'''Marketing'''

== Role of Marketing ==

'''Market share''' is defined as the proportion of total sales in a particular market for which one or more businesses or brands are responsible. It is expressed as percentage and can be calculated by value or volume.

In the case of Kos, it can be related with the dining hall, since what he sells then he divided by the number of customers in order to identify his market share. In the other hand, it can be related to the hospital and university according to the preferences of the citizens of Loyka. (potential market share)

The '''Market size''' can be estimated or calculated by the total sales of all businesses in the market. In the form of value, which is the total amount spent by customers buying products, or in the form of volume, which refer to the physical quantity of products which are produced and sold.

In this case, either the hospital or the university can achieved market size in the form of what the Loykese choose. Kos can obtain market size in the form of value, depending in the amount of products that he sells to its customers in the dining hall. (exist regarding market share)

'''Market growth''' can be either rapidly or slowly, or they might contract and get smaller.

In the case of Kos, he could either expand his business and increase market or continue operating in the same form (dining hall, HORIZONTAL). Making reference to the hospital or university, they could increase market growth in the form of hiring more doctors or teacher (according to the project choose), since the citizens of Loyka would agree to apply in the projects.

A '''market''' is any set of arrangements that allows buyers and sellers to exchange goods and services. '''Marketing''' is not just selling products, but to carry out a range of activities to find out customers preferences, including market research.

Effective marketing will have certain features, in which building relationships with customers is included; customers as a result of marketing are likely to develop a favorable view of the business.

One of General Diane Pierce main objectives was based on her previous experience in social marketing, which was to improve the image of the “Olive Hats” in Loyka (36). For this to be achieved she believed the creation of a university of a hospital would be useful, as it will allow the Loykese to see a benefit from the presence of the “Olive Hats” (56).

== Purpose of marketing ==

* Identify consumer requirements (What Loykese need NOW?)(77-78)

Because of the civil war, the country desperately needed engineers, school teachers, nurses and many other highly skilled professionals to help rebuild the social infrastructure.

(65) Increase access to medical care.

(69-70) Complications from the lack of prenatal care had increased significantly. Many young children had a variety of health issues.

* Anticipate consumer requirements (What will Loykese need in the FUTURE?)

* Satisfy consumers (Keep Loykese happy with the presence of the UWP troops)

For this purposes to be achieved and for the best option to be selected market research must be carried out, this means gathering information of what people want and need. '''Primary research''' was carried out by the UWP, (95-101) 2000 surveys were distributed to local residents, and focus groups were developed in order to know the opinion of local residents. This primary research allows the UWP to make informed decisions, risk is reduced as market has been already analyzed, and public relations that improve the image of the mission.

For both surveys and focus groups samples of the population were required, which are representative of the whole population. Size and gender in samples can influence the results, the UWP handed in 2000 surveys and the focus groups were to consist some of man only, women only, and some of both. Larger samples tend to be more representative, so decisions based on larger samples are more likely to be accurate.

A sampling method is not mentioned in the case but one can be chosen taking into account a number of key factors such as:

* Finance available

* Nature of product

For products that are uniform, such as in the case of the UWP, they must ensure that all of the populations are properly represented, and that little or no bias is introduced. Bias that could affect the research is the presence of just man, or women on the focus groups, as well as the age of the Loykese answering the surveys.

* Risk involved

The UWP’s decision will either improve or affect the image of the “Olive Hats”. The risk is the stay of the UWP mission in Loyka.

* Target market

'''Market Orientation:''' is a business that identifies reviews and analyses consumers’ needs.

Effects that having a market oriented approach will produce on a business, in this case UWP:

* Consult consumers continuously, meaning carrying market research even still after the project has been chosen, to know if Loykese are happy with the decision taken, and with the presence of the “Olive Hats”.

* Design product according to wishes of the consumers, in this is not a product but a service. The project selected by the UWP (university or hospital) will be according to the wishes of the Loykese.

* Business must produce the right product (university or hospital), at the right price in the right place (botanical gardens (53)).

For many non-for-profit organizations, particularly those on the public sector, price may be less important as a component of the marketing mix than for other businesses. In the case of both projects set by the UWP mission, they will be non-profit (44), the organization will not receive money from their customers.

== Social Marketing ==

'''Social marketing''' brings a change in the behavior that benefits society so it makes use of the tools of commercial marketing. Social marketing is different because its success is judged on the benefit to society rather than commercial goals.

While the “Olive Hats” were in the country they gave a sense of international support. This benefited the local business community because the provisions of the troop were purchased locally and the soldiers improved the damaged roads and bridges. These improvements in infrastructure helped Beral reassume their normal activities (15-20).

However, the “Olive Hats” also experienced some failures in their social marketing. The presence of the peacekeepers caused some resentment in society, and were accused of inappropriate behavior which made some of the Loykese did not want foreign soldiers in the country and some disagreements arose. (21-24).

To reduce the bad reputation of the “Olive Hats” General Diane Pierce was set as Commander, she had previous experience with social marketing and one of her objectives was to improve the bad image of the soldiers (34-32). Diane Pierce decided to build whether a hospital or a university, these would benefit both her troops and society by changing the routine and building positive relations with local society. (47-50).

A hospital would help give appropriate help to all the poor and damaged people; meanwhile a university would provide better education to the Loykese. Any option would benefit the local society by offering a better lifestyle but they would imply certain problems, hiring staff for a hospital is difficult because male doctors make clients uncomfortable, a university could be a signal of foreign intervention and center of physical attack.

To make the UWP’s social marketing effective General Diane Pierce would have to manage carefully the situation in order to prevent the possible problems building a hospital or a university could bring.

WHAT WHY HOW CAN BE APPLIED

== TIMELINE ON THE SUCCESSION OF EVENTS OF THE UWP MISSION TO LOYKA ==

*2006- Loyka civil war starts.

*2008- Civil war ceases.

*2009- United World Peace (UWP) sends 4000 peacekeepers to Loyka in order to maintain peace, security and order. Local businesses in Beral were able to resume their trade activities to the same levels as before the civil war.

* Resentment at the presence of “the Olive Hats” – some Loykese just not want foreign soldiers in their country.

* Local community leaders accuse the troops of inappropriate behavior and the local governor often has disagreements with General Meiri about the frequency of UWP patrols in the Beral area.

* The reputation of the UWP troops gradually deteriorates and General Meiri does not seem able to control the situation.

* “The Olive Hats” in Loyka started to resent being there and motivation was beginning to deteriorate.

* 2011- General Ron Meiri is replaced by General Diane Pierce as commander.
* UWP headquarters in Geneva prepare a force field analysis to evaluate whether the UWP Mission to Loyka should change its strategy in 2011.

* General Pierce decides to undertake a major improvement of social infrastructure in Loyka by using the resources of the UWP to build either a new hospital or a new university campus.

* General Pierce delegates the responsibility for investigating the feasibility of the two projects down the chain of command to Colonel Michael Donovan, Head of the Civil Engineering Group.

* The results of the research did not give General Pierce the clear indication that she

* Had hoped for as a slight majority preferred the hospital.

* Kos starts to think about the future of his own small produce distribution business, thinking of expansion.

* Kos discusses potential sources of finance with his bank.

* Kos prepares a business plan and compiled information comparing his current income to his forecast income if he increased his scale of operation and draws up 3 possible options.

* General Pierce is yet to take a decision.

== Glossary ==

Peacekeepers: (5) Peacekeeping is an activity that aims to create the conditions for lasting peace therefore peacekeepers are the people appointed to do so. The UWP sent 4000 peacekeepers to Loyka with the aim of maintaining order, peace and security within the zone torn by civil war.

Social marketing: (34) Social marketing brings a change in the behavior that benefits society so it makes use of the tools of commercial marketing. Social marketing is different because its success is judged on the benefit to society rather than commercial goals. General Diane Pierce has an experience in social marketing from previous UWP missions.

Public relations: (37) the discipline which looks after reputation, with the aim of earning understanding and support and influencing opinion and behavior. It is the planned and sustained effort to establish and maintain goodwill and mutual understanding between an organization and its stakeholders. General Diane Pierce has the strategic objective to improve the image of the Olive Hats in Loyka in order to improve public relations.

Primary research: (95, 169) Also called Field Research. It involves collecting primary data, which is information that did not exist before the research began; it is collected by a market research agency or by the business itself. General Pierce ordered Colonel Donovan to carry out primary research in order to obtain the people’s preferences on whether to construct a hospital or a university campus.

Survey: (97) A method for collecting primary research which consists of a series of questions designed to find out the views and opinions of a respondent. It must be designed to meet the needs of the company carrying out the survey. It may contain open or closed questions. Colonel Donovan carried out a survey to 2000 local residents for a more valid and reliable indication of the local community’s opinion of which was needed more, a university or a hospital.

Focus Groups: (99) Another method for collecting primary research which involves a group of customers being brought together on one or a number of occasions. They are asked to answer and discuss questions prepared by market researchers. Colonel Donovan conducts several focus groups to discuss the two options, some of the groups consist of men only, some of women only and some of both.

R&D: (116) Research and Development. It involves discovering new knowledge about products, processes, and services, and then applying that knowledge to create new and improved products, processes, and services that fill market needs. A new university would be prestigious and contribute to the long-term development of Loyka by training future professionals. It could also attract private capital for future public-private partnerships in research and development (R&D).

== Categories ==
*[[Business Organization and Environment]]
*'''Human Resources'''
*[[Accounts and Finance]]
*[[Marketing]]
*[[Operations Management]]

== References ==
If Any...

Marketing

2012-04-17T06:05:48Z

Gaby:

Accounts and Finance

2012-04-17T05:57:27Z

Gaby: /* Glossary */

'''Quantitative Investment Appraisal'''

== Average rate of return ==
'''Average rate of return''' is a percentage that shows the amount of profit someone gets back from an investment. This takes into account the profit and not the time.

[Net return (profit) per annum / Capital Outlay (cost)] x 100 = ARR

== Payback Period ==

The '''Payback Period''' is the amount of time a firm would take to recover the investment made. This takes into account the time and not the profit.

[Amount required / Net Cash Flow in year] x 12 = Payback Period

== In the case UWP ==
There is not enough information to make an Average Rate of Return (ARR) or a Payback Period as the case does not explain how much profit would the hospital or the University generate. Maybe a reason why they do not tell us that information is because the intention of those projects are not financial but to be healthy to the community. Also we do not have a net cash flow forecast for each project so the Payback Period is not available for students. In case the IBO gives a cash flow, we just need to analyse the amount of profits the projects are going to be generating to put what we need in a formula.

== In the case of Kos ==
We know how much profits the options available for him are going to be generating, what we do not know is how much does he have to invest so neither the ARR nor the Payback Period can be made.

== Qualitative Investment Appraisal ==

Colonel Michael Donovan had the responsibility for investigating the feasibility of the two projects (Hospital/University). “He calculated that both projects would cost the same (Appendix 3). As a result, the decision about whether to build a university or a hospital WOULD NOT BE BASED UPON COST, BUT UPON OTHER FACTORS” (51-56)
When we evaluate the two projects, it is important to consider the nature of this case: Qualitative Factors (those that cannot be measured) are really important since the purpose of the Mission is not to generate profit (money), but to create the adequate environment for social and political stability, peace and human development.

Some important qualitative factors are:

*Urgency: What does Loyka need more urgently: a Hospital or a University?
- A country that recently suffered a civil war is usually a country that faces political instability, economic crisis, lack of infrastructure and hygiene.

- Education and health are both considered basic needs.

- There may be many people with permanent injuries or disabilities caused by the violence of the civil war. They need medical attention urgently.

- Unhygienic environments provoke that diseases appear and spread. There may be many people who is sick and need medical attention.

- There has been “human capital flight” (brain drain). How will Loyka rebuild itself if it does not have the human resources needed?

- Education is considered indispensable for the future of a country. A nation needs educated people in order to be civilized, free, democratic, etc.

- “Education makes a people easy to lead but difficult to drive: easy to govern, but impossible to enslave” Henry Brougham

- A Hospital can attend people of any age. A University focuses on educating young people.

- The benefits of a hospital will be almost immediately palpable (short-term, medium-term). People will be able to appreciate the benefits of a university in the future (long-term).

- The construction of the University (25weeks) will take less time than the construction of the Hospital (30weeks).

- Include opinion of government...

*Objectives: How does each project help to achieve the objectives of the Mission?
- Image: Does the project put the image of the UWP at risk?

--- “[...] a university built by the UWP would become a symbol of foreign intervention in Loyka and would make it a target for critics of the government and of the UWP presence in the country” (80-83)

- Workforce: What is the impact on the workforce (troops)?

--- “The project also had the support of the troops, who would feel empowered and would welcome working in new flexible matrix structures.” (90-91)

*Environment -> See PESTLE

*Ethical reasons -> See Ethical objectives

'''Important information for qualitative investment appraisal: 68-116'''

== Working Capital / Circulating Capital ==

'''Working capital''' is the amount of money needed to pay for the day-to-day trading of a business. It reflects how well a business is performed.

Working capital = current assets - current liabilities

In this case on Appendix 5a can be find useful information for calculating the working capital of Kos’ business.

Option 1: All figures $ in dollars per month

Gross profit (current asset) - Gas and vehicle maintenance, Rent of storage facility, interest(current liabilities) =

$200 - $50 = $150

Option 2:
Gross profit (current asset) - Gas and vehicle maintenance, Rent of storage facility, interest (current liabilities) =
$2200 - ($400 + $200 + $100) = $1500

=== Working Capital Cycle ===
The '''working capital cycle''' are intervals between payments made by a business and the receipt of cash.

Lag 1: Purchase resources from suppliers on credit, which means obtaining the resources without having to pay for them immediately.

Lag 2: Resources turned into products.

Lag 3: Finished goods before they are sold

Lag 4: Goods sold to customer allowing customers to pay later.

In this case that time lags are present in Kos’ business and the UWP new project.

'''In Kos' business'''

Lag 1: Purchase of eggs, poultry, vegetables and other produce from local farms (61)

Lag 2: Do not transform the resources only resell them

Lag 3: Amount of time that Kos maintains the goods before selling them to the officers of dining hall. (62)

Lag 4: The case do not specify how the officers pay him.

Cash injection: (If expansion) Bank loan (130) and increasing working capital (156)

Cash drains:(If expansion) A new lorryand increase stockimpact in capital as wellexpenses would go up

'''In the UWP'''

Lag 1: Would be purchasing furniture and equipment for the construction of the new project.(Appendix 3)

Lag 2: Would be the construction time of the new project.

Lag 3: Time while people who would need the service provided by the new project arrive

Lag 4: Time while people would pay for the service that was provided

Cash injection: Capital that would be invested in the new project
Cash drains: Land

Every business has different working capital needs depending their size, stock levels, debtors and creditors. If Kos maximize the scale of operation of his business (option 3) becoming a wholesaler would require an increasing working capital ( 156). Increasing the scale of operation of his business would need to manage higher stock levels since would become just-in-case. (137). Besides expanding his business would imply a time between buying stock financed by trade credit and finished products since he would need the bank loan.

'''Working capital and profit are not the same!'''

Kos’ expansion would be profitable as long as the UWP Mission remains in Loyka but if Kos do not has the enough working capital problems would arrive.

=== Economies of scale ===

When the cost per unit of a service or product is reduced and more is produced, there are economies of scale at work.
(121)

Employing economies of scale to achieve the maximum number of products and services at the lowest price in a regular and dynamic business environment can be an arduous task, but it might be even harder when the economic climate is hostile and fickle (recessions, civil wars, etc.)

One of the reasons Kos is considering in expanding his business is the possibility to take advantage of economies of scale. However, he also fears that the logistics would get more complex. Not only that, but to collect more produce he would have to drive into unpaved roads away from UWP influence. The unpopularity of the “Olive Hats” and his relations to the UWP Mission and Colonel Donovan would present the danger of being considered a UWP collaborator at these remote communities. This could mean that the communities might refuse to sell their produce to him or, in a worse case, attempt to sabotage his equipment. However, the possibility of being able to run his business with no real threat to himself or his business still remains.

If more information if given about the rural communities’ opinion about the UWP Mission and their thoughts about Loykese who worked for them, it could be vital in determining if Kos’s expansion would be feasible or not, depending on the information.
Kos would also need to invest in a truck to get as far away as he needed to get to said communities. Because of the unpaved roads, it is likely that said lorry would not last for a very long time without constant maintenance.

As a result from the construction of the new hospital or university many local entrepreneurs are likely to take advantage of the business opportunities and with this Kos can have a first-mover advantage.

Even though his deliveries to the UWP Mission where just in time, by increasing the scale of operation of his business could lead to complications like the need to manage stock level on a just-in-case basis. And to keep his products fresh he might need to invest in a storage facility equipment, however the just-in-case stock control would
rise the possibility of waste.

Kos prepared a business plan and the income comparison showed that the expansion of his business would be very profitable, only as long as the UWP Mission remains in Loyka(see Appendix 5), and it is still unsire on how long the UWP Mission would remain in Loyka.

== Glossary ==

Collateral: (130) Assets used as a pledge to a loan. Most commonly used in mortgages.

->If Kos were to use a bank loan, he would have to place the lorry(truck) he purchases as a collateral.

Economies of scale: (121) when the cost per unit is lowered the more units are made.

-> Economies of scale are one of the advantages that Kos Palouk would have if he expanded his scale of operations.

Income statement: (~142-143, Appendix 5a) Also known as a profit-and-loss, this financial statement is used to measure how the business’s revenue measures up when compared to its expenses.

->In this case, Kos made a profit-and-loss comparison between Options 1 (his current income: no change) and 2 (predicted income if he were to increase the scale of operation) to see the profitability of each option on a financial level.

Just-in-case: (138-140) When a large inventory is kept at hand in order to meet the needs of potential buyers.

->If Kos were to expand his business, he would have to employ JIC instead of JIT. This means that the risk of spoilage would increase, although Kos believes that it would be minimal.

Just-in-time: (136) When a small amount of inventory is kept to increase efficiency. Relies on good relations with suppliers.

->Kos uses this type of strategy with his business. However, if he were to expand, he would have to move to JIC.

Land: (53) the physical location of the business, including the surface and the underground.

-> Land is referred to when talking about where the hospital/university will be built. In this case, the government of Loyka offered the land to the UWP mission.

Produce: (128) Goods that are grown or brought forth-- fruit, vegetables and other such foodstuffs fall in this category.

->Kos purchases produce from local farms. In order to increase his capacity to transport produce, he would need to purchase a new lorry (truck).

Profit-and-loss: See Income statement.

== Categories ==
*[[Business Organization and Environment]]
*[[Human Resources]]
*'''Accounts and Finance'''
*[[Marketing]]
*[[Operations Management]]

== References ==
If Any...

Accounts and Finance

2012-04-17T05:55:05Z

Gaby:

'''Quantitative Investment Appraisal'''

== Average rate of return ==
'''Average rate of return''' is a percentage that shows the amount of profit someone gets back from an investment. This takes into account the profit and not the time.

[Net return (profit) per annum / Capital Outlay (cost)] x 100 = ARR

== Payback Period ==

The '''Payback Period''' is the amount of time a firm would take to recover the investment made. This takes into account the time and not the profit.

[Amount required / Net Cash Flow in year] x 12 = Payback Period

== In the case UWP ==
There is not enough information to make an Average Rate of Return (ARR) or a Payback Period as the case does not explain how much profit would the hospital or the University generate. Maybe a reason why they do not tell us that information is because the intention of those projects are not financial but to be healthy to the community. Also we do not have a net cash flow forecast for each project so the Payback Period is not available for students. In case the IBO gives a cash flow, we just need to analyse the amount of profits the projects are going to be generating to put what we need in a formula.

== In the case of Kos ==
We know how much profits the options available for him are going to be generating, what we do not know is how much does he have to invest so neither the ARR nor the Payback Period can be made.

== Qualitative Investment Appraisal ==

Colonel Michael Donovan had the responsibility for investigating the feasibility of the two projects (Hospital/University). “He calculated that both projects would cost the same (Appendix 3). As a result, the decision about whether to build a university or a hospital WOULD NOT BE BASED UPON COST, BUT UPON OTHER FACTORS” (51-56)
When we evaluate the two projects, it is important to consider the nature of this case: Qualitative Factors (those that cannot be measured) are really important since the purpose of the Mission is not to generate profit (money), but to create the adequate environment for social and political stability, peace and human development.

Some important qualitative factors are:

*Urgency: What does Loyka need more urgently: a Hospital or a University?
- A country that recently suffered a civil war is usually a country that faces political instability, economic crisis, lack of infrastructure and hygiene.

- Education and health are both considered basic needs.

- There may be many people with permanent injuries or disabilities caused by the violence of the civil war. They need medical attention urgently.

- Unhygienic environments provoke that diseases appear and spread. There may be many people who is sick and need medical attention.

- There has been “human capital flight” (brain drain). How will Loyka rebuild itself if it does not have the human resources needed?

- Education is considered indispensable for the future of a country. A nation needs educated people in order to be civilized, free, democratic, etc.

- “Education makes a people easy to lead but difficult to drive: easy to govern, but impossible to enslave” Henry Brougham

- A Hospital can attend people of any age. A University focuses on educating young people.

- The benefits of a hospital will be almost immediately palpable (short-term, medium-term). People will be able to appreciate the benefits of a university in the future (long-term).

- The construction of the University (25weeks) will take less time than the construction of the Hospital (30weeks).

- Include opinion of government...

*Objectives: How does each project help to achieve the objectives of the Mission?
- Image: Does the project put the image of the UWP at risk?

--- “[...] a university built by the UWP would become a symbol of foreign intervention in Loyka and would make it a target for critics of the government and of the UWP presence in the country” (80-83)

- Workforce: What is the impact on the workforce (troops)?

--- “The project also had the support of the troops, who would feel empowered and would welcome working in new flexible matrix structures.” (90-91)

*Environment -> See PESTLE

*Ethical reasons -> See Ethical objectives

'''Important information for qualitative investment appraisal: 68-116'''

== Working Capital / Circulating Capital ==

'''Working capital''' is the amount of money needed to pay for the day-to-day trading of a business. It reflects how well a business is performed.

Working capital = current assets - current liabilities

In this case on Appendix 5a can be find useful information for calculating the working capital of Kos’ business.

Option 1: All figures $ in dollars per month

Gross profit (current asset) - Gas and vehicle maintenance, Rent of storage facility, interest(current liabilities) =

$200 - $50 = $150

Option 2:
Gross profit (current asset) - Gas and vehicle maintenance, Rent of storage facility, interest (current liabilities) =
$2200 - ($400 + $200 + $100) = $1500

=== Working Capital Cycle ===
The '''working capital cycle''' are intervals between payments made by a business and the receipt of cash.

Lag 1: Purchase resources from suppliers on credit, which means obtaining the resources without having to pay for them immediately.

Lag 2: Resources turned into products.

Lag 3: Finished goods before they are sold

Lag 4: Goods sold to customer allowing customers to pay later.

In this case that time lags are present in Kos’ business and the UWP new project.

'''In Kos' business'''

Lag 1: Purchase of eggs, poultry, vegetables and other produce from local farms (61)

Lag 2: Do not transform the resources only resell them

Lag 3: Amount of time that Kos maintains the goods before selling them to the officers of dining hall. (62)

Lag 4: The case do not specify how the officers pay him.

Cash injection: (If expansion) Bank loan (130) and increasing working capital (156)

Cash drains:(If expansion) A new lorryand increase stockimpact in capital as wellexpenses would go up

'''In the UWP'''

Lag 1: Would be purchasing furniture and equipment for the construction of the new project.(Appendix 3)

Lag 2: Would be the construction time of the new project.

Lag 3: Time while people who would need the service provided by the new project arrive

Lag 4: Time while people would pay for the service that was provided

Cash injection: Capital that would be invested in the new project
Cash drains: Land

Every business has different working capital needs depending their size, stock levels, debtors and creditors. If Kos maximize the scale of operation of his business (option 3) becoming a wholesaler would require an increasing working capital ( 156). Increasing the scale of operation of his business would need to manage higher stock levels since would become just-in-case. (137). Besides expanding his business would imply a time between buying stock financed by trade credit and finished products since he would need the bank loan.

'''Working capital and profit are not the same!'''

Kos’ expansion would be profitable as long as the UWP Mission remains in Loyka but if Kos do not has the enough working capital problems would arrive.

=== Economies of scale ===

When the cost per unit of a service or product is reduced and more is produced, there are economies of scale at work.
(121)

Employing economies of scale to achieve the maximum number of products and services at the lowest price in a regular and dynamic business environment can be an arduous task, but it might be even harder when the economic climate is hostile and fickle (recessions, civil wars, etc.)

One of the reasons Kos is considering in expanding his business is the possibility to take advantage of economies of scale. However, he also fears that the logistics would get more complex. Not only that, but to collect more produce he would have to drive into unpaved roads away from UWP influence. The unpopularity of the “Olive Hats” and his relations to the UWP Mission and Colonel Donovan would present the danger of being considered a UWP collaborator at these remote communities. This could mean that the communities might refuse to sell their produce to him or, in a worse case, attempt to sabotage his equipment. However, the possibility of being able to run his business with no real threat to himself or his business still remains.

If more information if given about the rural communities’ opinion about the UWP Mission and their thoughts about Loykese who worked for them, it could be vital in determining if Kos’s expansion would be feasible or not, depending on the information.
Kos would also need to invest in a truck to get as far away as he needed to get to said communities. Because of the unpaved roads, it is likely that said lorry would not last for a very long time without constant maintenance.

As a result from the construction of the new hospital or university many local entrepreneurs are likely to take advantage of the business opportunities and with this Kos can have a first-mover advantage.

Even though his deliveries to the UWP Mission where just in time, by increasing the scale of operation of his business could lead to complications like the need to manage stock level on a just-in-case basis. And to keep his products fresh he might need to invest in a storage facility equipment, however the just-in-case stock control would
rise the possibility of waste.

Kos prepared a business plan and the income comparison showed that the expansion of his business would be very profitable, only as long as the UWP Mission remains in Loyka(see Appendix 5), and it is still unsire on how long the UWP Mission would remain in Loyka.

== Glossary ==

Collateral: (130) Assets used as a pledge to a loan. Most commonly used in mortgages.
->If Kos were to use a bank loan, he would have to place the lorry(truck) he purchases as a collateral.

== Categories ==
*[[Business Organization and Environment]]
*[[Human Resources]]
*'''Accounts and Finance'''
*[[Marketing]]
*[[Operations Management]]

== References ==
If Any...

Accounts and Finance

2012-04-17T05:52:05Z

Gaby:

'''Quantitative Investment Appraisal'''

== Average rate of return ==
'''Average rate of return''' is a percentage that shows the amount of profit someone gets back from an investment. This takes into account the profit and not the time.

[Net return (profit) per annum / Capital Outlay (cost)] x 100 = ARR

== Payback Period ==

The '''Payback Period''' is the amount of time a firm would take to recover the investment made. This takes into account the time and not the profit.

[Amount required / Net Cash Flow in year] x 12 = Payback Period

== In the case UWP ==
There is not enough information to make an Average Rate of Return (ARR) or a Payback Period as the case does not explain how much profit would the hospital or the University generate. Maybe a reason why they do not tell us that information is because the intention of those projects are not financial but to be healthy to the community. Also we do not have a net cash flow forecast for each project so the Payback Period is not available for students. In case the IBO gives a cash flow, we just need to analyse the amount of profits the projects are going to be generating to put what we need in a formula.

== In the case of Kos ==
We know how much profits the options available for him are going to be generating, what we do not know is how much does he have to invest so neither the ARR nor the Payback Period can be made.

== Qualitative Investment Appraisal ==

Colonel Michael Donovan had the responsibility for investigating the feasibility of the two projects (Hospital/University). “He calculated that both projects would cost the same (Appendix 3). As a result, the decision about whether to build a university or a hospital WOULD NOT BE BASED UPON COST, BUT UPON OTHER FACTORS” (51-56)
When we evaluate the two projects, it is important to consider the nature of this case: Qualitative Factors (those that cannot be measured) are really important since the purpose of the Mission is not to generate profit (money), but to create the adequate environment for social and political stability, peace and human development.

Some important qualitative factors are:

*Urgency: What does Loyka need more urgently: a Hospital or a University?
- A country that recently suffered a civil war is usually a country that faces political instability, economic crisis, lack of infrastructure and hygiene.

- Education and health are both considered basic needs.

- There may be many people with permanent injuries or disabilities caused by the violence of the civil war. They need medical attention urgently.

- Unhygienic environments provoke that diseases appear and spread. There may be many people who is sick and need medical attention.

- There has been “human capital flight” (brain drain). How will Loyka rebuild itself if it does not have the human resources needed?

- Education is considered indispensable for the future of a country. A nation needs educated people in order to be civilized, free, democratic, etc.

- “Education makes a people easy to lead but difficult to drive: easy to govern, but impossible to enslave” Henry Brougham

- A Hospital can attend people of any age. A University focuses on educating young people.

- The benefits of a hospital will be almost immediately palpable (short-term, medium-term). People will be able to appreciate the benefits of a university in the future (long-term).

- The construction of the University (25weeks) will take less time than the construction of the Hospital (30weeks).

- Include opinion of government...

*Objectives: How does each project help to achieve the objectives of the Mission?
- Image: Does the project put the image of the UWP at risk?

--- “[...] a university built by the UWP would become a symbol of foreign intervention in Loyka and would make it a target for critics of the government and of the UWP presence in the country” (80-83)

- Workforce: What is the impact on the workforce (troops)?

--- “The project also had the support of the troops, who would feel empowered and would welcome working in new flexible matrix structures.” (90-91)

*Environment -> See PESTLE

*Ethical reasons -> See Ethical objectives

'''Important information for qualitative investment appraisal: 68-116'''

== Working Capital / Circulating Capital ==

'''Working capital''' is the amount of money needed to pay for the day-to-day trading of a business. It reflects how well a business is performed.

Working capital = current assets - current liabilities

In this case on Appendix 5a can be find useful information for calculating the working capital of Kos’ business.

Option 1: All figures $ in dollars per month

Gross profit (current asset) - Gas and vehicle maintenance, Rent of storage facility, interest(current liabilities) =

$200 - $50 = $150

Option 2:
Gross profit (current asset) - Gas and vehicle maintenance, Rent of storage facility, interest (current liabilities) =
$2200 - ($400 + $200 + $100) = $1500

=== Working Capital Cycle ===
The '''working capital cycle''' are intervals between payments made by a business and the receipt of cash.

Lag 1: Purchase resources from suppliers on credit, which means obtaining the resources without having to pay for them immediately.

Lag 2: Resources turned into products.

Lag 3: Finished goods before they are sold

Lag 4: Goods sold to customer allowing customers to pay later.

In this case that time lags are present in Kos’ business and the UWP new project.

'''In Kos' business'''

Lag 1: Purchase of eggs, poultry, vegetables and other produce from local farms (61)

Lag 2: Do not transform the resources only resell them

Lag 3: Amount of time that Kos maintains the goods before selling them to the officers of dining hall. (62)

Lag 4: The case do not specify how the officers pay him.

Cash injection: (If expansion) Bank loan (130) and increasing working capital (156)

Cash drains:(If expansion) A new lorryand increase stockimpact in capital as wellexpenses would go up

'''In the UWP'''

Lag 1: Would be purchasing furniture and equipment for the construction of the new project.(Appendix 3)

Lag 2: Would be the construction time of the new project.

Lag 3: Time while people who would need the service provided by the new project arrive

Lag 4: Time while people would pay for the service that was provided

Cash injection: Capital that would be invested in the new project
Cash drains: Land

Every business has different working capital needs depending their size, stock levels, debtors and creditors. If Kos maximize the scale of operation of his business (option 3) becoming a wholesaler would require an increasing working capital ( 156). Increasing the scale of operation of his business would need to manage higher stock levels since would become just-in-case. (137). Besides expanding his business would imply a time between buying stock financed by trade credit and finished products since he would need the bank loan.

'''Working capital and profit are not the same!'''

Kos’ expansion would be profitable as long as the UWP Mission remains in Loyka but if Kos do not has the enough working capital problems would arrive.

=== Herzberg ===

Herzberg’s theory shows two factors that influences in the causes of feelings of satisfaction or dissatisfaction at work. This factors are ''motivators'' or ''hygiene factors''.

The motivators give workers job satisfaction, such as recognition for their effort. The hygiene factors can lead to workers being dissatisfied, such as pay and conditions, improving these factors should remove dissatisfaction. Because Herzberg’s ideas are often linked with job enrichment, this theory is applied with the creation of a new hospital or a new university campus that would remotivate the The Olive Hats by providing a change of routine, by giving them a sense of achievement, and by buildingpositive relationships with the local population. (47-49)

=== Taylor ===

Taylor’s Scientific Management says that ''money'' is what motivated people at work. Taylor felt that workers should receive a fair day’s pay for a fair day’s work, and pay should be linked to output through piece rates. Although that this may be a good motivator for the soldiers, the salaries aren’t set by the colonel, they are set by the UWP itself, so financial rewards are not an option that could be taken to motivate workers.

=== McGregor ===

== Glossary ==

Na (Later)

== Categories ==
*[[Business Organization and Environment]]
*[[Human Resources]]
*'''Accounts and Finance'''
*[[Marketing]]
*[[Operations Management]]

== References ==
If Any...

Accounts and Finance