In times of crisis, optimal management of firm resources is of paramount importance. This course provides in-depth understanding of important strategic issues related to cost and revenue management in a globalizing economy. What are key global business trends impacting your firm today? How are different sectors (finance, real estate, manufacturing, trade, tourism, real estate, etc) impacted by globalization and the unfolding financial crisis? How to, given the circumstances, manage costs and revenues in a way that maximizes firm value? What are opportunities and risks facing firms in a globalizing economy? What are opportunities and risks related to off-shoring and outsourcing? These and many other other important stratetic issues will be discussed  by one of the leading international experts on globalization, outsourcing, and cost management.  

The course consists of a combination of classroom training, practical case studies and group exercises. Participants should bring their own laptops with Excel software.

Course Objectives

• To enable participants to develop a detailed understanding of the concepts of management finance, budgeting, and investment analysis – and how these affect shareholder value.
• To improve the participants’ skills in cost analysis, budgeting and financial analysis techniques and how and when to use them.
• To create an awareness of how to make decisions, minimise costs and maximise profits in the modern shareholder-value driven company
• To gain thorough understanding of key global trends and analyze strategic options facing firms in times of global crisis

Expected Outcomes

By attending the course, participants will:

• Work through the principles and practice of company budgeting and project analysis
• Appreciate the different methods of cost and benefit appraisal for companies
• Learn how to estimate cost of capital and make capital budgeting decisions
• Develop a comprehensive understanding of how companies are valued and how a company’s value can be improved in the context of cost analysis and budgeting
• Be able to analyze key global business trends that impact their firms
• Learn to evaluate and analyze various options to restructure firm organization and firm strategy
• Be able to adopt offshoring as an effective management tool
• Deploy case study method as a valuable analytical tool
• Command tools to adopt appropriate mix of cost and revenue management, taking into account issues relating to currency management, IP issues, personnel deployment etc.
• Analyze the world as a dynamic, organic, interconnected economic mechanism and approach the task of management in a flexible manner.

 Who Should Attend

The module is designed for managers with strategic responsibilities within firms.

Course Structure

Day 1

Accounts

• Defining revenue, cost of sales, and gross and net profit
• The balance sheet, cash flow and income statements
• Leases, depreciation and assets
• Financial ratios
• Working capital
• Managing cash flows (invoice discounting, factoring and other techniques)
• GAAP and IFRS – international accounting standards

Cost analysis

• Fixed and variable costs
• Classifying fixed and variable costs to aid in decision making
• Typical cost structures
• FIFO, LIFO and AVCO inventory costing
• Wages and salary systems

 Deriving optimum costing

• Comparing costing techniques (job order, process and others)
• Overhead apportionment
• Marginal costing and contribution
• Pricing decisions using costing techniques
• Absorbing direct and indirect costs into products or services

 Setting budgets

• Working within the context of the strategic plan
• Forecasting sales and revenue
• Calculating cost of sales and overhead
• Rolling, incremental, flexible and zero-based budget methodologies
• Budget coordination: creating the Master Budget
• Limiting factors

 Monitoring budgets

• Actual vs. budget
• Calculating and interpreting variances
• Diagnosing the cause of variances
• Re-forecasting
• Feedback and feed-forward controls

 Barriers to successful budgeting

• Top-down vs. bottom-up processes
• Committing to, and owning, the numbers
• Total team participation
• Dos and don'ts of budgeting
• Overcoming the negative aspects of the budgeting process
• Examining human responses to budgets

 Analyzing break-even points

• Calculating a project's break-even point
• Evaluating a product discontinuation decision
• Theory of constraints

Project Appraisal

• Payback and discounted payback, accounting rate of return
• Net present value, horizon perspectives & green/grey discount rates
• Forecasting techniques (time series, regression and others)
• Monte Carlo simulation using @RISK, scenario and sensitivity analysis
• Internal rate of return (IRR)
• XIRR and Modified IRR – use of Excel
• Mutually exclusive projects vs. independent projects

Exercise: Participants use Excel to analyse projects based on their payback, discounted payback, IRR, NPV and standard deviation of NPV.

Day 2

Globalization and the Individual Firm

• Attributes of Globalization
• Trade, Investment, Capital Flows, Information Flows, Demonstration Effect, Global Marketing, Global Competition, Global Labor Supply
• Offshoring/Outsourcing as a specific form of modern-day globalization
• Broad Implications and Challenges of Above for Management of Firms

 Offshoring: Challenges and Opportunities

• Offshoring Background: Manufacturing and China; Services and India; R&D and Eastern Europe
• Offshoring as both Cost Management and Revenue Enhancement
• For Western countries - R&D Offshoring to E. Europe -Reasons: Design and Research to Market; Broaden Access to Expertise, Existing Traditions, and Rapid Development of Scientific and Innovative Culture, Complex Interdisciplinary Nature of Contemporary R&D; Competitive Edge of Firm Married to Comparative Advantage of Location
• Lessons for firms from emerging economies

Cost Management, Offshoring and Globalization

• Specific aspects of changing global competition and implications for cost management
• Role of technology
• Tools of cost management: Organizational structure, Process management, Supply-chain management, Real estate management,
• Offshoring and The Pitfalls of Focusing on Costs; Costs and Revenues: An Integrated Approach: Personnel management, Cash Flow Management
• Cross-Border  Issues: Currency management, Cross-culture and Institutional Issues, Legal and Informational issues, Contracting and IP issues
• Sundry Challenges: Sources of other transactional costs; Quality Control, Monitoring and Coordination; Managing Impact on Core Competence

Analyzing various sectors: Finance, Manufacturing, Tourism, Travel and Real Estate

• Cost management in financial institutions
• Cost management in manufacturing
• Prospects and Drivers of tourism and travel
• Capacity constraints
• Real estate content of tourism
• Management issues In real estate and Tourism
• Interplay of technology, travel and tourism

Day 3

Case Study and Fun Assignment

• Case Study: Offshoring of back-office activities by a multi-activity firm (tourism, real estate, manufacturing); Specific challenges faced; tailoring of organizational and management structure
• Fun Assignment: Depending on number of participants class will be divided into teams; Project - Invest abroad or domestically  in a tourism-hotel-spa complex; Feasibility-viability study; Critical parameters; IRR targeted; Build or buy decision; Design; Financing and project management; Operational outsourcing or in-house management etc.