash Flow should be Retained within the Firm?

10. Why is the variance of dividend changes with the variance of firm’s earnings? 11. How are dividends used to signal future earnings?

8. Seminar-2

9. Returning Cash to Shareholders: Dividends vs. Share Buybacks

12. Do firms regard dividend payouts and buybacks as being equivalent ? 13. How did the tax reference Act 2002 affect corporate dividend policy in the US?

57

10. Debt 14. What is seniority? 15. How does seniority affect the cost of debt?

11. Is there an Optimal Capital Structure?

16. Does capital structure matter? 17. How does seniority affect the cost of debt? 18. How does the tax deductibility of interest affect optimal capital structure?

12. Seminar-3

13. International Capital Budgeting.

19. Why do firms favour project over corporate finance? 20. What is the significance of completion?

14. Mode of Entry and Financial Options

21. Why do joint ventures mostly fail? 22. How does corruption affect entry mode?

15. Issues in International Investing

23.How important does changes in exchange rate affect foreign direct investment

16. Seminar-4

58

Module Title: Investment Management and Capital Markets

Module Lecturer: Dr. Vijay Shenai 1. Module Description

The principle focus of this subject is on the study of the working of capital markets, analysis of the pricing and risk return characteristics of different securities, correlation effects, and improvement of the risk return characteristics of portfolios. The application of derivative securities to stabilise and hedge returns will be studied. The effects of international diversification will be analysed and various portfolio performance evaluation measures will be evaluated.

2. Learning outcomes

Upon completion of this subject students should be: able to solve financial problems within the context of a dynamic market place; able to develop their financial research, and analytical skills; suitably equipped to communicate effectively about security analysis and portfolio

management. 3. Indicative content

Efficient Markets Portfolio theory and asset pricing models The yield curve and fixed income securities Hedging using derivative instruments - options and futures, International diversification, measures to evaluate portfolio performance evaluation.

4 Delivery

A variety of teaching approaches is used, including lectures, seminars, case analysis, teamwork and extensive use of the Internet for guided research.



59

5. Assessment The formal assessment of this module will be conducted through an assignment and a closed book examination.. Assignment 30% Closed book examination 70%

The closed book examination will be of two hours duration

6. Core text: Bodie,Z., Kane, A. and Marcus, A.J (2008), Investments, (7th edn)

McGraw-Hill [ BKM]. Recommended Reading:

Jones, C.P. et al. (2007) Investments: Analysis and Management, (10th edn) John Wiley and Sons

Reilly, F.K. et al. (2003) Investments, Thomson/South-Western

Brown, K . (2008) Investment Analysis and Portfolio Management, (International edn) Thomson

Elton, E. J. , Gruber, M.J. , Brown, S.J and Goetzmann, W. N. (2010) Modern Portfolio Theory and Investment Analysis: International Student Version, 8th Edition, John Wiley & Sons

Sharpe P, W. (2008) Investors and Markets: Portfolio Choices, Asset prices and Investment Advice, Princeton University Press

60

7. Lecture Sequence for Investment Management and Capital Markets

Lecture Topics Indicative Readings: Core Text

Refer to Sample question No.

1. Market Efficiency Ch 12: BKM 1

2. Portfolio theory Ch 6-11: BKM 2

3. Asset pricing Models. Ch 6-11:BKM 2

4. Group Seminar1 7

5. Class work problems 1 and 2

6. The yield curve Ch 14-16: BKM 3

7. Bonds Ch 14-16: BKM

8. Bond management Ch 14-16: BKM 3

9. Group Seminar 2 8

10. Class work problems

11. Futures Ch 22: BKM 4 and 5

12. Options Ch 20-21:BKM 4 and 5

13. Group Seminar 3 9

14. Portfolio management Ch 24-26: BKM 5

15. Performance evaluation Ch 24-26:BKM 6

16. Class work problems 5 and 6

17. Group Seminar 4 / Revision 10

18.

Active Portfolio Management: Portfolio Performance Evaluation

Ch 24-26:BKM

19. International Diversification The Process of Portfolio

Ch 24-26:BKM

20. Group Seminar 5 / Revision

61

8. Sample Questions Lecture 1 1. (a) Discuss the concept of the efficient market hypothesis (EMH). You should

consider all its main forms.

(b) To what extent does empirical evidence support each of the main forms of

the EMH.

Lecture 2-3

2. (a) Compare and contrast the Capital Asset Pricing Model with the Arbitrage

Pricing Model.

(b) Discuss the advantages and disadvantages of each model.

Lecture 6 &7 Bonds and Portfolio Management 3. A fund manager plans to construct the most efficient portfolio from investing

equally or wholly in a Large Stock Fund or a Small Stock Fund and the remaining

in Treasury bills or alternatively just in the market wide index and Treasury bills.

Data on the risk and performance of the funds, is as below:

Return Risk Beta

Large Stock Fund 16% 20% 1.3

Small Stock Fund 20% 30% 1.8

Market wide index 14% 12%

The correlation coefficient of the returns between the Large Stock Fund and the Small

Stock Fund is 0.4. The return on Treasury bills is 6%.

62

Required: (a) Discuss the Treynor and Sharpe measures for evaluating portfolio performance and

advise which measure you will use to calculate the most optimal investment

possibilities.

(b) From the investment plan outlined above, suggest which alternative constructed

from the above two funds (Large Stock Fund and Small Stock Fund and the

Treasury bill or the market index and the Treasury bills gives rise to the best return

risk possibilities.

(c) On completion of the calculations, the fund manager decides that his clients are

prepared to accept a risk of 8%, what is the expected return from investing in the

most optimal portfolio?

(d) Outline all the assumptions made in arriving at your recommendations.

NOTE: All percentage returns/risk must be computed to two decimals e.g. 22.82%

The Yield Curve and Bond 4. Current spot rates are 5% per annum on bonds expiring in one year, 6% on non

coupon paying bonds of two years maturity and 7% on non coupon bonds of three

years maturity and longer. Three coupon paying bonds are available:

(i) a 6% bond of four years maturity; (ii) an 8% bond of three years maturity; and

(iii) a 10% bond of two years maturity.

Required: (a) Determine the present value of the three bonds.

63

(b) If you anticipate that the shape of the yield curve will remain the same in one year which bond would you buy? Support your answer with relevant calculations

(c) Identify the technique you have used and discuss whether it is an active or a passive strategy.

Lecture 10 – 14 : Options, Futures and Portfolio Management 5. (a) Discuss clearly, with diagrams, the risk and return implications of buying or

selling options or futures.

(b) In January XYZ, an institution sold 20,000 June calls on a company's share

at an exercise price of $110 for $15 per share and simultaneously bought

20,000 June puts on the same share for $20 per share at the same exercise

price. The market expects that a dividend will be paid on the share in three

months' time. At the time the interest rate per annum was 6% and the

company's shares were selling for $105 per share.

Required:

(i) Assuming the put and call are correctly priced, calculate the market's expectation of the dividend.

(ii) Evaluate the expected outcome of this strategy at expiry and explain in what

circumstances, the institution may consider such a strategy.

(ii) Explain whether it would be worthwhile to exercise the put if in May the share price

fell to $80 per share.

6. You are managing a £1.0 million portfolio of well diversified equities. You are

worried about a fall in the value of the portfolio within the next 6 months. The FTSE

100 index is now at 4950 and the value per futures or options contract is the index

multiplied by £10. The premium on Call and put options (£10 per index point)

expiring is 6 months are as follows:

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Exercise Price Calls Puts

5000 400 400

5100 375 525

5200 350 600

Short term interest rates are 4.0% per annum, the dividend yield on the FTSE 100 is

2.0% per annum.

Required:

(a) What is meant by the term `hedging’? Advise alternative strategies that could be

followed to hedge the value of the portfolio.

(b) What is the correct price for a 6 month futures contract on the FTSE 100 index of

shares?

(c) Assuming options are used to hedge the value of the portfolio show the outcomes

when the FTSE 100 Index at expiry is (i) 4000 (ii) 6000. Select any one exercise

price giving reasons for your choice. Compare the outcomes with the unhedged

position.

Seminar 1 : Question 7 (a) From both theory and empirical research discuss the factors which influence the

prices of options and comment on the performance of the Black Scholes model in

predicting option values.

(b) Benlon Limited’s share price is quoted now at 150p. European puts and calls on the

share expiring in one year are available at an exercise price of 200p. The risk free rate is

10% per annum. Benlon is in an industry where profits are volatile and one year later, the

share price is expected to be either 160p or 250p. No dividend will be paid by Benlon

during the year. The going rate of interest for lending/borrowing is 10% per annum.

65

As an active participant in the financial market with good contacts with brokers and banks

consider if any arbitrage strategies can be formulated in each of the following three cases,

and if so to explain clearly the outcomes in money terms:

Put option premium Call option premium

Case 1 50.5 10.5

Case 2 40.4 7.6

Case 3 60.4 40.4

Seminar 2: Question 8

(a) Define the yield curve and explain its relevance in financial markets.

(b) Compare and contrast the three main theories of the term structure of interest rates.

(c) What explanation would you offer for a downward sloping yield curve?

Seminar 3 :

Question 9:

Portfolio A is invested in small company equities, Portfolio B is invested in the shares and

bonds of large companies with a good rating. The average return on these portfolios and

the FTSE All-share index over the last five years is given below:

Average annual Standard deviation

Return of return Beta

Portfolio A 12.5% 18% 0.80

Portfolio B 15% 20% 1.10

FTSE All-Share 13% 13%

T-bills 5%

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Required:

(a) Calculate the Jensen, Treynor and Sharpe measures for evaluating the

performance of Portfolio A, Portfolio B, and a fund invested in the FTSE ALL-Share

index..

(b) Explain why conflicting results are obtained when using the three alternative

measures stated in (a

(c) On the basis of your analysis in (a) and (b) advise an investor, whose desired risk

level is 15%, on how a sum of £100,000 should be invested amongst the above

assets, and what return should be expected. Show all workings

(d) Discuss all assumptions made in your calculations. Seminar 4 Question 10

(a) Distinguish between an American option and a European option.

(b) Discuss clearly the relationship that European put and call premiums must

satisfy in the case of a non dividend paying share, when there are no opportunities

for riskless profit.

(c) Trenton Limited’s share price is quoted now at 300p. European puts and calls on

the share with an exercise price of 400p, expiring in one year, are quoted at 60p and 20p

respectively. The risk free rate is 10% pa. No dividend will be paid by Trenton during the

year. One year later, the share price is expected to be 340p 0r 440p. An investor is

prepared to lend you £ 10,000 at the going rate of 10% per annum.

Required:

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(i) Explain clearly the outcomes in each of the cases when Fenton’s share price is

340p or 440p.

(ii) Can you devise any strategies for riskless profit?

9. Assignment Assignment will be distributed in class by the Lecturer.

mba 2 course outline - stm aug 2010

Documents

taking corrective actions

closed book examination

small stock fund

large stock fund

free cash flow

strategy simulation games

research question hypothesis generation

optimal capital structure