Book choosing Innovation projects methods
10 important questions on Book choosing Innovation projects methods
What is capital rationing, and why do firms use it?
- Firms use it due to constraints in capital and resources
- Helps in choosing between valuable projects or seeking external financing
- Aids in formulating new product development plans within a fixed budget
Describe the concept of R&D intensity.
- Measures research and development efforts relative to company's sales size
What are discounted cash flow methods, and how do they relate to project valuation?
- Consider time value of money, risk, and payback period
- Quantitative methods to justify future benefits against expenditure
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Explain Net Present Value (NPV) and how it is calculated.
- NPV > 0 generates wealth
List and describe two disadvantages of quantitative methods in project selection.
- Bias against long-term or risky projects
- Fail to account for strategic importance
What role do screening questions play in project selection?.
- Focus on key criteria for project selection
- Help eliminate projects that do not align with organizational goals
What is the role of screening questions in project selection?
- They structure debate and analysis by focusing on important issues such as customer needs, firm capabilities, and project costs and timing.
How does the aggregate project planning framework support project selection?
- It aligns the mix of projects with the company's strategic intent and resource capacity.
- It facilitates better decision-making and resource allocation.
What is the Q-sort method and what is its purpose in project selection?
- It facilitates group discussion and consensus on the best projects by comparing individual rankings and debating their merits.
How does combining quantitative and qualitative information enhance investment decision-making?
- Data envelopment analysis ranks projects based on multiple criteria by measuring their distance from an efficiency frontier.
- It allows for a comprehensive evaluation of projects beyond simple financial metrics.
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