Module Title: Strategic Investment Decisions

Module Title:    Strategic Investment Decisions

Further information about general assessment criteria, ARNA regulations, referencing and plagiarism can be found on the module’s site on the e-Learning Portal.  Students are advised to read and follow this information.

Instructions on Assessment:
‘A company seeks to select the best or most profitable investment projects so that it can maximize the return to its shareholders. It also seeks to avoid the negative strategic and financial consequences which could follow from poor investment decisions

Watson D. & Head, A. (2010)
Corporate Finance – Principles & Practice (5th Edition), p.160

A) Capital Investment Appraisal Models
i.    In relation to the mining or pharmaceuticals industry, provide a notional illustrative example of a possible long term investment project.  It should be used to provide a financial analysis/evaluation, demonstrating a range of alternative techniques and illustrating the critical points you make in part (ii).

ii.    Critically appraise the alternative evaluation processes, used by managers to assist in choosing between competing capital investment projects in attempting to maximize the return to its shareholders.
(Note that your discussion should include the implications of risk and uncertainty).

(Marks available 60%)

You should not merely explain how various measures are calculated but rather should critically evaluate their potential usefulness for managers responsible for taking investment decisions. Please cite all references you rely upon and relate your critique to the illustrative example.

B) Behavioural / People Aspects of Capital Investment Decision Making
In order to ‘avoid the negative strategic and financial consequences which could follow from poor investment decisions’, human influences that can distort the degree of ‘objectivity’ employed must be taken into account.  Critically assess the potential impact of ONE of the following human influences on investment decisions taken by business managers:

•    Managerial attitude to risk
•    Hindsight bias
•    Availability bias
•    Anchoring and adjustment bias
•    Prospect theory
•    Overconfidence

Please cite all references you rely upon and relate your critique to the illustrative example.

(Marks available 40%)

Word limits and penalties for assignments

If the assignment is within +10% of the stated word limit no penalty will apply.

The word count is to be declared on the front page of your assignment and the assignment cover sheet.  The word count does not include:

•    Title and Contents page    •    Reference list    •    Appendices    •    Appropriate tables, figures and illustrations
•    Glossary    •    Bibliography    •    Quotes from interviews and focus groups.

Please note, in text citations [e.g. (Smith, 2011)] and direct secondary quotations [e.g. “dib-dab nonsense analysis” (Smith, 2011 p.123)] are INCLUDED in the word count.

If this word count is falsified, students are reminded that under ARNA page 30 Section 3.4 this will be regarded as academic misconduct.

If the word limit of the full assignment exceeds the +10% limit, 10% of the mark provisionally awarded to the assignment will be deducted.  For example: if the assignment is worth 70 marks but is above the word limit by more than 10%, a penalty of 7 marks will be imposed, giving a final mark of 63.

Students are advised that they may be asked to submit an electronic version of their assignment.

Time limits and penalties for presentations

The time allocated for the presentation must be adhered to.  At the end of this time, the presentation will be stopped and will be marked based on what has been delivered within the time limit.

Submission of Assessment:
All assignments must be submitted via the Newcastle Business School Office.  Each assignment must be accompanied by an Assessed Work Form which must be completed in full.  The assignment will not be accepted by the Newcastle Business School Office unless the form is completed correctly.

Marked assignments will be returned to students.  It is advisable to retain a copy of your assignment for your own records.  Your mark will be returned on the Assessed Work Form via the Newcastle Business School Office.

Mapping to Programme Goals and Objectives:

This assessment will contribute directly to the following Postgraduate programme goals and objectives.  (Insert an ‘X’ in boxes where applicable, referring to appropriate programme specification for mapping details)

Goal One: Be independent, reflective critical thinkers

1.    Demonstrate awareness of their personal strengths and weaknesses through critical reflective practice.
2.    Understand and challenge personal patterns of thinking and behaving.

Goal Two: Be culturally and ethically aware

1.    Demonstrate their ability to work in diverse groups and teams.

2.    Reflect on their own ethical values.

Goal Three: Have developed leadership and management capability

1.    Demonstrate their personal contribution to team effectiveness.

2.    Communicate complex issues effectively.

3.    Demonstrate decision making and problem solving skills.

4.    Carry out presentations and lead discussions.

Goal Four: Have developed and applied knowledge of international business and management theory

X    1.    Acquire, interpret and apply knowledge of international business, management and organisational functions.

Goal Five: Have developed a range of research skills and project capabilities

1.    Plan and complete a major individual piece of research on a contemporary business, management or leadership topic of their choice.
2.    Demonstrate skills of analysis and synthesis in the application of research methods to the exploration of contemporary business issues.

Goal Six: Have developed specialist knowledge about the theory and practice of your programme of study

X
1.    Demonstrate specialist functional knowledge in relation to your programme of study.

Assessment Criteria (NBS)

Module Specific Assessment Criteria

Trait        0
Fail    1 – 39
Fail    40 – 49
Fail    50 – 54
Pass    55 – 59
Pass    60 – 69
Commendation    70 – 100
Distinction
Part A

Long-Term Investment Appraisal Techniques    Critical evaluation of traditional investment appraisal techniques
(25%)    No real attempt provided.    Demonstrates little evidence of understanding in respect of  issues related to techniques which may be used to support long term investment decision making
Demonstrates insufficient evidence of knowledge and understanding in respect of  issues related to techniques which may be used support long term investment decision making     Displays adequate, but rather limited critical appreciation of issues related to techniques which may be used support long term investment decision making     Demonstrates understanding of  issues related to techniques which may be used to support long term investment decision making

Demonstrates a sound grasp of issues related to techniques which may be used support long term investment decision making including an understanding of Real Options methodology    Displays significant depth of understanding of issues related to techniques which may be used to support long term investment decision making including a clear understanding of  Real Options methodology
Implications of risk and uncertainty in investment decisions
(20%)    No real attempt provided.    Demonstrates little evidence of understanding in respect of  issues related to risk & uncertainty and strategic investment decision making
Demonstrates insufficient evidence of knowledge and understanding in respect of  issues related to risk & uncertainty and strategic investment decision making
Displays adequate, but rather limited critical appreciation of issues related to risk & uncertainty and strategic investment decision making     Demonstrates understanding of  issues related to risk & uncertainty and strategic investment decision making

Demonstrates a sound grasp of issues related to risk & uncertainty relative to strategic investment decision making, including an understanding of the significance of Real Options methodology    Displays significant depth of understanding of issues related to risk & uncertainty relative to strategic investment decision making, including a clear understanding of the significance of Real Options methodology
Use of Illustrative example to illustrate investment appraisal techniques
(15%)    No example provided    Demonstrates little evidence of ability to illustrate investment appraisal techniques in an example    Demonstrates insufficient evidence of ability to illustrate investment appraisal techniques in an example    Demonstrates limited application of the key relevant theories to an illustration of a strategic investment decision.    Demonstrates restricted ability (not including all methods or including with limited understanding) to apply all relevant theory to an illustration of an investment decision.    Demonstrates a sound understanding in critiquing relevant theory against the specific context of a clear and comprehensive example of a strategic investment decision    Demonstrates significant depth of understanding in critically applying relevant theory to the specific context of a detailed example of a long term investment decisions. Including Real Options
Part B

Behavioural Issues in relation to long-term investment decision making    Demonstration of understanding of behavioural influences on decision making
(25%)    No real attempt provided.    Demonstrates little evidence of understanding in respect of behavioural influences on decision making and little reference to academic literature    Demonstrates insufficient evidence of understanding in respect of  issues related to the potential impact of behavioural issues on investment decisions and insufficient reference to academic literature    Demonstrates adequate but rather limited evidence of understanding in respect of  issues related to the potential impact of behavioural issues on investment decisions and adequate but limited reference to academic literature    Demonstrates reasonable evidence of understanding in respect of  issues related to the potential impact of behavioural issues on investment decisions well supported by reference to academic literature    Demonstrates a sound grasp of understanding in respect of  issues related to the potential impact of behavioural issues on investment decisions very well supported by reference to academic literature    Demonstrates significant depth of understanding in respect of  issues related to the potential impact of behavioural issues on investment decisions extensively supported by reference to academic literature
Application of relevant theory to the context of strategic investment decisions (15%)    No real attempt provided.    Demonstrates little evidence of the ability to apply relevant theory to the context of  strategic investment decisions    Demonstrates insufficient evidence of the ability to apply relevant theory to the context of  strategic investment decisions    Demonstrates adequate but rather limited evidence of the ability to apply relevant theory to the context of  strategic investment decisions    Demonstrates reasonable evidence of the ability to apply relevant theory to the context of  strategic investment decisions    Demonstrates good evidence of the ability to apply relevant theory to the context of  strategic investment decisions

Demonstrates significant evidence of the ability to apply relevant theory to the context of  strategic investment decisions

Note:     For those assessments or partial assessments based on calculation, multiple choice etc.  Marks will be gained on an accumulative basis.  In these cases, marks allocated to each section will be made clear.

Students must retain an electronic copy of this assignment and it must be made available within 24 hours of them requesting it be submitted.

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