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  2. 2013
  3. September
  4. I
  5. Investment decision support
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Exit Survey
 
 
Strategic Investment Decision Evaluation Models: Assessment of the adoption of complex composite decision models for the evaluation of high uncertainty business change projects.
 
 
Invitation to participate
You are invited to participate in a research project that aims to provide empirical evidence of the value of different strategic investment assessment techniques to support evaluators in building composite evaluation models to support investment decisions. Before you decide on whether to take part, it is important for you to understand why the research is being done and what it will involve. Please take time to read the following information carefully, discuss it with others if you wish, and decide whether or not you wish to take part.

I am a student of the Masters of Business Administration (MBA) program at the University of Leicester. I am undertaking this research for my dissertation to fulfill the requirements of the MBA degree. The project has been approved through the University of Leicester's Research Ethics approval process.

Research purpose
The aim of this research is to provide empirical evidence of the value of different assessment techniques to support evaluators in building composite evaluation models to support investment decisions for strategic projects.
Strategic projects are substantial investments that involve high level of risk, produce hard-to-quantify (or intangible) outcomes, and have a significant long term impact on corporate performance. Increased sophistication in strategic investment decision making is required, however limited research exists on the composition of decision models in the market and which of the techniques provides real market value.

Projects with a high level of uncertainty are defined as projects where it is difficult to determine real cost, benefit and/or risk of the project quantitatively.

I call on those involved in strategic investment evaluation and/or decision making to participate in this survey.

Participant rights
Participation in this research is entirely voluntary. If you decide to take part, you have the right to stop being a part of the research study at any time without explanation. You have the right to ask that any data you have supplied to that point be withdrawn/destroyed.

You have the right to omit or refuse to answer or respond to any question that is asked of you.

You have the right to have your questions about the procedures answered (unless answering these questions would interfere with the study’s outcome). If you have any questions as a result of reading this information sheet, you should ask the researcher before the study begins.

What type of information will be sought and why relevant
The research survey is structured in order to understand the following information from the organization
1. Market Risk Orientation
2. Importance of strategic decision making
3. USe of decision support tools
4. Company and respondent demographic profile

Basic respondent demographic information is requested to understand the level of respondent involvement in the decision making process. Age is required to provide some level of understanding of the respondents experience and if correlation exist with age to exposure of modern evaluation techniques

The respondent will be required to complete a short survey (this should take no more than 20 minutes). The survey consists mainly of statements that require an assessment of importance on a Likert scale.

Should the respondent provide consent to further participate in a direct interview to explore correlations identified during the survey, the respondent may be contacted for a further 30 min web based interview at a suitable time to the respondent. Contact information provided for this purpose will not be used to identify or link the respondent with specific data provided in the study. Respondents may choose to stay anonymous.

There are no known disadvantages or risks to taking part. The information collected during the course of the research will be kept strictly confidential, no requirement exist to make any company or personal information available.

Research results
The survey results will be analyzed using standard statistical methods to support the conclusion of my dissertation study. The resultant analysis will be made available to respondents on request. Please provide your contact details when requested.

Contact information
Should you require any further information please do not hesitate to contact me
Nerine Joubert
[email protected]

Or my research mentor
Dr Jane Keenan
Dissertation Supervisor
University of Leicester

Thank you for taking the time to read this information sheet. Please select the box below as proof that you have been provided with this information sheet and your consent to participate in this research project.

Should you chooose not to participate, please use the "Exit survey" button at the top of the page.

Regards,

Nerine Joubert
25 October 2013
 
 
 
 
Market Risk Orientation
 
Do you agree or disagree with the following statements?
Strongly disagree Disagree Neutral Agree Strongly agree
Our business objectives are driven primarily by customer satisfaction
We constantly monitor our level of commitment and orientation to serving customer needs
We freely communicate information about our successful and unsuccessful customer experiences across all business functions
Our strategy for competitive advantage is based on our understanding of customers' needs
We measure customer satisfaction systematically and frequently
We have routine measures or regular measures of customer service
We are more customer focused than our competitors
I believe that business exists primarily to service customers
We poll end users at least once a year to assess the quality of our products and services
Data on customer satisfaction are disseminated at all levels in the business unit on a regular basis
 
 
Do you agree or disagree with the following statements?
Strongly disagree Disagree Neutral Agree Strongly agree
Our business objectives are measured predominantly with financial indicators
We constantly monitor our performance through sophisticated financial analysis
We measure shareholder value creation by earnings per share only
Our strategy is clearly articulated to all levels of the organization
Our strategic objectives are supported by a clearly articulated operational plan
Our business change decisions are supported by strategic analysis tools
We constantly search for the opportunity to leverage synergies across our organization when making investments
 
 
What level of importance has the following indicators have as indication of success in your organization over the last 5 years?
Not important Below average importance Average importance Important Very important
Profitability (net profit)
Efficiency (low cost)
Growth (increase in total assets)
Shareholder wealth (dividend plus stock price appreciation)
Utilization of resources (ROI)
Economic value added (EVA)
Market leadership (market share)
Technology leadership (innovation, creativity)
Survival (avoidance of bankruptcy)
 
 
 
Importance of strategic investment decisions and support tools
 
Do you agree or disagree with the following statements?
Strongly disagree Disagree Neutral Agree Strongly agree
Strategic investment decisions emerge through the formal planning process of your organization
Strategic investment decisions derive from an explicit corporate strategy
Formal procedures for evaluating strategic investment decisions exists and are used regularly
Investment opportunities are identified and proposed by top management
Lower level managers in the organization are involved in strategic investment decisions
Strategic investment decisions are influenced by the relative power of various groups in the firm
Strategic investment decisions are influenced by negotiations among groups in the firm
Financial evaluation techniques are often used in the early analysis of strategic investments
Financial evaluation techniques are often used in the final choice of strategic investments
The evaluation of the strategic investments is left to the judgement of top management
A strategic investment proposal will be rejected if its expected financial return does not meet the minimum requirements of return on investment
A strategic investment proposal whose expected financial return meets the minimum requirements can be rejected if it does not fit the firms competitive strategy
A strategic investment proposal whose expected financial return meets the minimum requirements of return on investment can be rejected if it does not satisfy the expectations and intuition of the top managers
A strategic investment proposal whose expected returns fall below the required level can still be accepted for strategic reasons
 
 
Please indicated how you consider the following as benefits of strategic investments
Not a benefit at all A benefit mainly in financial terms A benefit mainly in non-financial terms A benefit equally in financial and non-financial terms
Improved company/organization image
Improved product quality
Improved competitive position
The ability to expand in the future
Greater production flexibility/agility
Increased delivery speed to customers
Increased market share
Reduced scrap/rework costs
Reduced lead times
Reduced floor space requirements
Not a benefit at all A benefit mainly in financial terms A benefit mainly in non-financial terms A benefit equally in financial and non-financial terms
Reduced costs in product design
Reduced after-sale costs such as warranties
Reduced inventory levels
Savings from less frequent set-ups
Faster response to market needs
Easier production/service delivery scheduling
 
 
Please indicate which of the following have taken place in your organization in the last 5 years
No Yes
Acquisition of another organization
Merger with another organization
Substantial increase in production/service delivery capacity
Introduction of electronically integrated operations (i.e. ERP systems)
Introduction or major upgrade of major information technology solutions to support production or decision making
Introduction of fundamentally new product/service lines
Introduction of electronic commerce capabilities
 
 
Please indicate any other major strategic changes
   
 
 
 
Use of decision support tools
 
 
In the following section the questions differentiate between projects with high and low level of certaintay of outcome.
High certainty - produce quantifyable outcomes e.g. investment in plant or equipment.
Low level of certainty - produce hard-to-quantify (or intangible) outcomes e.g. Mergers, complex IS systems, client intelligence initiatives
 
 
Thinking about projects with a high level of certainty of the outcome -
How frequently does your organization use the following techniques when evaluating strategic investment projects?
Never Rarely Often Mostly Always
Direct cost comparison
Profit comparison
Average rate of return (ARR)
Static payback period
Net present value (NPV)
Internal rate of return (IRR)
Dynamic payback period
Compound value method
Critical debt interest rate method
Visualization of Financial Implications method (VoFI)
 
 
Thinking about projects with a high level of uncertainty of the outcome -
How frequently does your organization use the following techniques when evaluating strategic investment projects?
Never Rarely Often Mostly Always
Direct cost comparison
Profit comparison
Average rate of return (ARR)
Static payback period
Net present value (NPV)
Internal rate of return (IRR)
Dynamic payback period
Compound value method
Critical debt interest rate method
Visualization of Financial Implications method (VoFI)
 
 
 
Thinking about projects with high level of certainty of outcome-
If your organization uses discount methods (NPV, IRR etc) to evaluate investment projects, please indicate the minimum discount rate after tax being used.
 
Less than 5%
 
5% - 10%
 
11%-15%
 
16%-20%
 
21%-25%
 
more than 25%
 
 
 
Thinking about projects with high level of uncertainty of the outcome-
If your organization uses discount methods (NPV, IRR etc) to evaluate investment projects, please indicate the minimum discount rate after tax being used.
 
Less than 5%
 
5% - 10%
 
11%-15%
 
16%-20%
 
21%-25%
 
more than 25%
 
 
 
Thinking about projects with high level of certainty -
If your organization uses payback period method to evaluate strategic investments, please indicate which period best reflects the required payback period. (Use the lower limit as the key i.e. 1 year will fit into the 1-2 year bracket)
 
Less than 1 year
 
1-2 years
 
2-3 years
 
3-4 years
 
4-5 years
 
more than 5 years
 
 
 
Thinking about projects with high level of uncertainty -
If your organization uses payback period method to evaluate strategic investments, please indicate which period best reflects the required payback period. (Use the lower limit as the key i.e. 1 year will fit into the 1-2 year bracket)
 
Less than 1 year
 
1-2 years
 
2-3 years
 
3-4 years
 
4-5 years
 
more than 5 years
 
 
 
The following questions relate to all levels of certainty of strategic investment projects
 
 
How frequently does your organization use the following models to assess the economic life and replacement time
Does your organization use models to assess the economic life and replacement time?
 
Yes
 
No
 
 
How frequently does your organization use the following models to assess the economic life and replacement time?
Never Rarely Often Mostly Always
Optimum economic life assessment
Optimum replacement time assessment
 
 
 
Please indicate which period best reflects the time horizon used for evaluation of economic life.
 
Up to 5 years
 
6-8 years
 
9-11 years
 
12-15 years
 
more than 15 years
 
 
How frequently does your organization use multi-criteria models
Does your organization use multi-criteria models?
 
Yes
 
No
 
 
How frequently does your firm use multi-criteria models?
Never Rarely Often Mostly Always
Utility value analysis
Analytical hierarchy process
Multi-attribute utility theory
PROMETHEE (Preference ranking organization method for enrichment evaluations)
 
 
Does your organization use any simultaneous decision making tools?
 
Yes
 
No
 
 
How frequently does your organization use any simultaneous decision making tools?
Never Rarely Often Mostly Always
Static simultaneous financial investment and financing decision model (DEAN Model)
Multi-tier simultaneous financial investment and financing decision model (HAX Model)
Multi-tier simultaneous financial investment and production model (FORSTNER and HENN Model)
 
 
 
Does your organization incorporate uncertainty (risk) in the assessment of investments?
 
Yes
 
No
 
 
How frequently does your organization use the following techniques to incorporate uncertainty (risk) into the assessment of investments?
Never Rarely Often Mostly Always
Decision theory
Adjusted payback period
Adjusted discount rate (static applied risk factor)
Adjusted discount rate (using capital asset pricing model CAPM)
Adjusted forecast cash flow
Sensitivity analysis (Monte Carlo)
Risk analysis (Probability distributions)
Decision tree method
Options pricing method
 
 
 
Does your organization assess a project as part of a portfolio of investment projects or as individual project?
 
Portfolio of projects
 
Individual project
 
 
How frequently does your organization use the following portfolio assessment techniques?
Never Rarely Often Mostly Always
Markowitz portfolio assessment model
Flexible planning model
 
 
Please indicate which of the following is considered by your organizations when assessing investments and indicate the level of importance.
Not important Below average importance Average importance Above average importance Very important
Consistency with corporate strategy
Improved company image
Requirements of customers
Keeping up with the competition
Obtaining greater delivery flexibility and agility
The ability to expand in the future
Quality and reliability of outputs
Reduction of lead times
Reduced inventory levels
Experience with new technology
 
 
How frequently does your organization use the following techniques to guide the strategic investment decisions?
Never Rarely Often Mostly Always
Coordination with investment decisions of other firms - industry lead roadmaps
Real options approach
Balanced scorecard
Benchmarking
Value chain analysis
Enterprise architecture road-map
 
 
 
Please drag and rank (1st to 6th) the following in order of importance, where 1st is most important:
Drag your choices here to rank them
     
     
     
    Demographic Information
     
     
    Company Information
     
     
     
    Please indicate your organization's industry.
       
     
     
     
    Please indicate your main product types.
     
    Product design
     
    Product manufacturing/construction
     
    Product to end market (retail)
     
    Professional service delivery
     
    Government
     
    Not for profit
     
    Education
     
    Other
     

     
     
     
    What is your organizations overall turnover (or budget for NPO)?
     
    < £50 million
     
    £50 - £99 million
     
    £100 - £499 million
     
    £500 - £999 million
     
    £1-£5 billion
     
    > £5 billion
     
     
     
    Personal information
     
     
     
    What would best describe your background?
     
    Accounting and Finance
     
    Engineering
     
    Information Technology
     
    Mathematics
     
    Operations
     
    Sciences
     
    Social Sciences
     
    Other
     

     
     
     
    What is your level within the organization?
     
    C-level
     
    Senior Management
     
    Management
     
    Other
     
     
     
     
    How best would you describe your decision making level?
     
    Decision maker
     
    Assessor
     
    Influencer
     
    Other
     
     
     
     
    Respondent age
     
    <25
     
    25-34
     
    35-44
     
    45-54
     
    55-65
     
    >65
     
     
    Please indicate your choice below
    Yes No
    I would be prepared to be contacted directly to participate in a short online interview (no more than 20 min)
    I would like to receive feedback on the outcome of the research results
     
     
    Please provide your contact information if you have indicated that you are willing to participate in the interviews or to obtain feedback of the survey
    First Name : 
    Last Name : 
    Email Address : 
     
     
     
    Thank you for your participation in this survey. The information provided will only be used for academic research and not be distributed. Should you require any further information please do not hesitate to contact me on [email protected]. Nerine Joubert