Session 06

NSE Certified Capital Market Professional (NCCMP)

Part 2

Years 0 1 2 3 4 5 6 7 8 9 10

A GNP projections a0 a1 a2 a3 a4 a5 a6 a7 a8 a9 a10 B Business cycle / Growth rate cycle

C Macro-economic policy changes

D Population projections

E Demographic profile

F Income distribution

G Industry life cycle

H Technological changes

I Industry related policy changes

J Industry sales estimates j0 j1 j2 j3 j4 j5 j6 j7 j8 j9 j10 K Quality of management

L Quality of technology

M Market share of the company

N Company sales estimates n0 n1 n2 n3 n4 n5 n6 n7 n8 n9 n10 O Net profit margin

P Net profit p0 p1 p2 p3 p4 p5 p6 p7 p8 p9 p10 Q Number of equity shares

Q EPS q0 q1 q2 q3 q4 q5 q6 q7 q8 q9 q10

Adjust O for 1. Increasing costs of scarce/non-renewable

resources. 2. Increasing cost of energy. 3. Increasing costs of environmental

conservation.

E-I-C Analysis Working Sheet

J Industry sales estimates Market share

Market structure & Barriers to entry

K Quality of management

Quality of plant & Process technology

L Locational advantage

Quality of labour & Industrial relations

Cost structure

M Marketing set up

Effective rate of protection

Financial ratios

N Company sales estimates O Net profit margin

P Net profit Q Number of equity shares

Q EPS Com

pany

spec

ific

vari

able

s

1

2

Session 06

Session 05

Locational advantage is the cost advantage arising out of a specific location of a firm – proximity to raw materials or market, transport network/node, special incentives, etc.

The location of Dhamra in close proximity to the mineral belt of Orissa, Jharkhand and West Bengal and its deep draft suitable for large vessels is going to make Dhamra port the most cost-effective and efficient port on the Eastern coast of India.

Meghalaya has huge reserves of limestone and coal, which are major raw materials for cement manufacturing. This will act as a locational advantage for Nilanchaal cement plant .The cement projects located in Meghalaya have competitive advantage over competitors due to excise exemption, availability of large capital investment subsidies, low prices of lime stone & coal and a captive market of 4 to 5 million tons in North East. The market within North East is also expected to grow exponentially, due to commencement of many Hydro Power Projects in Arunachal Pradesh. The Nilanchaal Cement project is likely to be commissioned in the year 2011 and will be well poised to take advantage of the boom in consumption of cement in North East.

Firms may locate facilities in other countries to lower the basic costs of the goods or services they provide. These facilities may provide easier access to lower cost labor, energy and other natural resources. Other location advantages include access to critical supplies and to customers.

General Motors entered international markets to expand its market size. It is also earning positive returns on its international investments, but primarily in Asia. In fact, GM’s recent return to profitability is due to its Asian operations, primarily in China. While GM has lost its position as the world’s largest automaker after 76 years in the lead, it has major expansion plans for its China venture.

`

PRICE

1 2 3

Geographical reach.

Market penetration

Dedicatedness of the distribution network.

Ability of the company to service the network.

Cost-effectiveness of the marketing set- up.

Effective rate of Protection is the income generated at domestic prices in excess of what would be possible at global prices.

Session 07