BMGT43800 Strategic Resource Allocation
Academic Year 2021/2022
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).
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.
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.
The course is structured to focus participants along multiple learning pathways, from the core concepts of basic financial statement analysis and the underpinning accountancy principles, to delving into the time value of money, evaluating how firms invest in real or even intangible assets, how they raise finance to fund these investments, and ultimately how these investments impact the value of the firm.
Finally, firm-level finance is set against the context of global capital markets. Participants will explore market indices, financial instruments, portfolio theory, and the merits of mergers & acquisitions.
There is no requirement for participants to have prior knowledge of accounting or finance.
However, the driving objective of this course is to equip participants 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.
Learning Strategy : Extensive use will be made of the required core texts, recommended readings/supporting texts and discussion of topical finance issues. The course may draw, on occasion, on visiting speakers.
Participants are expected to have prepared in advance for each class and to actively contribute their knowledge to class discussion. Participants will work in-groups and individually to make presentations as required. It is essential for all students to be familiar with the readings and cases to maximise in-class learning.
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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.
|Continuous Assessment: A limited number of individual assessments to cover some of the learning outcomes not covered by the group presentation or individual essay.
|Presentation: A virtual presentation that demonstrates the interaction between finance & strategic management. Your audience will have the opportunity to ask questions after your presentation. Topic to be agreed.
|Essay: A 2,000 word (±10%) easy on the theme of how "the yarn of finance is woven into the cloth of finance".
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
[List will be added to before the start of the module]
||Week(s) - 19, 20, 21, 22, 23, 24, 25, 28, 29, 30, 31, 32
||Thurs 14:00 - 16:50