MBA643 Project Risk, Finance and Monitoring Assignment Help

Part A

i) Project selection - How should the company you select determine what projects to undertake and what ones to avoid? What tools, measures, and practices are available to project analysts in this industry?

ii) Cost management - What is the role of project cost management for your chosen company? Why is it important? What strategies or approaches should the company you have chosen adopt in order to effectively manage project costs?

iii) Funding - What funding measures or options are generally available to assist companies like the one you have chosen to fund proposed new projects? The report should include reference to any implications associated with different funding types or models.

iv) Implementation and winding up - Are there any particular issues associated with commencing a project that your company must consider? Why are they important? Who do they impact or affect? What happens when the project finishes? How are projects wound up? Do they just end or are there resource or infrastructure considerations? Are there environmental issues associated with the end of a project?

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i) Project selection

The company always look for the future aspects of the project. Therefore, every project taken by the Samsung Company is largely dependent on its future growth and potential. For example, the folding phone that was introduced by the company in 2019, was meant to target those consumers who want to stay with the cutting-edge technology (britannica.com, 2019). After few samples into the market by the company, the demand for the product has grown significantly. However, the price of the product is making the consumers to wait for a couple of years in order to get the best value for money.

There was a time when the company used a USB type on its Samsung galaxy devices that was considered as a cutting edge. However, as time went by, USB type C has become one of the most globalized mode of charging as well as data transferring devices. These devices are globally used in most of the smart phones as well as laptops. As per (La, 2019) over 5 million devices that are using USB type C, are in the market as of the year 2019. The number of users using this type product is likely to increase in the next couple of years. The company should maintain its position as one of the most innovative companies in the world. Unlike Black-berry and Apple, the Samsung company takes necessary risks in order to stay ahead in the innovative sector of the market. For any project selection, it looks for the following aspects.

- Desires of the consumer

- Stability of the market for the desired project

- Demands that are deriving from the market

- Possible growth of the market

ii) Cost management

The role of project cost management's is to look after the budget for a project. It helps providing the starting line or the base line for the project's budget. It keeps a constant engagement with the project and takes the necessary action needed for the project's success with the limited resources. Samsung Company has always worked on the research and development sector in order to get the best product possible. However, many such cases has been noticed where the product development projected exceeded the initial forecasted budget. Therefore, the Samsung Company has made the cost management a very important aspect of every project. Its primary task is to predict an overall budget for a particular task and make changes accordingly. The company should incorporate relevant cost strategy method for any given project. It is also called as monetary cost that is very much helpful for a business. Because it can either reduce or avoid the entire cost by making a specific decision.

iii) Funding

Samsung is a very much reputed, well recognized and well-established company as a result the funding for its projects derive from multiple sources. Its projects are well funded from share market as well as government sources. Generally, the company use share market as its primary source of funding for any projects. However, in case of projects relating to government agencies it knocks the doors of the banks. The company generate more than enough revenue yet it minimizes the risk for any given project in the best way possible.

There are two type of funding models that are generally accepted in the company and they are 

- Crowed based funding under which equity based funding is a general mode and

- Debt funding

Although there is some time when Angel funding have been noticed but it is not a popular mode of funding for the company.

iv) Implementation and winding up

The company do not understand the demand of the mass people very well. Ever since it has enhanced its brand image, it has lost the very principle for which it stood. The principle was to make product affordable and for every individual.It is struggling to maintain as one of the world leader in its sector despite being one of those companies that has a very diverse product range. The company should work on its ability to provide the product cheaper and affordable by mass people. It is important because even though the company is considered as one of the global leaders, the threat of new entry is increasing with every passing day. It will affect the company's overall revenue if it does not do something about it. If everything goes well for the company, the company manages to get good amount of money from the project. The product riches to the people and help the company to grow. However, the e-waste has grown significantly over the past couple of years therefore needing the attention of the manufacturer. The Samsung Company is working in order to get better recyclable results (samsung.com, 2019).

 
Part B

a) According to the sources above does Apple currently have equity capital on issue? Whydo companies raise equity capital? What has happened to the Apple share price in 2019and why has this happened? (you will need to do some research here) 

Yes, the company has good scope for raising additional equity shares for the company. The companies from all around the world raise equity capital because it help them to generate money for a given project. For example, IPhone can issue new shares for raising money in order to create new production facilities outside of china.

The shares in 2019 have lost some of its value because, the IPhones users are very much happy with their older IPhones but with a replaced battery. Therefore, the consumers are not willing to buy a new Apple device from the company. The competitors such as Google, Samsung, MI and many more are slowly but steadily taking away the market domination from Apple. The products from these companies are providing somewhat similar performance as Apple's. Ever since the introduction of Fist Generation IPhone, the company did not pay much attention towards creative designs. Whereas, the products from Samsung and some Chinese brands are showing innovative and futuristic designs to the consumers. Even though the quality of Apple is superior to most of its competitors, the line of superiority is getting thinner and thinner every day. The technology is evolving rapidly and quality of the product cannot alone help the company to achieve success in the future.

What are the FCFs for this project?

The FCF for the project is 868,000 on the fourth year.

What is the NPV of this project?

The net present value for the project is 168,000

State whether Apple should invest in this project and explain why or why not based on your calculations?

No the apple should not invest in this project because it will have no return on investment. Moreover, the depreciation and invention of new battery will only result in drop of sales value. Overall, the project is not suitable for Apple.

b) Is funding this project with ordinary shares the cheapest way to finance? Why or why not? Imagine Apple could refinance using only bonds. Would this affect its NPV? Why or why not?

Yes, the ordinary shares are more than enough for the company to fund its new project because its ordinary shares can bring more then enough money for the project.

Using only bond will have a divesting result upon the company. It will have to go into debt it is chose to reference using only bonds. The NPV of the company will not be affected as because it has a brand presence better than most of the company in this segment.
 
Conclusion and recommendations

The above discussion is based on Apple and Samsung Company. Part A consists of the issues that are faced by the Samsung Company and possible solutions for the company. The Samsung and Apple are two tech giants and have come a long way after its formation. However, both of these companies are facing serious competitions from the market and need a better approach to deal with the marketing situations.

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