Subject: IMT-26: Project Management-MT1
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PART-A

Q1. What are the pitfalls of an ill-conceived project for a firm, an economy and a society? How can one avoid or minimize the chances of project failure from the perspective of the firm, the economy and the society?

Q2. Imagine a large company with multiple products, a few locations and many markets. If you have to select three important strategic thrust areas for this firm, what would those three be, assuming normal market conditions? How would you expect divisions to come up with the project proposal that is acceptable for you?

Q3. In the study of indicators, why are only the studies of lead indicators useful, when some variables may change either concurrently or with lag of time?

Q4. Do you think that PCA can be done without adjustment for inflation? Give reasons for your answer.

Q5. Why should a state government or the Central Government offer land at concessional rates and other incentives for setting up private for-profit academic institutions? Explain giving the economic benefits of academic institute project. Do you think that along with offering incentives, imposition of some regulation is also essential? Why or why not?

PART-B

Q1. If you are heading a strategy group in a large global company that manufactures and sells steel products, what type of a formal system would you like to build to encourage generation of good project ideas?

Q2. Describe the situation in which using weighted average cost of capital as a cut-off rate is justified. Name at least one type of project in which you expect that the situation you described would exist.

Q3. 'EV rule and CV rule can provide a broad guideline only for the selection of mutually-exclusive projects, but one should not entirely depend on them.' Do you support this statement? Why or why not?

Q4. Do you agree that the main goals of project review are to take a fresh look at the viability of the project and to acquire learning values from mistakes?

Q5. Do you think that inflation adjustment would make a PCA more effective? Why or why not? How is inflation adjustment done in the data when conducting a PCA?

PART-A

Q1. In some situations, a project with IRR greater than the cut-off rate must be rejected on financial grounds. Describe such situations.

Q2. Describe three mutually-exclusive situations in which different discounted cash flow techniques are likely to give different rankings of projects. In such situations, which evaluation technique would you recommend? Why?

Q3. Despite several limitations, why is sensitivity analysis still very useful in project risk management? Would you recommend the use of any other method(s) of risk management along with sensitivity analysis? What would be those and why?

Q4. Execution of project means implementing detailed project report without any modifications? Do you agree?

Q5. Why would a lender look at the times-interest-earned ratio and debt-service-coverage ratio for evaluating the financial strength of a proposed project?


CASE STUDY - 1

The relevant data of activities of a small project is given below:

ActivityPreceeding

Activities

Duration (days)

Normal Cash

Cost (Rs)

Normal Cash

A

-

7

5

500

900

B

A

4

2

400

600

C

A

5

5

500

500

D

A

6

4

800

1000

E

B,C

7

4

700

1000

F

C,D

5

2

800

1400

G

E,F

6

4

800

1600

     (a) Determine the normal duration and normal cost of the project. Determine the critical path.

     (b) Enumerate the rules of crashing the network.

     (c) Crash the project to 21 days and determine the crashed cost and path. Determine the network after every step of crashing.

     (d) What is the percentage increase in cost to complete the project in 21 days?


CASE STUDY - 2

Honda's Marketing Strategies in India

In September 2004, Honda Motorcycle and Scooters India Limited (HMSI), the wholly owned subsidiary of the Japan-based Honda Motor Company Limited (HMCL), launched its first 150cc motorcycle named 'Unicorn.' Priced at Rs 50,043 (ex-showroom price, Delhi), Unicorn had a four stroke 13.3 BHP engine with five gears. The new bike was available in five colours and was designed to achieve a speed of 0 to 60 KMPH in five seconds. Unicorn was promoted with the caption 'Be a wing rider'. Targeted at the youth, Unicorn looked sportier than all existing motorcycles in the premium segment and was pitted against the Bajaj Pulsar, the leader with 75 percent market share in that segment. The other bikes in this segment were TVS Fiero, LML's Graptor and Hero Honda's CBZ. HMSI expected sales of 56,000 units of Unicorn in the first year of launch.

The Indian two-wheeler industry, traditionally considered a scooter market, witnessed a gradual migration towards motorcycles from the 1990's. When HMSI was incorporated in late 1999, the Indian motorcycle market was booming, compared to the scooter market. Still, SI announced that it would initially concentrate only on the scooter market and would enter the motorcycle market in 2004, the year when the HMCL joint venture agreement with the Hero Group was due for revalidation. HMSI was credited for reviving the scooters market in India. Within three years of commercial operation, HMSI emerged as the market leader in the scooters segment. The company's scooter models included Activa, Dio and Eterno. After coming out of the joint venture with KEL,

HMCL planned to introduce its own two-wheelers in the market. In October 1999, in a major strategic initiative, HMCL established HMSI. Launched in 2001, Honda Activa was the first scooter model of HMSI for the Indian market. A 102 cc scooter, Activa was specially designed keeping in view the needs and preferences of Indian consumers who expressed that the conventional Indian scooter was too big and difficult to handle and that the scooterette was too small and similar to a moped. Dio was launched in 2002 as the first motoscooter in the Indian market. Thanks to the success of its joint venture with Hero Group and KEL, 'Honda' was already a household name in India. Hence, rather than putting major efforts into brand building, HMSI's marketing strategy emphasized on offering innovative products at competitive prices, novel promotional campaigns and developing an extensive distribution network. After the launch of Unicorn, HMSI announced plans to introduce a 135cc motorcycle in 2005.

Questions:

(i) Examine and analyse the marketing mix of Honda Motors.

(ii) Compare and contrast the marketing strategy of Honda with other leading players in the Indian two-wheeler industry including Bajaj Auto and Hero Honda Motors.