An influence diagram shows the influences, from within the organisation or from outside it, which bear on a person or unit.

Author(s): The Open University

This first representation can be developed in the way shown in Figure 11.

For example, think about the inputs to the running of a commuter rail operation and the outputs from it. The diagram might look like the one in Figure 10.

The results of the evaluation reflect the scores that are awarded to each option and the weightings that are attached to the different criteria. A change in one or the other (or in both) will lead to a change in the results. Accordingly, when you construct a matrix of this kind be sure to think hard about the scores and weightings. A matrix like this can be used in many ways, for example, when interviewing applicants as part of a selection process.

Author(s): The Open University

Suppose that a couple who have children are thinking about the next family holiday. They list five options, including staying at home. They also list four criteria and they give each an importance weighting on a scale of 1 to 5, where 5 is the most important and 1 is the least important.

The evaluation matrix would look like Author(s): The Open University

When a line cuts an axis, the line is said â€˜to intercept the axis atâ€™ [the particular point]. In this example, the line cuts the vertical (y) axis at Â£10, so â€˜the line intercepts the y axis at Â£10â€™. It can also be said that â€˜the intercept with the y axis is Â£10â€™.

Author(s): The Open University

The origin is the point on the graph where the x axis value (the output) and the y axis value (the total costs) are both zero.

Author(s): The Open University

By the end of this unit you should be able to:

• understand the value of graphics as visual thinking tools;

• give examples of relevant graphics used in the business context.

Author(s): The Open University

Keller (2003) distinguishes between a â€˜small-b brandâ€™ as defined by the American Marketing Association:

name, term, sign, symbol or design, or a combination of them, intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competition

(Keller, 2003, p. 3)

and the industry/practitioner definition of â€˜a big-B brandâ€™. F
Author(s): The Open University

Market segmentation and targeting is at the core of marketing strategy and consumers (or potential consumers) are the key stakeholder group for both commercial and social marketers. In this section we focus on those specific consumers whose behaviour is the focus of the social marketing activity.

In Section 3.2, the factors which impact
Author(s): The Open University

The extended Fishbein model, based on the theory of reasoned action, includes the following components to explain behaviour.

1. Attitude to the behaviour comprising:

Â

• a. The strength of the expectancy (beliefs) that the act will be followed by a consequence.

• b. The value of that consequence to the individual.

This is the basic expectancy value approach. Returning to o
Author(s): The Open University

Bachelier, L. (1900) ThÃ©orie de la Speculation, Paris, Gauthier-Villars.
Banz, R. (1981) â€˜The relationship between return and market value of common stocksâ€™, Journal of Financial Economics, Vol. 9, pp. 3â€“18.
Barber, B. and Odean, T. (2000) â€˜Trading is hazardous to your wealth: the common stock investment performance of individual investorsâ€™, <
Author(s): The Open University

Except for third party materials and otherwise stated (see terms and conditions), this content is made available under a Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Licence

Grateful acknowledgement is made to the following sources for permission to reproduce material in this unit:

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In a financial context, risk is a synonym for uncertainty â€“ the possibility that the actual outcome will differ from the mean expected outcome. It is therefore a neutral rather than a negative concept. Investors are risk-averse in the sense that they require more return for taking on more risk. Risk itself is measured by the standard deviation of actual returns around the mean expectation. In the real world, investment risk is created by a number of different factors that affect the certain
Author(s): The Open University

This is the risk that contractual returns will not be paid because the borrower's financial situation has deteriorated to the point that it is no longer able to service the debt. It is possibly the commonest type of risk in commerce generally, and you are probably familiar with it in some shape or form. It affects many areas of business decision-making over and beyond the specialised world of investment risk and return. Most large companies devote significant resources to the identification,
Author(s): The Open University

Our first question was: what is the mean expected total return for next year? We calculate this by taking each of the possible returns and weighting it by its relative probability. As our table is so simple and symmetrical, it is not difficult to see that the weighted mean return is 7% per annum.

Our second question was: what is the degree of risk or uncertainty in this mean figure? In other words, how widely dispersed are the possible outcomes around the mean expected outcome? The most
Author(s): The Open University

We will define â€˜risk premiumâ€™ as an extra reward required by investors to compensate for perceived uncertainty in the amount or timing of an expected return.

But do investors in fact require an extra premium for uncertainty, or is this perhaps just a convenient assumption?

The following activity is designed to give you an opportunity to test your own reactions.

Author(s): The Open University

A fair return on investment is defined as one that compensates the investor for the risk incurred in making the investment â€“ neither more nor less. Conversely, an excess return is one that over-compensates the investor for the risk incurred. Investors want to avoid investments that pay less than a fair return, while borrowers want to avoid paying an excess return. In this unit we shall:

• define more precisely what we mean by â€˜riskâ€™ in a fi
Author(s): The Open University

This unit has focused on planning a project. At this stage you may find it useful to recap on the learning objectives introduced at the beginning of the unit and to think about some of the issues associated with them.

1. You should now be able to develop plans with relevant people to achieve the project's goals. This will involve identifying and finding ways of including the appropriate people in the project.

2. You should be able
Author(s): The Open University

7.6 Who should estimate?

The person managing the project is not necessarily the best one to prepare the estimates, although they should be closely involved, both as a source of information and because they need a clear understanding of what the estimates mean and what the estimators assume about outputs, inputs and the transformation process. If there are others who have more experience or more knowledge about some of the areas of work, these people may be the best ones to make estimates for the project or parts of i
Author(s): The Open University