Objective
This subject imparts basic financial concepts to develop knowledge of financial system, financial institutions and basic concepts / techniques of corporate finance.
Unit–I
The Finance Function: Goals, Objectives and Ethics: Scope of Finance, Real and Financial Assets, Equity and Borrowed Funds
Domestic, Economic and Financial Environment: Developments Till 1991, Macroeconomic Reforms, Micro Economic Reforms, The Eleventh Plan Proposals
International Economic and Financial Environment: World GNI and Ranking of Individual Countries, Growth in International Trade and Finance, The Importance of the Multinational Corporation, Methods of Doing International Business, World Trade Organization, Forms of Economic Integration among Nations, Balance of Payments
Unit – II
Concepts of Risk and Return: Capital Market Theory: Return on a Single Asset, Risk of Rates of Return: Variance and Standard Deviation, Portfolio Theory, Portfolio Return: Two-Asset Case, Portfolio Risk: Two Asset Case, Risk Diversification: Systematic and Unsystematic Risk, Capital Asset Pricing Model (CAPM), Assumptions of CAPM, Characteristics Line, Security Market Line (SML), Implications and Relevance of CAPM
Financial Ratio Analysis: Users of Financial Analysis, Nature of Ratio Analysis, Standards of Comparison, Types of Ratios, Liquidity Ratios, Current Ratio, Quick Ratio, Cash Ratio, Interval Measure, Net Working Capital Ratio, Leverage Ratios
Time Value of Money: Time Value of Money, Compounding, Discounting
Unit – III
The Cost of Capital: Significance of the Cost of Capital, Investment Evaluation, Designing Debt Policy, Cost of Equity and the Capital Asset Pricing Model (CAPM);, The Weighted Average Cost of Capital, Book Value vs. Market Value Weights, Flotation Costs, Cost of Capital and Investment Analysis, Divisional and Project Cost of Capital, The Pure-Play Technique, The Cost of Capital for Projects
Capital Structure: Theory and Policy: Assumptions of Traditional Capital Structure Theories, Relevance of Capital Structure: Capital Structure Planning and Policy, Cash Flow Analysis, Practical Considerations in Determining Capital Structure, Assets, Growth Opportunities, Debt- and Non-debt Tax Shields, Financial Flexibility and Operating Strategy.
Unit – IV
Dividend Policies: Objectives of Dividend Policy, Practical Considerations in Dividend Policy, Firm’s Investment Opportunities and Financial Needs, Shareholders’ Expectations, Constraints on Paying Dividends, Stability of Dividends, Constant Dividend Per Share or Dividend Rate, Constant Payout, Constant Dividend Per Share Plus Extra Dividend
Working Capital Management: Concepts of Working Capital, Focusing on Management of Current Assets, Focusing on Liquidity Management, Operating and Cash Conversion Cycle, Gross Operating Cycle (GOC), Cash Conversion or Net Operating Cycle, Permanent and Variable Working Capital, Balanced Working Capital Position, Determinants of Working Capital, Nature of Business, Market and Demand Conditions.
Unit – V
Valuation Of Securities: Concepts of Value, Book Value, Liquidation Value, Going Concern Value, Market Value, Features of a Bond, Bonds Values and Yields, Bond with Maturity, Yield to Maturity, Current Yield, Yield to Call, Bond Value and Amortization of Principal, Bond Values and Semi-annual Interest Payments, Pure Discount Bonds, Perpetual Bonds, Bond Values and Changes in Interest Rates, Bond Maturity and Interest Rate Risk, Bond Duration and Interest Rate Sensitivity, Valuation of Preference Shares, Valuation of Ordinary Shares, Dividend
Capitalization, Single Period Valuation, Multi-period Valuation, Growth in Dividends, Normal Growth, Super-normal Growth.
Unit – VI: Cash Flows and Capital Budgeting
Nature of Investment Decisions, Importance of Investment Decisions, Types of Investment Decisions, Expansion and Diversification, Replacement and Modernization, Mutually Exclusive Investments, Independent Investments, Contingent Investments, Capital Budgeting Process, Capital Investments, Capital Investment Planning and Control, Investment Evaluation Criteria, Investment Decision Rule, Evaluation Criteria, Net Present Value Method, Calculating IRR by Trial and Error, NPV Versus IRR, Non-Conventional Investments: Problem of Multiple IRRs, Difference: Case of Ranking Mutually Exclusive Projects, Reinvestment Assumption and Modified Internal Rate of Return (MIRR).
Reference
1. Brealey, R.A., and Stewart C Myres, Principles of Corporate Finance, Tata McGraw Hill.
2. Pandey, I.M., Financial Management, Vikash Pub.
3. Prasanna Chandra, Financial Management, Tata McGraw Hill.
4. Damodaran, Corporate Finance, Wiley.
6.2. Strategic Management
Objective
The course advocates a general management view point. It seeks to develop cross functional and holistic thinking; and the ability to recognize patterns of strategy under conditions of incomplete and imperfect information. This course covers the important analytical approaches and the process through which business and corporate strategy decisions are formulated.
Unit–I
Evolution, Definition, Nature and Scope of Strategic Management:
Concept of Strategy, Evolution, Definition, Scope and Importance of Strategy, Central Concepts in Strategic Management, Collecting Information on an External Environment, Deciding the Scope of an Organisation, Acquiring Organisational Resources and the Skills to Match External Opportunities and Threats, Deciding the Investment Patterns for Future, Strategic Management Planning, Scope and Importance of Strategic Planning, Strategic Decision-Making, Process of Strategic Management, Levels at which Strategy Operates, Role of a Strategist.
Unit–II
Strategic Intent: Concept of Strategic Intent, The Mission and Vision Statements, Defining a Mission Statement, Defining a Vision Statement, Creating a Sense of Vision , Importance of Vision and Mission Statements, Characteristics and Components of a Mission Statement, Business Definitions, Types of Business Activities, Objectives of Business.
Strategic Planning Process: Organizational Capability, Strategic Advantage, Factors Affecting Organisational Capabilities, Financial Capability, Marketing Capability, Operational Capability, Personnel Capability, Information Management Capability, Factors Affecting Organizational Appraisal, Approaches to Organisational Appraisal, Sources of Information and Methods and Techniques of Organisational Appraisal.
Unit–III
Business Challenges & Strategic Planning: The Nature and Role of Business Level Strategies, Business Level Strategies, the Overall Cost Leadership Strategy, The Differentiation Strategy, Location and Timing Tactics, building and Use of Core Competence, Building Core Competence, Assessing Core Competencies by Performing an Internal Audit.
Environmental Appraisal: The Nature of the Environment and the Economic Variables, Concept of Environmental Appraisal, Effect of Changing Environment, Need for Environmental Appraisal, Applicability of Environment, Environmental Scanning Techniques, Barriers to Environmental Appraisal, Macro Environment, Auditing Environmental Influences.
Unit–IV
Corporate Level Strategies: Concept of Corporate Level Strategies, Corporate Level Strategies in Action, Comparing Business and Military Strategies, Guidelines for Effective Corporate Level Strategies, Grand Strategies, Dimensions to Evaluate Grand Strategy Mix, Types of Strategies, Corporate Restructuring, Mergers, Concept of Synergy.
Strategic Analysis and Choice: Nature of Strategic Analysis and Choice, Process of Generating and Selecting Strategies, Threats-Opportunities-Weaknesses-Strengths (TOWS) Matrix, Boston Consulting Group (BCG) Matrix, GE Nine Cell Matrix, Hofer’s Product –Market Evolution Matrix, Shell Directional Policy Matrix, Competitive Analysis: Porter’s Five Forces Model, Qualitative Factors in Strategic Choice
Unit–V
Strategy Implementation: Nature of Strategy Implementation, Matching Structure with Strategy, Restructuring, engineering, Restructuring, Re-engineering, Managing Resistance to Change, Crafting Strategy Supporting Culture, Production/Operations Concerns when Implementing Strategies, Human Resources Concerns when Implementing Strategies, Projects and Procedures, Project Implementation, Procedural Implementation, Resource Allocation, Factors Affecting Resource Allocation;, Difficulties in Resource Allocation;, Approaches to Resource Allocation, Organisational Structure
and Strategic Implementation, Structural Mechanism for Implementation of Strategy;, Structures for Strategies.
Unit–IV
STRATEGIC CONTROL AND OPERATIONAL CONTROL: Evaluating Strategy Implementation, Evaluating Marketing Issues in Strategy Implementation, Evaluating Finance and Accounting Issues in Strategy Implementation, Research and Development Issues in Evaluating Strategy Implementation, Evaluating the Importance of Information Systems in Implementing Strategy, Strategic Control and Operational Control, Strategic Control, Operational Control, Benefits and Limitations of Control Techniques, Organizational Systems and Techniques of Strategic Evaluation, Techniques of Strategy Evaluation.
References
1. Porter, M.E., Competitive Strategy, Free Press, New York.
2. Porter, M.E., Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York.
3. Johnson and Scholes, Exploring Corporate Strategy, PHI 4th Edition.
4. Ghemawat, P., Strategy and the Business Landscape, Pearson.
7. SYLLABUS - SPECIALIZATION STREAMS