Critical Thinking Project Business analytics – tools SCMS 3711-001 Saran Panchakunathorn Case Study The assignment is based on the Case: Project Portfolio Management at XYZ Pharma that was developed at London School of Economics. The case describes the R&D project selection and prioritization problem at a major pharmaceutical company, a recurrent issue of strategic importance to the company. Objective The objective of XYZ Pharma is to research and develop drugs at an affordable price for patient while concerning about the sustainability of the business and prefer good objective that will help company growth better. Constraints • The amount of time required in developing drugs • The increase of development time which will increase the cost of development • Generic competitors in the market Risk There are many risk that can be involved in the process of the project, some of the risk involving in the amount of investment budgeted for the project, the expected returns on the investment proposed. There are also other risks such as risk of assessing the requirement, risk of proper analysis, lack of knowledge for the people who run the project, lack of resources etc. Alternative An alternative would be to understand the actual need of the project and develop strategies by reducing unnecessary cost and increase sale. What information is required for project portfolio management at XYZ and how can it be collected? Collecting information from research and development, project team, strategies planning and marketing will provide the cost, timing, risk, and opportunities that associated, and the market will indicate the weight on the overall operations. How would you determine the value of the project? What additional info. would you collect? Which quantitative tool might help in determining the value of the project? By evaluating all the risks involved with the project, by calculating the probability of success and failure and by subtracting the net sale of the entire project’s cost and calculating the present value. I would collect earlier research that was conducted before me and the success of development. I would also research how many of my competitors failed and all failures inside the company as well. I would look at previous launching costs and net sales to review the proper averages. Finally, the quantitative tools I would use for help would be Linear Programming and Forecasting. How would you assess the risks embedded in project 1? What additional info. Would you collect? Which quantitative tool(s) might help you in determining the project risk? The risk embedded in Project 1 can be assessed by researching the market risk and the success or failure rate of the project. Researching the risk of similar projects can be useful in implementing Project 1. The tool I would use is the Forecasting tool. It would be useful in determining the averages of like projects. Suppose that next year’s R&D budget has been reduced to $50 million. How would you decide which projects to continue, and which to put on hold? What additional info. Would you collect? Which tool might help in determining the best portfolio? The project with the highest return on investment should be selected only if the budget for R&D in the next year has been reduced to $50 million. The company with the highest return on investment should be given priority and the other projects on hold should follow according to their return on investment and their ability to maximize the value of the organization. The returns on investment would be great information to collect to help establish which of the companies will maximize the value of the organization. The tool I would use to choose the best portfolio would be the Deterministic Decision Model.
