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MYRAcle Sai Deepak

Making the Compelling Business Case – Course @MYRA

“Is this investment a positive NPV (Net Present Value)”, used to ask Prof. Raghavendra Rau, while solving case studies in the 1st year Advanced Corporate Finance course. Solving some case studies required us to calculate the NPV, taking into account forecasted cash inflows (benefits of the investment) and cash outflows (costs of the investment) of the investment, which were provided in the case study. If the calculated NPV is positive, the investment could be profitably pursued and if it is negative, it would be better off not pursuing, as the investment would be loss-making. This popular capital budgeting technique is used as a base to accept or reject a proposed investment.

While just the NPV calculation is straight forward, I am a bit confused and thus curious about the process of forecasting cash inflows and cash outflows. How does one precisely know the cash inflows and cash outflows of an investment before it is actually implemented? Who is responsible in the company to provide these forecasts to the analyst? Are there any real-world instances when the forecasts have gone terribly wrong in large multi-national corporations? Is there any process or methodology to be followed to make a near-perfect forecast and appropriate investment decision?

Making the Compelling Business Case, taught by Prof. Wolfgang Messner, in Myra School of Business, has overwhelmingly answered my previous questions and, in fact, busted few faulty assumptions of mine. While the course name itself is self-explanatory about its scope, I believe my key takeaway from this course is – Investment decision in an organization should be pursued by building a robust BUSINESS CASE, rather than just based on mere analysis or just intuition or gut feeling.

Through the course, it is unfortunate to learn that most of the companies even today go-ahead on the investment decisions without proper cost-benefit analysis, due to lack of knowledge and experience, leading to failed projects or missed targets in the projects. Also, in many companies despite a proper cost-benefit analysis, the final decision is taken based on decision maker’s intuition or guts feeling or even based on his/her personal agenda. In fact, we can reflect on our own previous decisions in our own life, when we trusted our intuition more than logic and reason.

This should not be the case in a company, as we might end up making huge losses due to our inability to build a logical and rational process for deciding on a proposed investment. Just to quote an example of bad investment which is exemplified in the course, KIN phone by Microsoft is a disastrous $ 1 Billion investment which has hardly reaped any benefits to the company. There were only 503 phone sales, during its two-month presence in the market. How can a company like Microsoft make such a pathetic investment decision? Are all their forecasts just a fiction? Or else did they go ahead with the investment decision without proper cost-benefit analysis?

Thus, this course emphasizes on building a robust business case and encourages using it as a process, as well as a tool to guide a decision maker on an investment. Business Case, from a process perspective, has six phases – Understating the investment need, Analyzing the costs (cash outflows), Discovering the benefits (cash-inflows), Evaluating NPV & risk & uncertainty, Presentation of analysis to senior management and Measuring the investment’s performance. Each phase in the process builds on the previous phase and acts as a learning process to discover the wins and losses of the investment while the business case is developed. I believe a process approach would provide an analyst a systematic approach to exploring all the possibilities in terms of costs, benefits, risks and strategic future options that are relevant to the investment decision. The end result is a business case document with recommendations on investment alternatives, which can be considered as a tool to convince the different stakeholders in the organization along with the senior management.

As a part of the course, we are required to build a business case on a hypothetical investment case which interests us, to serve as a practice. During building the business case, I have realized the importance and difficulty in identifying and forecasting the costs and benefits of the investment. It could be quite difficult if not impossible to chalk down all the costs & benefits and forecast their values for the investment period, which may range from 1 year to 20 years depending on the type of the investment. Beyond the cost and benefits, it is important to understand the impact of certain variables to understand the risk involved in the investment and scope for strategic flexibility options in future. However, certain tools and frameworks provided in the course textbook – Making the compelling business case are of specific use during this process.

Other key learning during the course includes – the importance of presentation skills (Presentation slides and vocal communication). Right from my under-graduation, I am not a firm believer of need for outstanding presentation skills though I value them to a certain extent. However, I am convinced with the professor argument for the need of outstanding presentation skills in the real business world. He has a rich experience as a consultant, and I believe he is right. We have spent almost equal time on building a good presentation compared to the time spent on analysis. The whole effort in building the business case goes futile if it is not well presented to the decision makers.

MYRAcle Sai Deepak

Sai Deepak Reddy

PGDM 20114-16

February 23, 2016

Experiential Learning Redefined by Dr. David Patient at MYRA

It was just another normal day in MYRA School of Business, until the students were introduced to a new face in the class, Dr. David Patient, who is the Professor of Organizational Behavior(OB) at MYRA School of Business and Professor of Human Resources Management at Catolica Lisbon School of Business, Portugal.

Students in the first year of PGDM were excited about learning Organizational Behavior through Case Studies, Videos and Presentations.

As a student of Organizational Behavior myself before, I was of the opinion that the subject would be theoretical with all the theories and concepts of behavior. However, Dr. David Patient displaced all the notions that I had about how the subject would be taught, when he made it clear that there would be no textbooks, materials or notes used during the lecture.

Case Studies formed the base of teaching the different concepts of Organizational Behavior. Right from the first case study about Jensen Shoes to the Army Crew Team, real life based case studies on Lisa Benton to our last case study on GE; case studies filled our minds throughout.

Sipping a hot tea in the cold weather, the evening discussions revolved around the case study that was to be discussed in class the next day.

The professor used to divide the class into groups and each group had to come with solutions for the different scenarios in the case.

While some of us decided to read the case about Everest 1996, others watched the movie in theatres instead. For the first time, we watched a movie more from the perspective of the case study than as a means of entertainment.

We watched a TEDx talk by Dan Ariely on what makes us feel good about our work with the application of some of the OB concepts.

Dr. David Patient also used lot of examples from his real life including his family to teach us OB concepts. The professor pulled no stops in mentioning about the funny moments he had with his wife.

What a way to teach Organizational Behavior! A drastic change in the way we have been taught, from Rote Learning to Experiential Learning. A Refreshing change though.

We look forward to more case studies, movies and a meal with the professor next year.


Ganesh S

PGDM 2015-17

Sparsh: A social initiative—A MYRAcle’s experiences

Vikasana, the social service club of IIM B, organized Sparsh, an event challenging participants to come up with feasible solutions to globally expand the operations of Samarthanam, a trust for disabled people in India. In 1997, Mahantesh G.K. and two of his friends envisioned an organisation to provide opportunities for the deserving, young, and talented children with disability of any form, or from marginalized economic backgrounds. Thus, more than a decade ago, Samarthanam Trust for the Disabled came into existence by providing free hostel facilities to the deserving students.

Mission of Samarthanam is to empower the visually impaired, disabled and underprivileged people through developmental initiatives, focusing on educational, social, economic, cultural and technological aspects.

In the case we were given, Samarthanam aims to reach out to more than 100,000 people by 2020.They want to expand themselves in other countries in order to raise funds to help the operations in India. We pitched the idea of raising funds by doing service to the disabled people. We picked Canada and Finland as the two target countries because both are developed economy and have very high disability rate. Finland has the disability rate of around 34%, highest in globe and entering into Finland is like a gate-pass to European Union. Canada has one of the highest numbers of NRI and Samarthanam can leverage upon it. Our service approach was like a business case where Samarthanam will train people with disability (PWD) and raise money by charging them marginally higher. Close to 200 teams participated in 1st round out of which top 5 teams were selected. The result of first round gave us the ticket to visit IIM B and stay there for three days. It was like a dream come true and I made sure that we will not leave any stone untouched in winning this competition.

We reached IIM B on 23rd September evening and were just amazed by the beauty of campus. There is totally a different aroma in IIM B campus and getting a chance to stay in this campus was not less than a blessing for me. As per final round plan, top5 team had to visit Samarthanam, the day before the final event and understand the whole case practically. It was really inspiring to see that how the vision of one person had made a change into the life of so many disabled persons. I was just impressed by the statement of director “making liability (disabled person) into taxpayer”. We made some changes in our presentation and then came the D-day. We practised a lot to deliver our presentation efficiently in the given time of 10 minute. We were the first team to present so pulling out all our fear; we presented the case and answered all the questions put across by jury. They were mostly convinced by our answers. We went through the presentation of all the teams and were told to wait outside before announcing the result. For me every second was like hours put together because this was one of the most precious moment of life. After half an hour the Jury announced the result and mentioned that, it was very difficult to pick between 1st and 2nd team. We won 2nd prize and were really happy with the decision. We were on cloud nine and I was living my dream of getting certified from IIM B for an international event.

We took the pictures at the IIM B campus to capture these precious moments. I thanked GOD

for fulfilling my dreams. Staying in IIM B campus for 3 days and winning 2nd prize in one of the flagship event in Vista 2015 are the moments which I will cherish in my whole life.

Manoranjan Kumar
Manoranjan Kumar

PGDM 2014-16