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business
valuation measuring and managing
Questions and Answers of
Valuation Measuring And Managing
* explore implications for the nature of leading and managing change.
* identify connections between the enquiry–action framework and the theories of change introduced earlier in the book; and
* discuss the integration of practices;
* elucidate the practicalities of the enquiry–action framework;
(3) Consider at least one model, tool and theory that you could use to give an account of the change contained in your plot summary.
(2) If you worked for the organization concerned, which organizational audiences might require an account of the change to be constructed?
(1) Construct a short plot summary (no more than seven steps) that summarizes the case.
(4) What are the pros and cons of a hybrid approach that seeks to have either:(i) some parts of the organization structured in an organic way and other parts in a mechanistic way; or(ii) people
(3) What would you see as the principal advantages and disadvantages of (a)mechanistic and (b) organic structures?
(2) Using the mechanistic-organic model, analyse the structural changes that Oticon went through.
(1) How would you describe the environment of Oticon?
(6) What are the divergent perspectives at play in this change:(i) fix and maintain;(ii) build and develop;(iii) move and relocate; or(iv) liberate and recreate (Marshak)?
(5) Is this a large-scale change impacting on major processes or a lot of people, or is it more minor (Burnes)?
(4) Is slow and careful change needed or is there a need to move more quickly(Burnes)?
(3) Is this an internal change or are we in a situation in which several organizations are changing at the same time, such as a group of competitors (Van de Ven and Poole)?
(2) Can we determine the nature of the change we face or are we strongly influenced by external constraints (Van de Ven and Poole)?
* prepare those studying change in the context of assessed courses to produce academically grounded accounts of change.
* focus the production of accounts of change by examining critical questions that help frame the account; and
* introduce the challenges of writing for organizational and academic audiences;
* What difficulties or sensitivities might the gathering and the analysis of such evidence have thrown up?
* Which techniques might they have used to gather that evidence?
* What evidence might they have gathered to support and inform the change process?
ITS Canada attempted a major cultural change when the organization broke away from its parent company and moved to new premises (see Extended Case 2). From the point of view of the senior managers at
* identify the political and social challenges of gathering and presenting evidence in change processes
* build familiarity with a range of techniques used to gather evidence; and
* introduce the concept of evidence;
(4) If you were in Simon’s role how would you balance being a company director and being conductor? Which position would you use in dealing with the situation, and what would you do?
(3) If you were in the role of Jeremy what could you do to change the interactions with the cast, and Bella in particular.
(2) How does each character narrate the story? What is the plot line according to them? What role do the characters take? How much freedom of action do they believe that they have?
(1) What might be the TA life positions of Bella the soprano, Jeremy the artistic director and Simon the conductor?
* discuss transactional analysis as a way of understanding and planning interaction
* introduce narrative analysis and its relevance for managing change; and
show how conversations and interaction fit into broader social and interactive context of organizational change;
(3) What do you think the processes adopted say about the culture at Power Provision plc?
(2) Do you think that the selection decisions to make redundancies were rational and fair? Could they be improved? If so, how?
(1) How would you assess the state of the psychological contract as the case progresses?
(3) Are they the best people available to do the role? (Should it be them?)
(2) Are they motivated to perform the role? (Will they do it?)
(1) Do the people have the capability to perform the role? (Can they do it?)
(7) What will be the outcomes for people or objects that I care about (the quality of the product/service, clients, my colleagues and friends, the direction of the company, my current and future role
(6) What can I do about it (to change or reinforce)?
(5) Do I agree with (or am I committed to) what is expected?
(4) How should I spend my time?
(3) Can I contribute?
(2) Do I fit in?
(1) Where are we going (as an organization or on a particular change project)?
* consider the application of practices contrasting environments.
* discuss approaches to selecting people to join change teams and organizations;and
* introduce the psychological contract and discuss its importance for managing change;
* explore the nature and practices of selection decision making;
if you could start from scratch, how would you set up a competitor?
Who executes the process and does it need to be them?
How will it be done – i.e. using which resources?
When and within what timescales must it be done ?
Where must it be done?
Why are we trying to do it?
What are we trying to do?
introduce basic techniques for process mapping and suggest ways in which process changes might draw on such modelling approaches Use the following questions to challenge the assumptions that underpin
locate process-oriented change research within the literature; and
show how processes relate to other aspects of organizations, such as people and structures;
consider the choices that an organization faces when changing customers and competitors.
describe the role of strategic groups in defining change challenges; and
suggest ways in which customers can be segmented;
(4) Would Microsoft gain a useful advantage by taking Nokia over? What reaction might they expect from stakeholders to such a move?
(3) From a stakeholder/influence perspective, what advantages do Nokia and Microsoft gain by collaborating?
(2) Construct a stakeholder map from the point of view of Microsoft before the collaboration with Nokia was established.
(1) Construct a stakeholder map from the point of view of Nokia before the collaboration with Microsoft was established.
8. Consider the example of the valuation of the pharmaceutical R&D project described in the final section of the chapter. Under the assumptions stated, the DTA value is identical to the ROV value.
7. For estimating the value of an option on a traded stock, the expected return on the stock is irrelevant, as proven in option-pricing theory. For the valuation of an option on an asset that is not
6. The option to defer an investment reduces risk for a company because it does not need to commit the full investment outlay until there is more certainty about the true value of the underlying
5. It is often argued that the two most important real options available to a manager evaluating investment decisions are the option to defer an investment decision and the option to abandon an
4. Under what circumstances should a manager apply a standard NPV approach, a DTA approach, or an ROV approach to valuation?
3. Assume a company runs a plant for which the value one year from now will be either $1,000 if market growth is positive or $250 if market growth is negative. The probability of positive market
2. Identify the value drivers embedded in a real option. What is each driver’s effect on the option’s value, and how might they interact?
1. Define contingent net present value (NPV). Outline and explain the differences between standard and contingent NPV.
8. In the economic spread analysis, a tax penalty is allocated to a bank’s interest spread on loans, but no tax credit is allocated to the interest spread on deposits.Why does that not violate the
7. In a bank valuation, the amount of current loan loss provision is not deducted from the DCF result.Why is it then important to analyze the adequacy of the bank’s current loan loss provisions?
6. Consider a large banking group with businesses in retail banking, equity trading, and mergers and acquisitions (M&A) advisory. Discuss its potential for creating value based on the possible
5. If a bank attracts new equity to increase its Tier 1 capital ratio,what happens to its cost of equity and its intrinsic value if it invests the new equity capital in (a) deposits with the central
4. If a bank increases its maturity mismatch, what happens to its economic spread before taxes and its economic spread after taxes (i.e., including the tax penalty)?
3. Define maturity mismatch. Why is maturity mismatch important for understanding a bank’s risk and analyzing its performance?
2. Identify the value drivers embedded in the equity cash flow model. How do the equity cash flow drivers differ from the drivers of the enterprise DCF models?
1. Why should you estimate the value of a bank by employing the equity cash flow method, rather than the enterprise DCF models stressed throughout the text?
5. What are the four steps in a scenario analysis approach for valuing cyclical companies?
4. What are the potential reasons cyclical companies invest cyclically rather than countercyclically? When should companies invest?
3. Why should a scenario approach to valuation be used to value cyclical companies?
2. Describe how analyst projections of cyclical company profits compare with actual performance.What are the possible reasons for the deviation?
1. Assuming investors had perfect foresight, how would the volatility of a cyclical company’s share price compare with the volatility of its profits?
7. Last year, GrowthCo traded at $20 per share. Over the past 12 months, the company’s share price rocketed to $60 per share. Does this mean the share price was misvalued last year?
6. Why do most young, high-growth companies have negative earnings?
5. How do you estimate the potential margin and capital turnover for a young, high-growth company? Are the company’s current margin and capital turnover relevant?
4. For a company with a new product, how can you estimate its potential market share?
3. How does the total market for a new product differ from a company’s addressable market? Which market is more relevant for forecasting a company’s revenues?
2. Howwould you approach valuing a two-division firmwith one mature division and one high-growth division?
1. Which valuation methodology—scenario-based DCF analysis or multiples analysis—is preferable in valuing high-growth firms? Why?
8. Many emerging economies have restrictions on capital outflows to protect their growth and stability; for example, they may impose high taxes on repatriated profits by foreign companies. Where and
7. To estimate the beta for a Brazilian telecommunications company, you have collected a sample of telecom peers in Latin America and Asia and peers in the United States and Europe. The median beta
6. Discuss the relative merits of including risk adjustments in cash flow or in discount rates—especially for high-growth companies in emergingmarkets.
5. Volatilities for individual stock and market indexes in emerging economies are typically higher than those for U.S. stocks and indexes. Should that mean that the cost of capital for investments in
4. You are computing the value of a firm headquartered in an emerging market.Identify the factors unique to an emergingmarket that need to be evaluated when estimating the cost of equity using the
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