Guidebook For Supporting Decision Making Under Uncertainties: Today's Managers, Tomorrow's Business Today's Managers, Tomorrow's Business

This book provides much-needed guidance in making sound business decisions for the business leader or decision maker, especially investment appraisal practitioners such as strategic planners, business analysts, financial partners, and supply chain experts. By supply chain , the authors mean the network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product. The book begins with an introduction to the concept of decision making under uncertainty and the forces driving the business. A gap in the current knowledge is then discovered as it arises from an analysis of the profitability indicators that are currently being used. With hands-on experience in decision making within the supply chain environment, and coupled with leading-edge mathematical and business formulations, the authors propose how to enrich quantitative and qualitative decision-making measures. This further leads to a decision-making framework and process, supported by a ready-to-use tool (PADOVA). Contents: Decision Under Uncertainty; Critical Review of Accounting Performance Measures; Critical Review of Strategic Criteria; A Way Forward: Quantitative Decision Making Measures; A Way Forward: Qualitative Decision Making Measures; The Framework. CONTENTS 6 Prologue 8 Acknowledgements 10 Chapter 1 Decision Under Uncertainty 12 A Radical Change of Perspective 12 The New Business Drivers 15 Traditional Accounting Measures are Surpassed 18 The constant strive for growth 19 How to turn uncertainty into value 20 How to quantify the value added by intangibles 22 A New Approach to Value 24 Reflection on Learnings 28 Chapter 2 Critical Review of Accounting Performance Measures 30 Residual Income Indicators 30 The background of Residual Income Indicators (RII) 30 Residual income indicators vs. traditional performance measures 32 Discussion of NPV vs. IRR and ROI 33 Return on equity (ROE) 35 Dividends and EPS 36 Three advanced residual income indicators 36 Rappaport 37 TBR (Total Business Return) 39 Similarities and differences 41 Shortcomings 43 Time Issues 44 Reinvestment rate 45 Non-constant accumulation of project risk 45 Time-varying discount rates 46 Time-varying discount rate components 47 Terminal value calculation 50 Capital Scale Issues 50 Implications 51 Reflection on Learnings 52 Chapter 3 Critical Review of Strategic Criteria 54 Shortcomings of Existing Methodology 54 Strategic Issues 56 Impact on Residual Income Indicators 61 Reflection on Learnings 65 Chapter 4 A Way Forward: Quantitative Decision Making Measures 68 The Enhanced NPV 68 Uncertainty concept 68 The model 69 The Capital Scale Index 70 Scale issues 71 The model 71 A simple application example 72 TheOperatingValueAddedModel 74 Lifetime of the project 76 Real options 77 An application example 80 Reflection on Learnings 84 Chapter 5 A Way Forward: Qualitative Decision Making Measures 86 Project Value Chain 86 Innovation/new technology 86 Technical expertise 87 Customer relations 87 Supply chain development/relations 88 Financial resources 88 Profit sustainers 88 Supply chain positioning 88 Product differentiation 88 Superior risk management 89 Lean/operational excellence 89 Operational flexibility 89 The Growth Matrix 89 Questionnaire data processing 93 RiskAnalysis 95 Risk management 98 Risk management methodology 98 Strategic objectives 99 Risk identification 99 Risk quantification 100 Risk mitigation 103 Low severity, low expectancy 105 High severity, low expectancy 105 Low severity, high expectancy 106 Low severity, low expectancy 107 High severity, high expectancy 108 Frequency induced corrective actions 109 Risk index 109 Reflection on Learnings 111 Chapter 6 The Framework 114 TheVision 114 Residual Income Indicator 115 Capital Scale Index 118 Growth Matrix 118 Risk Analysis 119 Summary 121 Reflection on Learnings 123 Chapter 7 Implementing a Case Illustration 124 Residual Income Indicator 124 Growth Matrix 127 Risk Analysis 128 Reflection on Learnings 132 Conclusions: A Way Forward 134 Certainty and Uncertainty 134 Influencing Factors 135 Scope of the decision 137 External conditioning 138 How can we Help the Decision-Making Process? 138 A Framework for Taking Decisions 138 Appendix 140 Effect of DiscountingModel 140 Comparison of Different Residual Income Indicators on Value Creation 141 Effect of Additional Flexibility (Real Options) onto the Plan Value 143 Comparison of Different Residual Income Indicators on Terminal Value 143 Effect of Initial Capital on Value Creation 144 Comparison Between Profitability Index and Capital Scale Index 145 References 148 Index 150 The Inside Ring Is The First Novel In Mike Lawson’s Critically Acclaimed Series Of Political Thriller Starring Joe Demarco, Fixer For The Speaker Of The House. It Opens With An Assassination Attempt On The President. He Is Only Wounded, But His Best Friend And A Secret Service Agent Are Killed. It Turns Out That The Attack Wasn't Without Warning. General Andrew Banks, The Secretary Of Homeland Security, Received A Note That The President Was In Danger, And Even More Alarming, That Secret Service Agents Guarding The President Had Been Compromised. General Banks Is Reluctant To Tell The Fbi About The Note, Partly For Self-serving Political Reasons, And Partly Because He Doesn’t Want To Damage The Secret Service’s Reputation Based On Something That Might Very Well Be A Hoax. So He Requests Help From His Friend, Speaker Mahoney, And Mahoney Assigns His Man Demarco To Determine If The Secret Service Was Really Involved. Moving At A Breakneck Pace, And Packed With Plenty Of Humor And Suspense, The Inside Ring Is A Must-read For Fans Of Political Thrillers. Ch. 1. Decision under uncertainty. A radical change of perspective. The new business drivers. Traditional accounting measures are surpassed. A new approach to value -- ch. 2. Critical review of accounting performance measures. Residual income indicators. Time issues. Capital scale issues -- ch. 3. Critical review of strategic criteria. Shortcomings of existing methodology. Strategic issues. Impact on residual income indicators -- ch. 4. A way forward: quantitative decision making measures. The enhanced NPV. The capital scale index. The operating value added model -- ch. 5. A way forward: qualitative decision making measures. Project value chain. The growth matrix. Risk analysis -- ch. 6. The framework. The vision. Residual income indicator. Capital scale index. Growth matrix. Risk analysis -- ch. 7. Implementing a case illustration "This book provides much-needed guidance in making sound business decisions for the business leader or decision maker, especially investment appraisal practitioners such as strategic planners, business analysts, financial partners, and supply chain experts. By "supply chain", the authors mean the network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product." "The book begins with an introduction to the concept of decision making under uncertainty and the forces driving the business. A gap in the current knowledge is then discovered as it arises from an analysis of the profitability indicators that are currently being used."--Jacket