univ exam 2000 solutions

8/12/2019 Univ Exam 2000 Solutions

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UNIVERSITY OF MUMBAI, MAY 2000 EXAMINATION - PROJECT MANAGEMENT

FOR M.H.R.D.M. / M.M.M. / M.F.M. (THIRD YEAR)

SUGGESTED ANSWERS SO!UTIONS TO PROB!EMS

Note: Answers to theoretical questions are suggestive and cover only the main points and expected key phrases. The

actual answers could be differently structured more elaborate and explanatory.

".# S$%&' N%'* (A+ %& '% +1&, 3 4&5 6$)

7) I486' % 97&97'7%+ %+ 7+'&79 :9%84+' 7+ I+7*

- !iberalisation process in "ndustrial fiscal trade # commerce import # export exchange control policies ofthe government that has continued since $%%& has given a boost to "ndian industry.

- No controls by government on industrial licensing except in defence nuclear drugs # pharmaceuticalstobacco alcohol # railways.

- 'arket oriented economy with no artificial barriers for protecting inefficient industry.- (asier inflow of latest technology- )pening of financial markets to foreign investors # easy inflow of foreign funds.- )pening*up of international competitive markets.- (xposure to global competition in local markets-

"mprovement in productivity # product quality.- +aster infrastructure development on commercial basis.

77) I+'776'7%+ % +1 7+:'4+' %88%&'+7'7*

,asic reasons for companies to look for new investment opportunities:

)rganisational ambitions and aspirations for growth * to be a local - state - national - global player to be

a market leader etc.

"ncreased competition in existing markets * more competitors.

/roduct decay - obsolescence * /roduct substituted - not required any more.

Technology obsolescence * New cheaper technology available.

0overnment policy * changes in government policy tax structure may necessitate withdrawal of product.

1ystematic steps to be followed to choose a new investment opportunities:

(stablishing policy: /olicy arising out of corporate plan # resulting in a long*term strategy for

company2s strength. 13)T analysis : 4ritical evaluation of company2s strengths and weaknesses in marketing production

financial areas its resources and skills. (xternal environment is analysed to study opportunities andthreats.

1election of market : /otential markets that are in line with company2s ob5ectives and policies are

assessed # short listed.

6emand assessment : ,ased on published information in trade 5ournals government statistics published

surveys etc.

6etail market survey : To establish demand pricing probable market share establish distribution

strategy etc.

Technical feasibility : Technical and technological feasibility. 'aterials # skill requirement.

7isk assessment : 8nderstanding and assessment of present # future market risks.

+inancial # profitability assessment : 4omparative assessment of alternatives to choose final productidea.777) V977' % '&+ +97 7+ 4+ %&6'7+; %& 8&%


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- /roblem and conflict solving ability to identify and understand problems place them in perspectivedevelop and implement solutions.

- /eople management- /erspective vision to step back and take an overall view to see symptoms of problems.- ,eing an organiser managing and allocating time for important issues- +amiliarity with the organisation to understand funding and decision making process.- "nitiative and risk taking ability to accept - delegate tasks not done.

T6$+769 5799, 5+%19; 8&7+6:- 1hould be a generalist to see a bigger picture i.e. relationship of pro5ect to the company impact of end

product etc.- (xperience of not only working on several pro5ects but to integrate it to apply to the current pro5ect- Acquire knowledge and information on all aspects of pro5ect and quickly.- ,asic understanding and appreciation of technical process is required rather than expertise in the same.- Adequate knowledge of latest pro5ect planning budgeting and control techniques.

". 2 ) D76 H4+ A86' % P&%


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- A66%+'7+; R' % R'&+ is a measure of pro5ect profitability that relates income to investment bothmeasured in accounting terms. "t is generally expressed as a ratio of Average "ncome after Tax to "nitial"nvestment.

(xcept for the N/< criterion which can not be used for comparing mutually exclusive proposals unless theinvestment amounts are similar all other criteria enable a good comparison within their own limitations.

"n general the non*discounting methods are simpler to calculate and therefore give a quicker comparisonbetween various proposals. They however do not take time value of future cash flows into consideration andtherefore may result in misleading conclusions. These criteria are therefore used to compare smaller investments

or as a quick method to discard weak proposals.

6iscounting methods are considered to be more dependable for comparing large investments and arerecommended for use by the financial institutions.

". ) F%99%17+; 8&%


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". 3 ) W$' & '$ 7''7%+ 7+ 1$76$ :9'7%+ % 7+:'4+' 9'&+'7: 7 6797'' 677%+ '&

+97? E897+ '$ 76 '8 7+:%9: 7+ 677%+ '& +97.

1ome investment decisions are not isolated or not unconnected with future outcome of events after making the

decision are analysed with help of decision tree technique. 'any such outcomes would be beyond the control ofthe decision*maker and will be a result of chance to a greater or lesser extent.

A decision tree consists of a number of branches springing at each node as a result of one of two conditions.,asic steps involved in the analysis are:$. "dentify the problem and various alternatives

?. +orm the decision tree.- 6ecision points and alternatives available for action.- 4hance points when outcomes are dependant on chance

@. 1pecify probabilities # monetary values for various outcomes.- data for probabilities associated with each possible outcome at various chance nodes and- 'onetary value of each combination of decision alternatives and chance outcomes.

D. (valuate the alternatives.- (valuate monetary values of chance points and decision points in a backward manner till reaching

the original decision point.

". 3 ) A 6%48+ $ + 7+:'79 &89 % R. #00 C&%&. I+:'7+; '$7 4%+' 7+ 7' 7'7+; 7+6+ ;7: 6&'7+ &'&+ % .0. A9'&+'7:9, '$& 7 + %88%&'+7' %& 7:&776'7%+ 1$76$, 7

669, 7 '74' '% &7+; &'&+ % #.0. H%1:& 7 7:&776'7%+ 7 +%' 669, 86'

&'&+ 1799 %+9 2.0. W$' 4' '$ 8&%797'7 %& '1% %'6%4 % 7:&776'7%+ 7+ %&& '%

45 '$ 7:&776'7%+ 1%&'$1$79?

!et probability of success in diversification be x2. Bence probability of failure is M$*x9.(valuation of diversification should be at least be F > i.e. 7s. F.& 4rores if not more.

BenceF.& J $G.& x H ?.& M$*x9F.& J $G.& x H ?.& Q ?.& xF.& Q ?.& J $=.& xx J E - $= J &.D

/robability of success in diversification should be at least &.D or D&.& >

6

100 Cr.INVEST

EXISTINGBUSINESS

DIVERSIFY

SUCCESS x %

FAILURE 1-X %

8.0 Cr.100 %

1.0 Cr.

2.0 Cr.


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". W&7' $%&' +%' %+ + %& % '$ %99%17+;* (3 4&5 6$)

7) U % CPM 7+ %8'747'7%+ % 8&%


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:) P&% 7& 7+ '$7& 7;+776+6? W$+ 6+ 8&%


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". ) R&&7+; '% '$ 97' % 6'7:7'7 9%1, &1 +'1%&5 7+ =A&&%1 D7;&4 (AOA)> 6%+:+'7%+. F7+

%' '$ T%'9 T74 %& 8&%


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". ) A 8&%

univ exam 2000 solutions

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