DO NOT FOLLOW 100%, AT LEAST

CHANGE CHAPTER NUMBER

3000words

1. Introduction Why this report 100words (Google: Objective of

business analysis)
2. Research on industry sector and Your company 300words
a. Industry 150 words (google)
b. Company 150 words (AR or company website)
3. Analysis, interpretation and discussion of strategic issues
1100words (maximum 2 models)

a. PESTEL & Related Issues to the Company 550words

i. Political
ii. Social
iii. Enviroment

b. 5 Forces PLUS & Issues 550words(additional 3 forces:

Globalization, Digitization, Deregulation)
i. Buyer
ii. Supplier
iii. Competitor
c. Ansof
d. BSC & Strategy Map
4. Detailed financial analysis, financial spreadsheet modeling of
recommended strategy options 700 words 5 to 9 indicator
a. Competitors Analysis using Industry KPI (sales, market share,
profitability, cash, debt, p/e) including KPI 350words
(Morningstar, FSA, remember to use the word KPI in every
statement. Eg. 1 sales, 2 market share, 3 profitability, 4 cash,
5 debt, 6 investment, 7 p/e, I suggest ROE, NPM, GPM,
Interest Coverage Ratio, Debt/Equity Ratio, Asset Turnover,
Inventory Turnover, Receivable Turnover, Payable Turnover)
i. PE
ii. CAPM
iii. Debt
iv. Asset Turnover
b. Financial spreadsheet modeling of recommended strategy
options (NPV, Payback, IRR) 350words (refer to Excel
Appendix)
5. An appraisal of the limitations of financial models and conventional
analysis 300 words

a. Limitation of financial models 150words

b. Convention Analysis 150words

6. Recommendation 300words including Resources needed and Time

Scale

a. Cost Benefit Analysis

b. Suitability Acceptability Feasibility (feasibility is whether
you have the resources including
money/people/time/space to do the project,
acceptability means can you accept the risk and return
of the project, suitability is are you suitable to do the

project, does the project suitable for your company

strategy)
7. Conclusion 200words
Appendix A: Financial Modeling on Recommendation (Excel
Spreadsheet) 15%
Appendix B: Referencing
Appendix C: Financial Statement of Company
Appendix D: Financial Statement of Competitor

Chap 1 Introduction
It is difficult to be prescriptive about this module. Imagine being
called in to a meeting with the Chief Executive and being told to
sort out the organization. It is difficult to define sort out,
because if the CE could explain it, the possible solutions would be
self evident. This sort of problem is faced by most senior managers
at some time in their career, especially in these turbulent times.
This module simulates the problems (issues) that real life managers
deal with and requires you to test some of your proposed solutions.
The focus is on some aspect of competitive advantage and how this
is reported in published information and also in financial reports and
statistics.
The module is integrative; it requires you to look at competitive
strategy from diferent angles (e.g. organizational, operational,
market, financial etc). You must pull together these strands in order
to form a coherent picture of the issues (i.e. the problems and
opportunities) inside and around your chosen organisation.
Part of your analysis will be qualitative - soft - and part of your
analysis will be quantitative - hard. You must pull together soft
analysis and hard (financial and market data) in order to perform
a complete analysis.
It is valuable to be aware of the key performance indicators that are
employed in each market sector. The traditional financial ratios are
useful here, but do not give the full picture. Some sectors have very
specialized KPIs. How does your chosen organisation compare with
your chosen benchmark organizations in these key areas?
The module also requires an awareness of values and judgments in
financial and other reporting. You must interpret evidence from a
number of diferent sources in order to give your judgment on
numerical data represented in the accounts.
The module requires you to test the outcomes of your
recommendations using spreadsheet scenario modeling. You should
comment on the suitability, acceptability and feasibility of your
recommendations and integrate the figures derived from your
scenario modeling in this section.

The Business Analyst is an agent of change. Business Analysis is a

disciplined approach for introducing and managing change to
organizations, whether they are for-profit businesses, governments,
or non-profits.

Business analysis is used to identify and articulate the need for

change in how organizations work, and to facilitate that change. As
business analysts, we identify and define the solutions that will
maximize the value delivered by an organization to its stakeholders.
Business analysts work across all levels of an organization and may
be involved in everything from defining strategy, to creating the
enterprise architecture, to taking a leadership role by defining the
goals and requirements for programs and projects or supporting
continuous improvement in its technology and processes.
We have the specialized knowledge to act as a guide and lead the
business through unknown or unmapped territory, to get it to its
desired destination. The value of business analysis is in realization
of benefits, avoidance of cost, identification of new opportunities,
understanding of required capabilities and modeling the
organization. Through the efective use of business analysis, we can
ensure an organization realizes these benefits, ultimately improving
the way they do business.

Chap 2a
Research on Stainless Steel industry
Generally the industry looks good. However, according to Reuters,
the European Commission will launch an investigation by the end of
this month into alleged dumping of stainless steel into the European
Union by Chinese and Taiwanese producers, a leading executive
said.
The case could be the first of a number the European steel industry
brings in the coming months to counter record exports from the
world's largest steel producer, China. Manufacturers there are
boosting output to new highs, despite a domestic slowdown.
"These trade cases against cold-rolled stainless from China and
Taiwan have been brought up to the Commission and to my
knowledge the Commission has agreed to file them," said Wolfgang
Eder, chief executive of Austrian steelmaker Voestalpine (VOES.VI),
and former president of steel industry body Eurofer.
"We are expecting more anti-dumping (action) in the second half.
I can confirm imports into Europe are going sharply up," he said in
an interview with Reuters in London.
The steel industry, represented by EU industry body Eurofer, filed a
complaint in mid-May. The Commission had 45 days to determine
whether or not to proceed with an investigation, an EU source said.
Eurofer itself declined to comment. A Commission spokesman
also declined to comment.
The Commission can impose provisional duties within nine months
of launching an investigation if it determines that the imports are
dumped, meaning sold at artificially low prices. After a further six
months, EU member states can then agree to impose definitive
duties, typically lasting five years.
The EU also investigates allegations of unfair subsidies, with those
cases lasting 13 months.
EU imports of cold-rolled stainless steel sheet from China and
Taiwan totalled 758 million euros (605.377 billion pounds) last year,
according to Eurostat, a 10-fold increase from the value in 2002.
EU production in 2012, the last year for which data is available, was
worth 23.6 billion euros.
"We have been expecting the anti-dumping filing since last year. The
impact on Taiwan would be massive. The European zone is the

biggest export market of Taiwans cold-rolled stainless, accounting

for about 25 percent of total exports," said one Taiwanese
steelmaker.
The EU already has in place duties on seven types of steel products
from stainless fasteners to welded tubes coming from China but no
cases simply involving specific grades of steel.
The China Iron and Steel Association was not available to comment
on the stainless case, but warned earlier this year that rising
Chinese steel exports were likely to increase the risks of antidumping action around the world.
This year alone, the United States has opened a probe into imports
of carbon and alloy steel wire rod from China, confirmed plans for
duties on concrete steel rail tie wire from China and Mexico, and has
said the country unfairly subsidised high-tech steel.
According to China's General Administration of Customs, Chinese
exports of steel, including stainless, hit 8.07 mln tonnes in May, the
highest ever level and an annual increase of 41.5 percent in the
year to date.
Meanwhile, China produced just over half of the world's stainless
steel last year, despite weak demand and pricing trends, according
to research by Steel Market Intelligence GmbH.
Although potential EU anti-dumping duties are many months away,
the bloc's move to open an investigation could help the region's
struggling stainless producers boost prices ST-CRUSTL-IDX, which
have already recovered to around one-year highs.
(Reporting By Maytaal Angel, Philip Blenkinsop, Faith Hung in Taipei
and David Stanway in Beijing; editing by Keiron Henderson)
Search Engine
Today, everyone is using search engine. Search engine market has
grown tremendously. There are more and more search engine
available. Therefore, competition is getting bigger and bigger.
Search engines will continue to garner strength from innovative
technologies that allow advertisers to determine which terms, ads
and websites are most efective. After experiencing substantial
growth over the past five years, revenue will grow even more
quickly in the next five years. The rising penetration of the internet,
the proliferation of mobile devices with internet connections, and
the use location-based services will support demand over the
period. The Search Engines industry grew rapidly over the five years
to 2014, as operators significantly expanded their scope and refined

their methods of providing users with relevant content. Because

search engines have developed and expanded their advertising
platforms, advertising revenue has flowed into the industry.
Competition in the industry has rapidly evolved into a battle
between two of the largest search engines: Google and Microsoft's
Bing. While the industry's other major player, Yahoo, lost a
substantial amount of market share in the past five years, Google
and Bing have increased their user bases and reinforced their
dominance

Chap 2B
About HMI
Health Management International Ltd (HMI) is a healthcare company
with presence in Singapore, Malaysia, Indonesia, Cambodia and
Myanmar. Listed on the SGX Mainboard, HMI is focused on the
delivery of healthcare services.
HMI owns and operates two tertiary care hospitals in Malaysia, the
flagship Mahkota Medical Centre in Malacca and Regency Specialist
Hospital in Iskandar Malaysia, Johor, which provide a comprehensive
suite of medical and surgical disciplines. To reach out to regional
patients, HMI has a network of 21 patient representative offices.
With more than 22 years of experience in hospital management,
HMI provides project consultancy and advisory services.
HMI also owns and operates HMI Institute of Health Sciences in
Singapore and Mahkota Institute of Health Sciences and Nursing in
Malacca, Malaysia.

Regency Specialist Hospital (Regency) is a 218-bed tertiary care

hospital located within Iskandar in Johor, Malaysia. Officially
launched in November 2009 by the Chief Minister of Johor, Regency
is committed to providing high quality and afordable healthcare to
local and regional patients. The hospital is approximately half an
hours drive from Singapore Checkpoint and 18km from Johor Bahru
City Centre.
HMI hospitals are amongst the first few hospitals approved by the
Singapore Ministry of Health for Singapore residents to use their
Medisave for hospitalization and day surgeries overseas. With its
proximity to Singapore, Regency has a core group of Singapore
medical specialists who practice on both sides of the causeway. This
allows Singapore residents to benefit from their dual practices.
For more information about the hospital, please go to the Regency
Specialist Hospital website.

Chap 3
Strategic Issue
I suggest FLE uses JSW model in strategic planning which started
with positioning, then choices and then implementation (JSW 2007).
In the positioning, I would like to apply PESTEL (3a) and 5 forces
(3b). In the choices, I would like to use Ansof (3c) and for the
implementation, I would suggest Balance Score Card (BSC) (3d).

Chap 3a
PESTEL on Shell
The political situation in UK is very stable and there is no issue
politically for Shell. However, from social aspect, Shell will be facing
non renewal energy pressure from people in UK. Because oil & gas
industry has consume too much of the non renewal energy which
going to run out of oil soon if these were to continue. However, Shell
can look into alternative energy like producing solar panel or nuclear
plant. The economic situation in UK is not doing well, people in UK
has problem paying petrol for their transportation, that will afect
Shell. This economic issue is going to continue for a long period of
time because of global crisis.
The economic situation in Singapore is looking very bad in coming
years, this will afect KFC sales and consumer may not be able to
pay for high price meal. I propose KFC moves into low cost chicken
which can use chicken from Indonesia rather than currently from
Malaysia. From social aspect, Singaporean are very health
conscious, and majority of them feel that KFC chicken is very
unhealthy. This will create a big issue in KFC sales. However, I
suggest KFC use organic cooking oil and free-range chicken to
improve the quality of hygiene. I also suggest KFC promote low fat
healthy food. In additional, KFC can bake chicken instead of only
fried.
PESTEL on McDonald & the issue
From Economic aspect, interest rate is going up because of tapering
of QE (quantitative easing) and because of that, McDonald is facing
high interest cost. This issue will greatly afect McDonald growth
rate because franchisee need to borrow money to setup outlet, and
high cost will deter their growth. One of the solution is go for low
capital investment like McDonald mobile kiosk.
Social Aspect of search engine
People (Social) in US has very high expectation on search engine as
there are many choices of search engine like Bing, Yahoo etc. People
in US are not as easily satisfied (using only Google) like other
countries. This creates a big issue for Google as people in US do not
give Google special priority. I recommend Google other than
ensuring the search engine fit to US people, Google should give
some complimentary product to encourage people in US to use
Google like high capacity cloud storage and high capacity in email
space.

Chap 3b
Porter five forces analysis is a framework for industry analysis and
business strategy development (Kevin 1996). According to Porter
2008, it draws upon industrial organization (IO) economics to derive
five forces that determine the competitive intensity and therefore
attractiveness of a market.
Attractiveness in this context refers to the overall industry
profitability. An "unattractive" industry is one in which the
combination of these five forces acts to drive down overall
profitability. A very unattractive industry would be one approaching
"pure competition", in which available profits for all firms are driven
to normal profit. This analysis is associated with its principal
innovator Michael E. Porter of Harvard University (as of 2014).
5 Forces on Shell
Current rivalry is creating a big issue for Shell as BP is slashing their
price and implementing many cost reduction project.
KFC is facing low forces from supplier and customer which is not
creating big issue in KFC. However, current rivalry force is very high
for KFC, which is McDonald who also start fried chicken menu. In
addition to McDonald, there are many new entrants like Popeye
which serve very good fried chicken as well. This will be a big issue
for KFC. However, I suggest KFC to go into Caf like McCafe and
Starbuck. Also, KFC could start selling beer like Burger King does.
The bar can be like Paulinar or Harry.
Health care education industry is very highly competitive because
competitors are in balance. This will create a big ISSUE for HMI
because HMI has to sell his courses/product are reasonable price.
Because of that, I suggest HMI to diversify their business to manage
nursing home.
Health care education currently is facing a slow market growth due
to product life cycle already at maturity stage. This will create a big
ISSUE for HMI because forward looking, HMI profit will not grow
much. I suggest HMI to extend their education business to beyond
health care education but go into commercial degree like MBA.
Health care education currently is facing high fixed costs because
instructor are getting more expensive and rental are increasing as
well. This will create a big ISSUE for HMI as because of high fixed
cost, they has to continue to operate their business at lower selling
price and this will afect their bottom line. I suggest HMI to expand
their business to country which has lower fix cost like Papua or

Cambodia. The detail financial model for this proposal is found in

Chapter 4.
Health care education industry has high exit barriers because
investment and commitment is very high like rental and employee
contract. This is a big issue for HMI has HMI cannot exit this industry
due to the committed contract. I suggest HMI to reduce their
commitment in future by signing shorter contract but at higher cost
Health care education industry product are undiferentiated because
everyone is selling same product. This will create a big issue for HMI
because HMI product cannot sell at higher price since everyone is
selling the same product. This will reduce the bottom line of HMI. I
suggest HMI create special product that no player in health care
education industry has done like yoga (break through from the
convention product). In order to achieve that, I suggest HMI
collaborate with Singapore Famous Yoga Centre. This
recommendation financial spreadsheet will be found in chap 4b.
Search engine industry has very low customer loyalty because there
are many search engine ofering low price in advertisement which
can easily port over from Google to competitor like Yahoo. Because
of that, this create a big issue for Google as customer can switch
easily without loyalty, this could afect Google revenue and profit. I
recommend Google to go into operating system business like
Microsoft where the customer could not switch easily and usually
are loyal to the product.

By looking at individual force (previous

paragraph), it is not good enough according
to 5 forces PLUS. Therefore, linking the force
become as important. In the case of Danone,
currently the buyer force is very high
because customer is very demanding,
customer want high quality and service but
paying low price. Because of that, competitor
forces becoming lesser because many
competitor quit because of high forces from
the customer. This will create a big issue to
Danone. Danone has to lower the selling
price imply revenue will drop and profit will

drop. But increasing the quality of product

and service, the cost for Danone will increase
and this will lead to lower profit. I recommend
Danone to move into new market by opening
retail shop (detail financial modeling on this
recommendation is in the next chapter).
economies of scale
capital requirements of entry
access to supply or distribution channels
customer or supplier loyalty
experience
expected retaliation
legislation or government action
diferentiation
Potential solution
Take-over / acquisition
Merger
Joint venture
Franchise
Collaboration
Product for product substitution
e.g. email for post
substitution of need
e.g. reliable and cheap appliances reduce need for maintenance
services
generic substitution
a concentration of buyers
many small operators in the supplying industry
alternative sources of supply
low switching costs
components/materials that are a high percentage of cost to the
buyer leading to shopping around
a threat of backward integration

a concentration of suppliers
customers that are fragmented and bargaining power low
high switching costs
powerful supplier brand
possible integration forward by the supplier
Deregulation
Health care education industry has becoming more and more
deregulated. This will create a big issue for HMI as they are not
protected by regulation, implying anyone can come into health care
education industry. This will afect the bottom line of HMI as
customer will have more and more choices. I suggest HMI go into
more protected industry like R&D in healthcare.
Globalisation
Health care education industry is facing high forces from
globalization because most of the health care education player has
establishment is all the major city in the would. This will create a big
issue for HMI because HMI only has small present in overseas. I
suggest HMI to go into smaller industry (industry with less big player
or less capital) like pharmacy selling focus on selling medication.
Digitisation
Health care education industry is facing high forces on digitization
because most of the health care education player already fully
automate and fully computerize their operation by installing
Enterprise Resource Planning. This create a big issue for HMI as
currently they have not install ERP yet. The solution for HMI is to find
a low cost ERP but strong in CRM because CRM is more critical in
business operation.

Chap 3c Ansof
In Ansof model, there are 4 possibilities, old market old product
(market penetration), old market new product (product
development), new market old product (market development) and
new market new product (diversification). I would like to propose old
product new market, FLE Indonesia because Indonesia is expanding
and by using old product, FLE is taking lower risk.
I would like to propose McDonald to go into new product base on old
market. The new product is training how to cook burger in
Singapore. I also propose McDonald to go into new product new
market by setting up Italiano restaurant like Vapiano (the popular
Italy restaurant in East and central Europe).

Chap 3d BSC & Strategy Map

I would like to propose FLE using BSC to look at their performance
and to improve their performance through learning and growth. BSC
is a model to measure performance through 4 section in hierarchy
form from Learning and Growth on the lowest level, to Internal
Process to customer satisfaction and lastly to financial performance.
The word balance implies you must balance finance and nonfinancial performance. Training per year per employee is one of the
critical success factors for FLE and this will be one of the KPI in FLE
that should be measured. In addition to BSC, to integrate BSC into
strategy map is vital important because the end result of balance
score card to enhance the final objective and strategy of the
company that is the mission, vision and values. As for FLE, by
enhance resources like training of employee would eventually help
in the final mission for FLE to be the largest logistic company in
Singapore because by improving employee capability, FLE can
operate more efective and efficient, then customer will be more
satisfied and FLE will grow their business and hopefully can achieve
the largest logistic company in Singapore.

Chap 4 a
The key performance indicator for this industry include financial
ratio and non financial ratio. The key performance indicator include
ROE, CAPM, Debt Ratio, Interest Coverage, Current ratio, Asset
Turnover and Net Profit Margin.
For stainless steel industry, the KPI for CEO is the ROE (return of
equity) as that is the measurement of shareholder on the CEO,
which the shareholder hired. Company X Roe is 16% vs the closest
competitor company Y which has ROE of 12% shows that company X
is doing better than Y.
Debt ratio is a KPI for retail industry as managing debt is one of the
way to compete in the market. The debt ratio for M&S is 0.9 which is
better than the competitor which is 1.7 implying that M&S is taking
lesser risk.
One of the KPI in steel industry is ROE which the ROE for SGH is
3.6% as compare to the competitor AnnAik whose ROE is 5.7 which
imply that SGH is losing out to its closest competitor.
Base on net profit margin.

Chap 4 b

Financial spreadsheet modeling of recommended strategy options

I would like to recommend McDonald to sell Nasi Lemak and my detail
financial proposal is in Appendix A.
Payback
IRR
NPV

1.77
57%
$5,420,140.4
6

My proposal could give McDonald a payback of 1.77 years, meaning the

investment of 3.5m will be able to get back in 1 year and 9 months
approximately.
My proposal could give McDonald a return of 57% of the investment of
3.5m, or annualized of 2m per year on average.
The net present value of this proposal is 5.4m meaning that the initial
investment of 3.5m will give a return of 5.4m in 5 years with discounting
of future cash flow value and excluding the initial investment.
My final conclusion is McDonald should take up this proposal because the
payback, IRR and NPV is very attractive.
M&S
According to Sullivan 2005, Capital budgeting (or investment appraisal) is
the planning process used to determine whether an organization's long
term investments. Funding of cash can be either through debt or equity
(Varshney 2010). I would like to recommend M&S to go into
manufacturing of chocolate and cookie and my detail financial proposal is
in Appendix A using capital rationing method NPV, IRR and Payback
(Campbell).

My proposal could give M&S a payback of 2.6 years, meaning the

investment of 30m will be able to get back in 2 years and 7 months
approximately.
My proposal could give M&S a return of 30% of the investment of 30m, or
annualized of 9m per year on average with time value of money factor in.
The net present value of this proposal is 16m meaning that the initial
investment of 30m will give a return of 16m in 5 years with discounting of
future cash flow value and excluding the initial investment.
My final conclusion is M&S should take up this proposal because the
payback, IRR and NPV is very attractive.

Noble
According to Sullivan 2005, Capital budgeting (or investment appraisal) is
the planning process used to determine whether an organization's long
term investments. Funding of cash can be either through debt or equity
(Varshney 2010). I would like to recommend Noble to go into trading LPG
(Liquified Petroleum Gas) and my detail financial proposal is in Appendix A
using capital rationing method NPV, IRR and Payback ( Campbell).

My proposal could give Noble a payback of 2.16 years, meaning the

investment of 12m will be able to get back in 2 years and 2 months
approximately.
My proposal could give Noble a return of 47% of the investment of 12m, or
annualized of 6m per year on average with time value of money factor in.
The net present value of this proposal is 19m meaning that the initial
investment of 12m will give a return of 16m in 5 years with discounting of
future cash flow value and excluding the initial investment.
My final conclusion is Noble should take up this proposal because the
payback, IRR and NPV is very attractive.

Chap 5A limitation of financial model

Financial ratios are not very useful on a stand-alone basis; they must be
benchmarked against something. Analysts compare ratios against the
following:
1.The Industry norm - This is the most common type of comparison.
Analysts will typically look for companies within the same industry and
develop an industry average, which they will compare to the company
they are evaluating. Ratios per industry are also provided by Bloomberg
and the S&P. These are good sources of general industry information.
Unfortunately, there are several companies included in an index that can
distort certain ratios. If we look at the food and beverage ratio index, it will
include companies that make prepared foods and some that are
distributors. The ratios in this case would be distorted because one is a
capital-intensive business and the other is not. As a result, it is better to
use a cross-sectional analysis, i.e. individually select the companies that
best fit the company being analyzed.
2.Aggregate economy - It is sometimes important to analyze a company's
ratio over a full economic cycle. This will help the analyst understand and
estimate a company's performance in changing economic conditions, such
as a recession.
3.The company's past performance - This is a very common analysis. It is
similar to a time-series analysis, which looks mostly for trends in ratios.
Limitations of Financial Ratios
There are some important limitations of financial ratios that analysts
should be conscious of:
Many large firms operate diferent divisions in diferent industries. For
these companies it is difficult to find a meaningful set of industry-average
ratios.
Inflation may have badly distorted a company's balance sheet. In this
case, profits will also be afected. Thus a ratio analysis of one company
over time or a comparative analysis of companies of diferent ages must
be interpreted with judgment.
Seasonal factors can also distort ratio analysis. Understanding seasonal
factors that afect a business can reduce the chance of misinterpretation.
For example, a retailer's inventory may be high in the summer in
preparation for the back-to-school season. As a result, the company's
accounts payable will be high and its ROA low.
Diferent accounting practices can distort comparisons even within the
same company (leasing versus buying equipment, LIFO versus FIFO, etc.).
It is difficult to generalize about whether a ratio is good or not. A high
cash ratio in a historically classified growth company may be interpreted
as a good sign, but could also be seen as a sign that the company is no
longer a growth company and should command lower valuations.
A company may have some good and some bad ratios, making it
difficult to tell if it's a good or weak company.

In general, ratio analysis conducted in a mechanical, unthinking manner is

dangerous. On the other hand, if used intelligently, ratio analysis can
provide insightful information.

High quality global journalism requires investment. Please share this

article with others using the link below, do not cut & paste the article. See
our Ts&Cs and Copyright Policy for more detail. Email
ftsales.support@ft.com to buy additional rights.
http://www.ft.com/cms/s/0/b78d47d4-5c9c-11e0-ab7c00144feab49a.html#ixzz35RMH7dcR
Critics suggest that financial models were inefective during the financial
crisis, resulting in portfolio underperformance and unexpected losses to
investors. For instance, various innovative products found to fuel the crisis,
such as those introduced by certain banks, were largely made possible
through modelling techniques. Recent events thus highlight the need for a
close look at the role and efectiveness of financial models and the
expertise of modellers.
What are the limitations of models?
Perhaps most important among the limitations of modelling techniques is
the inability to efectively capture change or the unexpected. Models can
pose serious risks to those who rely too heavily on them. The future
direction of markets is highly uncertain. In short, no single model can
contain all the necessary information to capture the uncertain path of
outcomes.
Compounding this challenge, markets jump, sometimes abruptly
producing fat tails (unexpected bumps) in the distribution of returns. Such
shocks in financial markets severely hamper the efectiveness of modeldriven decision making.
For example, risk models such as Gaussian VaR (value at risk), often fail to
predict the duration and magnitude of extreme losses because they are ill
suited to that task. They do not admit the extreme outcomes during
periods of turmoil.

Chap 5B limitation of convention analysis

http://www.recercat.net/bitstream/handle/2072/2088/wp0206.pdf?
sequence=1
Or refer to file limitation of convention analysis

Example of limitation on 5 forces is it does not cover forces on

globalization, e-commerce and deregulation. Therefore new 8 forces
is to overcome that.

Chap 6
My recommendation is for Danone to setup Danone retail shop. The
resources needed are some of the time and efort from the top
management but at executive level, Danone will be hiring new staf.
The timeline for this proposal must be execute before Q4 of 2015 as
this opportunity loss the efect if it takes too long to execute.
CBA
The financial cost of setting up retail shop is 1.1B which the financial
benefit is 0.61B in addition to the 1.1B cost. This implies the
financial benefit of this proposal is more than the cost. Therefore,
from financial cost-benefit analysis perspective, this proposal is
good.
However, we have to consider other cost and benefit besides
financially. One of the important cost is by creating retail shops,
Danone is actually competiting with some of their current customer.
This efect is not very strong as current retail shop which will be
afected is very small (less than 2%). On the other hand, the non
financial benefit for opening retail shop is branding awareness. By
creating retail shop, Danone as a brand will be more known (like
Body Shop).
SAF
By recommending McDonald to sell Nasi Lemak, is this feasible,
acceptable or suitable.
First, feasibility, 3.5m to McDonald Singapore is definitely financially
feasibility. In term of other resources like human, space is also not
an issue.
Nest, can McDonald accept the risk and return for selling Nasi
Lemak. Risk is quite minimum as McDonald is very familiar with
food, return is very good base on payback, IRR and NPV.
Lastly is suitability, McDonald is definitely suitable to sell Nasi
Lemak as McDonald believe in Polycentric which means they will
customized their menu for local needs, which Singaporean love Nasi
Lemak.

Appendix A

Appendix B Referencing
Sullivan, arthur; Steven M. Shefrin (2005). Economics: Principles in
action. Upper Saddle River, New Jersey 07458: Pearson Prentice
Hall. p. 375. ISBN 0-13-063085-3.
Prof. Campbell R. Harvey; The Investment Decision of the
Corporation, Prof. Don M. Chance
Varshney, R.L.; K.L. Maheshwari (2010). Manegerial Economics. 23
Daryaganj, New Delhi 110002: Sultan Chand & Sons. p. 881. ISBN
978-81-8054-784-3.
Michael Porter, Nicholas Argyres, Anita M. McGahan, "An Interview
with Michael Porter", The Academy of Management Executive
16:2:44 at JSTOR
Michael Simkovic, Competition and Crisis in Mortgage Securitization
Kevin P. Coyne and Somu Subramaniam, "Bringing discipline to
strategy", The McKinsey Quarterly, 1996, Number 4, pp. 14-25
Michael E. Porter. "The Five Competitive Forces that Shape
Strategy", Harvard Business Review, January 2008, p.86-104. PDF
Werner Felt, B. (1984), A resource-based view of the firm, Strategic
Management Journal, Vol. 5, (AprilJune): pp. 171-180