Project management

Global business environment: history 1
Postwar recovery 1945 – 70
Keynesian policies
Stagflation 1970 -1980
Monetarism and supply side economics 1980 – 2007
Global crisis

Fundamentals
managing projects 1
Firms as collections of projects
robindcmatthews

NPV AND NCF
NET PRESENT VALUE and NET CASH FLOW
Net Present Value
Net Cash Flow
Fundamental Equation
П (t) = R(t) – C(t)
C(t) = W&S(t) + M(t) + I(t) – D(t) +[rd(t) +re(t)]
robindcmatthews

Fundamentals
managing projects 2
Integrating the real and financial sectors
robindcmatthews

robindcmatthews

robindcmatthews

robindcmatthews
Meta Model

*
http://www.robindcmatthews.com

*
http://www.robindcmatthews.com
PAYOFFS (P)
OUTER (OD) DYNAMICS
P
I
OODOO
P
OD
INNER (ID)
DYNAMICS
ID
(0)
grammar
ATTRACTOR

robindcmatthews
Project Management October 2014
part 2

networks
Synergies and feeedback
robindcmatthews
Project Management October 2014
part 2

robindcmatthews

More complex networks
robindcmatthews

Networks: default state
Small world: highly clustered, short path lengths
Degree of a node is the number of edges (k) connecting it to other nodes.
High degree nodes have many connections (high k); low degree nodes have few (low k)
P(k) probability of degree k follows a power law
P(k) ~ z k – α..
P(k)~ z k – α..
robindcmatthews

Haldane (2009)
robindcmatthews

Haldane (2009)
robindcmatthews

Haldane (2009)
robindcmatthews

The Crisis 2007 – 20012
The financial tower of Babel
robindcmatthews
Project Management October 2014
part 3

Securitization
GLOBAL POSITIVE FEEDBACKS
1980 – 2006
(circa)

CDO’s
CDC’s
CDW’S
SWF’S
SPV’’s
SPE’s
CONDUITS
IPO’s
PRIVATE EQUITY FUNDS
HEDGE FUNDS
DERIVATIVES/OPTIONS
SHADOW BANKING SYSTEM
REGULATED BANKING SYSTEM
CORPORATE BONDS
GOVERNMENT BONDS
LIQUID ASSETS
CASH
regulated
unregulated
The financial tower of Babel: 21ST century

Causes of crises
Low interest rates
Savings glut
Financial innovation
Moral hazard
None of the above
All of the above
Samudaya (the second noble truth: thirst)

Causes of the crisis?
Low interest rates
Savings glut
Financial innovation
Moral hazard
Greed

Exposure to Greek debt
Source rge monitor
robindcmatthews

Long term bond yields july 2011
Source rge monitor
robindcmatthews

Project Management October 2014
part 4
Emerging nations
Back to the past

Economist Sept 17 2006

Project Management October 2014
part 5
The environment
Gaia or exploitation

Project Management October 2014
part 6
Cryptic models
Keynesian and monetarist

The price level
Real output
Aggregate demand
Aggregate supply
∑ S
∑ D
Keynesian case with liquidity trap

The price level
Real output
Aggregate demand
Aggregate supply
∑ S
∑ D
The pure classical case
Reagonomics and crowding out

Simple Keynesianism
The multiplier
The marginal propensity to consume
The importance of aggregate demand

Keynes: sources of unemployment
The liquidity trap
Inconsistency between savings and investment
Rigid money wages

Monetarism

The Phillips curve

Project Management October 2014
part 7
Micro-foundations
Costs
Revenues
Risk

NPV AND NCF
NET PRESENT VALUE and NET CASH FLOW
Net Present Value
Net Cash Flow
Fundamental Equation
П (t) = R(t) – C(t)
C(t) = W&S(t) + M(t) + I(t) – D(t) +[rd(t) +re(t)]
robindcmatthews

costs
AVOIDABLE
UNAVOIDABLE
F1
Sunk costs
Unavoidable once incurred
(True costs)
V
Variable
Avoidable by cutting
Down output
(marginal costs)
F2
Fixed
Avoidable by going out of business

Scale and scope economies
Leveraging
Outsourcing
Restructuring

Marketing
segmentation

Elasticity (price)
% change in quantity bought/% change in price
Defined as an absolute value
Varies along demand curve
E> 1 implies price reduction increases sales revenue
E < 1 implies price reduction decreases sales revenue

ELASTICITIES
EP = │ EP │ = price elasticity
Ey = income elasticity

niches
Market
segments
Market segment
Whole market