BMGT43800 Strategic Resource Allocation
Academic Year 2022/2023
This module is designed to provide students in the MSc in Strategic Management & Planning programme with the skills necessary to analyse strategic investment opportunities from a financial perspective. In other words put numbers on the “Strategic Story”. Finance theory suggests the objective of a firm’s management is to maximise shareholder wealth. In this module we will show how this in congruent with meeting ESG objectives for a business.
The fundamental goal of strategy is to maximize firm performance. Translating this goal into action entails both initiating long-ranging and prescient decisions on direction, while remaining simultaneously agile and tactical in navigating near-term horizons.
While strategy may design and craft the anatomy of a firm, finance irrigates the blood stream for survival, sustainability, growth and success. Finance is also the scorecard used to measure success at the senior corporate level. Investor Relations presentations are as CFO-centric as they are led by the CEO.
Consequently, it is critical to understand how financial flows measure the day-to-day status of a firm, and subsequently, how strategic investments decisions can build and transform the future performance of a firm. To do this you need an understanding of accounting (the scorecard) and finance (the metrics that measure value creation). This module is structured to focus along multiple learning pathways, including financial accounting, management accounting and of course finance.
How should firms make these investment decisions?
Examples of strategic investments that could potentially improve a firm’s performance include launching new products, building new facilities, investing in R&D and innovation, or acquiring other companies. However, evaluating whether to pursue these or any investment opportunities requires estimating their financial impact on firm performance.
However, the driving objective of this course is to equip you with a grounded understanding of the principles of investment finance, and to set this learning holistically within the context of the firm and of capital market dynamics.
There is no requirement for participants to have prior knowledge of accounting or finance.
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Curricular information is subject to change
On completion of this module students should be able to:Indicative Module Content:
- Analyse basic financial statements;
- Apply DCF techniques to evaluate different investment proposals;
- Determine whether a strategic investment opportunity adds value to a firm;
- Recognize the real options embedded in potential investment opportunities;
- Explain the Financial performance metrics to a senior management audience;
- Evaluate the fundamental properties of capital markets.
This module will cover the following Finance topics:
1) Accounting: How (& why) it works - Balance Sheet / P&L
2) Value: sources and drivers
3) Risk: WACC, Opportunity Cost of Capital
4) Investment Decisions
5) Financing Decisions
6) Debt Policy
7) Dividend (Payout) Policy
8) Financial Analysis & Planning
10) Options (Financial & Real)
The intereaction between strategy and accounting/finance will be a key element of this module.
|Specified Learning Activities
|Autonomous Student Learning
Requirements, Exclusions and Recommendations
Not applicable to this module.
Module Requisites and Incompatibles
Not applicable to this module.
|Multiple Choice Questionnaire: A Brightspace quiz that tests the general knowledge of the module content. The quiz will contain MCQ type questions and some calculation questions.
||End of trimester MCQ
|Presentation: A presentation that demonstrates the interaction between finance & strategic management. Your audience will have the opportunity to ask questions after your presentation.
|Essay: Terminal Assignment:
A 2,000 word (MAX.) essay on the theme of how "the yarn of finance is woven into the cloth of strategy".
The title of your essay will be agreed with lecturer- c.week 5.
Carry forward of passed components
• Group/class feedback, post-assessment
• Peer review activities
How will my Feedback be Delivered?
In addition to group/class feedback, individual feedback will be given on a 1 to 1 basis as appropriate.
Main Text (finance):
Brealey, Myers & Marcus (2020) Fundamentals of Corporate Finance (10th ed.), McGraw Hill
Supplemental text (strategy):
Grant & Jordan (2015) Foundations of Strategy (2nd ed.), Wiley
Supplemental text (management accounting):
Drury (2021) Management & Cost Accounting 11th ed., Cengage
Supplemental text (general business):
Magretta (2003) What Management Is: How it Works and Why it's Everyone's Business, Profile
||Week(s) - 20, 21, 22, 23, 24, 25, 26, 29, 30, 31, 32, 33
||Thurs 14:00 - 16:50