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Presented by:
• Joefil Jocson & Phillip Ermita
• Doctor of Philosophy in Engineering Management
Presented to:
• Dr. Rachael Moralde PHD
• Professor
contents
• Feasibility
• Market analysis
• Technical analysis
• Organizational design
• Nature of organization
• Team building
• Performance
• Social analysis
• Stakeholder analysis
• Community organization
• Continuation …
• Environmental analysis
• Screening / scoping
• Political analysis
• Risk management
• Financial analysis
• Economic analysis
• Sensitivity Analysis
conceptual framework
conceptual framework
Overview
• Feasibility studies can be used in many ways but
primarily focus on proposed business ventures.
Engineers, even farmers and others with a business
idea should conduct a feasibility study to determine
the viability of their idea before proceeding with the
development of a business. Determining early that a
business idea will not work saves time, money, effort
and heartache later on.
• A project feasibility study allows exploring and
analyzing business opportunities and making a
strategic decision on the necessity to initiate the
project. It is the right way to answer the question: “Is
the concept of my project economically reasonable and
technically feasible?”
Reasons given not to
do a feasibility study
• We know it’s feasible. An existing business is
already doing it.
• Why do another feasibility study when one was
done just a few years ago?
• Feasibility studies are just a way for consultants to
make money.
• The market analysis has already been done by the
business that is going to sell us the equipment.
• Why not just hire a general manager who can do
the study?
• Feasibility studies are a waste of time. We need to
buy the building, tie up the site and bid on the
equipment.
Reasons to do a feasibility
study
• Gives focus to the project and outline alternatives.
• Narrows business alternatives
• Identifies new opportunities through the investigative process.
• Identifies reasons not to proceed.
• Enhances the probability of success by addressing and mitigating factors
early on that could affect the project.
• Provides quality information for decision making.
• Provides documentation that the business venture was thoroughly
investigated.
• Helps in securing funding from lending institutions and other monetary
sources.
• Helps to attract equity investment.
FEASIBILITY
STUDY
• Is an analysis of the viability of an idea.
• The feasibility study focuses on helping answer the
essential question of “should we proceed with the
proposed project idea?”
PRE-FEASIBILITY STUDY
• A pre-feasibility study may be
conducted first to help sort
out relevant scenarios. Before
proceeding with a full-blown
feasibility study, you may want
to do some pre-feasibility
analysis of your own
MARKET
ANALYSIS
• A market analysis is a quantitative
and qualitative assessment of
a market. It looks into the size of
the market both in volume and in
value, the various customer
segments and buying patterns, the
competition, and the economic
environment in terms of barriers
to entry and regulation.
Dimension of
marketing
analysis
Market Size
• The size of the market is a key factor in a
marketing analysis. The bigger the market
the more competitors you are likely to have.
For a big market, you need to make sure
your products and services stand out.
Otherwise, the customers can easily switch
to a rival product. Not only that, a bigger
market makes you rethink your pricing
policy.
Growth Rate of the
Market
• The market growth rate is a huge factor in any sort
of marketing analysis. This is because you get the
idea of how long the said market will last.
Market Trends
• Market trends are a significant part of
the marketing analysis. Having
knowledge about the trends help you to
decide what kind of product you are
going to sell. When you are starting off a
business you need to know what the
current trend is. What is the thing that
the customers like? How much they are
willing to spend?
Market Profitability
• Most companies’ motive to get into the
business is to make a profit. In other words,
they are profit-motive businesses. So before
getting into a business you need to analyze
the profitability of the market.
Distribution Channels
• Distribution channels are very important for a
business. Without those, you won’t be able to get
your products to your customers. So it becomes a
big factor in a marketing analysis. This is because
you need to assess how well the channels are.
Industry Cost
Structure
The industry cost structure is a significant
factor while running a business. It basically
sees how much cost is required to get your
products for sale. Sometimes firms can come
up with ways to decrease that cost and thereby
make a bigger profit without increasing the
market price
TECHNICAL ANALYSIS
• Technical analysis is a trading tool employed
to evaluate securities and attempt to forecast
their future movement by analyzing statistics
gathered from trading activity, such as price
movement and volume. Unlike fundamental
analysts who attempt to evaluate a security's
intrinsic value, technical analysts focus on
charts of price movement and various
analytical tools to evaluate a security's
strength or weakness and forecast future price
changes.
How Technical Analysis Is
Used
• Technical analysis is used to attempt to
forecast the price movement of virtually
any tradable instrument that is generally
subject to forces of supply and demand,
including stocks, bonds, futures and
currency pairs.
• In fact, technical analysis can be viewed as
simply the study of supply and demand
forces as reflected in the market price
movements of a security. It is most
commonly applied to price changes, but
some analysts may additionally track
numbers other than just price, such as
trading volume or open interest figures.
Key Assumptions of
Technical People• Technical analysis is applicable to
securities where the price
is only influenced by the forces of
supply and demand.
• Technical analysis does not work
well when other forces can
influence the price of the
security.
• In order to be successful,
technical analysis makes three
key assumptions about the
securities that are being
analyzed:
High Liquidity
• Liquidity is essentially volume.
Heavily-traded stocks allow
investors to trade quickly and
easily, without dramatically
changing the price of the
stock.
• Thinly-traded stocks are more
difficult to trade, because
there aren't many buyers or
sellers at any given time, so
buyers and sellers may have
to change their desired price
considerably in order to make
a trade
No Artificial Price Changes
• Splits, dividends, and
distributions are the most
common “culprits” for artificial
price changes. T
• hough there is no difference in
the value of the investment,
artificial price changes can
dramatically affect the price
chart and make technical
analysis difficult to apply.
No Extreme News
• Technical analysis cannot predict extreme
events, including business events such as a
company's CEO dying unexpectedly, and
political events such as a terrorist act.
• When the forces of “extreme news” are
influencing the price, technicians have to wait
patiently until the chart settles down and
starts to reflect the “new normal” that results
from such news.
Strength of
Technical
Analysis
Focus on Price
• If the objective is to predict the future price, then it makes sense to
focus on price movements. Price movements usually precede
fundamental developments. By focusing on price action, technicians
are automatically focusing on the future
Supply, Demand and Price Action
• Many technicians use the open,
high, low and close when
analyzing the price action of a
security. There is information to
be gleaned from each bit of
information. Separately, these
will not be able to tell much.
However, taken together, the
open, high, low and close
reflect forces of supply and
demand.
Support Resistance
• These are usually marked by periods of
congestion (trading range) where the prices
move within a confined range for an extended
period, telling us that the forces of supply and
demand are deadlocked.
Pictorial Price History
• The price chart is an easy-to-
read historical account of a
security's price movement over
a period of time
Assist with Entry Point
• Technical analysis can help with timing a proper entry point. Some
analysts use fundamental analysis to decide what to buy and
technical analysis to decide when to buy. It is no secret that timing
can play an important role in performance.
• Technical analysis can help spot demand (support) and supply
(resistance) levels as well as breakouts. Simply waiting for a breakout
above resistance or buying near support levels can improve returns.
Weakness of
Technical
Analysis
Analyst Bias
• Just as with fundamental analysis, technical analysis is subjective and
our personal biases can be reflected in the analysis.
Open to Interpretation
• Furthering the bias argument is the fact that technical analysis is open
to interpretation. Even though there are standards, many times two
technicians will look at the same chart and paint two different
scenarios or see different patterns.
Too Late
• Technical analysis has been criticized for being too late. By the time
the trend is identified, a substantial portion of the move has already
taken place. After such a large move, the reward to risk ratio is not
great. Lateness is a particular criticism of Dow Theory.
Always Another Level
• Even after a new trend has been identified, there is always another
“important” level close at hand. Technicians have been accused of
sitting on the fence and never taking an unqualified stance. Even if
they are bullish, there is always some indicator or some level that will
qualify their opinion.
Trader’s Remorse
• Not all technical signals and patterns work. When you begin to study
technical analysis, you will come across an array of patterns and
indicators with rules to match
ORGANIZATIONAL
DESIGN
• Organizational design is a
step-by-step methodology
which identifies
dysfunctional aspects of
work flow, procedures,
structures and systems,
realigns them to fit
current business
realities/goals and then
develops plans to
implement the new
changes.
The hallmark of the design process is a
comprehensive and holistic approach
to organizational improvement that
touches all aspects of organizational
life, so you can achieve:
• Excellent customer service
• Increased profitability
• Reduced operating costs
• Improved efficiency and
cycle time
• A culture of committed and
engaged employees
• A clear strategy for
managing and growing your
business
Organizations that don’t periodically renew
themselves suffer from such symptoms as:
• Inefficient workflow with breakdowns and non-value-added steps
• Redundancies in effort (“we don’t have time to do things right, but do have time to do them over”)
• Fragmented work with little regard for good of the whole (Production ships bad parts to meet their quotas)
• Lack of knowledge and focus on the customer
• Silo mentality and turf battles
• Lack of ownership (“It’s not my job”)
• Cover up and blame rather than identifying and solving problems
• Delays in decision-making
• People don’t have information or authority to solve problems when and where they occur
• Management, rather than the front line, is responsible for solving problems when things go wrong
• It takes a long time to get something done
• Systems are ill-defined or reinforce wrong behaviors
• Mistrust between workers and management
Methodology
of
Organizational
Design
Charter The Design Process
• As senior leaders, you come together to
discuss current business results,
organizational health, environmental
demands, etc. and the need to embark on
such a process.
• You establish a charter for the design process
that includes a “case for change,” desired
outcomes, scope, allocation of resources,
time deadlines, participation,
communications strategy, and other
parameters that will guide the project.
Assess the Current State of the Business
• You don’t want to begin making changes
until you have a good understanding of
the current organization.
• Using a Transformation Model, we
facilitate a comprehensive assessment of
your organization to understand how it
functions, its strengths and weaknesses,
and alignment to your core ideology and
business strategy
Design the New Organization: At a high level, the
steps in this process include the following:
• Defining your basic organizing principle.
• Streamlining core business processes
• Documenting and standardizing procedures.
• Organizing people around core processes.
• Defining tasks, functions, and skills.
• Determining facility, layout and equipment
• Identifying support resources
• Defining the management structure
• Improving coordinating and development systems
Implement The Design
• Now the task is to make the design
live.
• People are organized into natural
work groups which receive training
in the new design, team skills and
start-up team building.

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Feasibility Assessment

  • 1. Presented by: • Joefil Jocson & Phillip Ermita • Doctor of Philosophy in Engineering Management Presented to: • Dr. Rachael Moralde PHD • Professor
  • 2. contents • Feasibility • Market analysis • Technical analysis • Organizational design • Nature of organization • Team building • Performance • Social analysis • Stakeholder analysis • Community organization • Continuation … • Environmental analysis • Screening / scoping • Political analysis • Risk management • Financial analysis • Economic analysis • Sensitivity Analysis
  • 5. Overview • Feasibility studies can be used in many ways but primarily focus on proposed business ventures. Engineers, even farmers and others with a business idea should conduct a feasibility study to determine the viability of their idea before proceeding with the development of a business. Determining early that a business idea will not work saves time, money, effort and heartache later on. • A project feasibility study allows exploring and analyzing business opportunities and making a strategic decision on the necessity to initiate the project. It is the right way to answer the question: “Is the concept of my project economically reasonable and technically feasible?”
  • 6. Reasons given not to do a feasibility study • We know it’s feasible. An existing business is already doing it. • Why do another feasibility study when one was done just a few years ago? • Feasibility studies are just a way for consultants to make money. • The market analysis has already been done by the business that is going to sell us the equipment. • Why not just hire a general manager who can do the study? • Feasibility studies are a waste of time. We need to buy the building, tie up the site and bid on the equipment.
  • 7. Reasons to do a feasibility study • Gives focus to the project and outline alternatives. • Narrows business alternatives • Identifies new opportunities through the investigative process. • Identifies reasons not to proceed. • Enhances the probability of success by addressing and mitigating factors early on that could affect the project. • Provides quality information for decision making. • Provides documentation that the business venture was thoroughly investigated. • Helps in securing funding from lending institutions and other monetary sources. • Helps to attract equity investment.
  • 8. FEASIBILITY STUDY • Is an analysis of the viability of an idea. • The feasibility study focuses on helping answer the essential question of “should we proceed with the proposed project idea?”
  • 9. PRE-FEASIBILITY STUDY • A pre-feasibility study may be conducted first to help sort out relevant scenarios. Before proceeding with a full-blown feasibility study, you may want to do some pre-feasibility analysis of your own
  • 10. MARKET ANALYSIS • A market analysis is a quantitative and qualitative assessment of a market. It looks into the size of the market both in volume and in value, the various customer segments and buying patterns, the competition, and the economic environment in terms of barriers to entry and regulation.
  • 12. Market Size • The size of the market is a key factor in a marketing analysis. The bigger the market the more competitors you are likely to have. For a big market, you need to make sure your products and services stand out. Otherwise, the customers can easily switch to a rival product. Not only that, a bigger market makes you rethink your pricing policy.
  • 13. Growth Rate of the Market • The market growth rate is a huge factor in any sort of marketing analysis. This is because you get the idea of how long the said market will last.
  • 14. Market Trends • Market trends are a significant part of the marketing analysis. Having knowledge about the trends help you to decide what kind of product you are going to sell. When you are starting off a business you need to know what the current trend is. What is the thing that the customers like? How much they are willing to spend?
  • 15. Market Profitability • Most companies’ motive to get into the business is to make a profit. In other words, they are profit-motive businesses. So before getting into a business you need to analyze the profitability of the market.
  • 16. Distribution Channels • Distribution channels are very important for a business. Without those, you won’t be able to get your products to your customers. So it becomes a big factor in a marketing analysis. This is because you need to assess how well the channels are.
  • 17. Industry Cost Structure The industry cost structure is a significant factor while running a business. It basically sees how much cost is required to get your products for sale. Sometimes firms can come up with ways to decrease that cost and thereby make a bigger profit without increasing the market price
  • 18. TECHNICAL ANALYSIS • Technical analysis is a trading tool employed to evaluate securities and attempt to forecast their future movement by analyzing statistics gathered from trading activity, such as price movement and volume. Unlike fundamental analysts who attempt to evaluate a security's intrinsic value, technical analysts focus on charts of price movement and various analytical tools to evaluate a security's strength or weakness and forecast future price changes.
  • 19. How Technical Analysis Is Used • Technical analysis is used to attempt to forecast the price movement of virtually any tradable instrument that is generally subject to forces of supply and demand, including stocks, bonds, futures and currency pairs. • In fact, technical analysis can be viewed as simply the study of supply and demand forces as reflected in the market price movements of a security. It is most commonly applied to price changes, but some analysts may additionally track numbers other than just price, such as trading volume or open interest figures.
  • 20. Key Assumptions of Technical People• Technical analysis is applicable to securities where the price is only influenced by the forces of supply and demand. • Technical analysis does not work well when other forces can influence the price of the security. • In order to be successful, technical analysis makes three key assumptions about the securities that are being analyzed:
  • 21. High Liquidity • Liquidity is essentially volume. Heavily-traded stocks allow investors to trade quickly and easily, without dramatically changing the price of the stock. • Thinly-traded stocks are more difficult to trade, because there aren't many buyers or sellers at any given time, so buyers and sellers may have to change their desired price considerably in order to make a trade
  • 22. No Artificial Price Changes • Splits, dividends, and distributions are the most common “culprits” for artificial price changes. T • hough there is no difference in the value of the investment, artificial price changes can dramatically affect the price chart and make technical analysis difficult to apply.
  • 23. No Extreme News • Technical analysis cannot predict extreme events, including business events such as a company's CEO dying unexpectedly, and political events such as a terrorist act. • When the forces of “extreme news” are influencing the price, technicians have to wait patiently until the chart settles down and starts to reflect the “new normal” that results from such news.
  • 25. Focus on Price • If the objective is to predict the future price, then it makes sense to focus on price movements. Price movements usually precede fundamental developments. By focusing on price action, technicians are automatically focusing on the future
  • 26. Supply, Demand and Price Action • Many technicians use the open, high, low and close when analyzing the price action of a security. There is information to be gleaned from each bit of information. Separately, these will not be able to tell much. However, taken together, the open, high, low and close reflect forces of supply and demand.
  • 27. Support Resistance • These are usually marked by periods of congestion (trading range) where the prices move within a confined range for an extended period, telling us that the forces of supply and demand are deadlocked.
  • 28. Pictorial Price History • The price chart is an easy-to- read historical account of a security's price movement over a period of time
  • 29. Assist with Entry Point • Technical analysis can help with timing a proper entry point. Some analysts use fundamental analysis to decide what to buy and technical analysis to decide when to buy. It is no secret that timing can play an important role in performance. • Technical analysis can help spot demand (support) and supply (resistance) levels as well as breakouts. Simply waiting for a breakout above resistance or buying near support levels can improve returns.
  • 31. Analyst Bias • Just as with fundamental analysis, technical analysis is subjective and our personal biases can be reflected in the analysis.
  • 32. Open to Interpretation • Furthering the bias argument is the fact that technical analysis is open to interpretation. Even though there are standards, many times two technicians will look at the same chart and paint two different scenarios or see different patterns.
  • 33. Too Late • Technical analysis has been criticized for being too late. By the time the trend is identified, a substantial portion of the move has already taken place. After such a large move, the reward to risk ratio is not great. Lateness is a particular criticism of Dow Theory.
  • 34. Always Another Level • Even after a new trend has been identified, there is always another “important” level close at hand. Technicians have been accused of sitting on the fence and never taking an unqualified stance. Even if they are bullish, there is always some indicator or some level that will qualify their opinion.
  • 35. Trader’s Remorse • Not all technical signals and patterns work. When you begin to study technical analysis, you will come across an array of patterns and indicators with rules to match
  • 36. ORGANIZATIONAL DESIGN • Organizational design is a step-by-step methodology which identifies dysfunctional aspects of work flow, procedures, structures and systems, realigns them to fit current business realities/goals and then develops plans to implement the new changes.
  • 37. The hallmark of the design process is a comprehensive and holistic approach to organizational improvement that touches all aspects of organizational life, so you can achieve: • Excellent customer service • Increased profitability • Reduced operating costs • Improved efficiency and cycle time • A culture of committed and engaged employees • A clear strategy for managing and growing your business
  • 38. Organizations that don’t periodically renew themselves suffer from such symptoms as: • Inefficient workflow with breakdowns and non-value-added steps • Redundancies in effort (“we don’t have time to do things right, but do have time to do them over”) • Fragmented work with little regard for good of the whole (Production ships bad parts to meet their quotas) • Lack of knowledge and focus on the customer • Silo mentality and turf battles • Lack of ownership (“It’s not my job”) • Cover up and blame rather than identifying and solving problems • Delays in decision-making • People don’t have information or authority to solve problems when and where they occur • Management, rather than the front line, is responsible for solving problems when things go wrong • It takes a long time to get something done • Systems are ill-defined or reinforce wrong behaviors • Mistrust between workers and management
  • 40. Charter The Design Process • As senior leaders, you come together to discuss current business results, organizational health, environmental demands, etc. and the need to embark on such a process. • You establish a charter for the design process that includes a “case for change,” desired outcomes, scope, allocation of resources, time deadlines, participation, communications strategy, and other parameters that will guide the project.
  • 41. Assess the Current State of the Business • You don’t want to begin making changes until you have a good understanding of the current organization. • Using a Transformation Model, we facilitate a comprehensive assessment of your organization to understand how it functions, its strengths and weaknesses, and alignment to your core ideology and business strategy
  • 42. Design the New Organization: At a high level, the steps in this process include the following: • Defining your basic organizing principle. • Streamlining core business processes • Documenting and standardizing procedures. • Organizing people around core processes. • Defining tasks, functions, and skills. • Determining facility, layout and equipment • Identifying support resources • Defining the management structure • Improving coordinating and development systems
  • 43. Implement The Design • Now the task is to make the design live. • People are organized into natural work groups which receive training in the new design, team skills and start-up team building.

Editor's Notes

  1. The reasons given above should not dissuade you from conducting a meaningful and accurate feasibility study. Once decisions have been made about proceeding with a proposed business, they are often very difficult to change. You may need to live with these decisions for a long time.
  2. Conducting a feasibility study is a good business practice. If you examine successful businesses, you will find that they did not go into a new business venture without first thoroughly examining all of the issues and assessing the probability of business success. Below are other reasons to conduct a feasibility study.  “The feasibility study is a critical step in the business assessment process. If properly conducted, it may be the best investment you ever made.”
  3. All activities of the study are directed toward helping answer this question. Feasibility studies can be used in many ways but primarily focus on proposed business ventures. Farmers and others with a business idea should conduct a feasibility study to determine the viability of their idea before proceeding with the development of a business. Determining early that a business idea will not work saves time, money and heartache later. A feasible business venture is one where the business will generate adequate cash-flow and profits, withstand the risks it will encounter, remain viable in the long-term and meet the goals of the founders. The venture can be either a start-up business, the purchase of an existing business, an expansion of current business operations or a new enterprise for an existing business.
  4. A pre-feasibility study may be conducted first to help sort out relevant scenarios. Before proceeding with a full-blown feasibility study, you may want to do some pre-feasibility analysis of your own. If you find out early-on that the proposed business idea is not feasible, it will save you time and money. If the findings lead you to proceed with the feasibility study, your work may have resolved some basic issues. A consultant may help you with the pre-feasibility study, but you should be involved.  This is an opportunity for you to understand the issues of business development.
  5. Set your price too high then you are going to lose your customer base to other competitors. Set it too low and people will think that you are just providing cheaper poor quality goods. If the market size is small then you can get away with charging a high price. All these facts are kept in the marketing analysis. Based on that you go ahead with your marketing plan.
  6. Before you make an investment you need to analyze the market’s growth rate. If it is likely to grow over time then you can invest more in it. If it has no growth then you are likely to be discouraged from investing anything at all. How much time and importance you give to the market depends on its growth rate.
  7. What other trends may capture their attention? These are the sort of things which will go on your analysis. On the other hand, market trends can change any day. This can turn out to be an opportunity for your business. If that’s the case then you can seize it and make the most of it. Changes in trend can also be a threat for you. If you are comfortable producing one kind of good then a market trend change will affect you the most.
  8. If the market has a good profitability then only you are going to invest heavily. Otherwise, it would be a waste of your time and capital. In order to calculate the profitability of the market, there are a few things one has to consider. These things include; buyer power, supplier power, barriers to entry and so on.
  9. This is because you need to assess how well the channels are. If the existing ones are good enough or you need to develop newer ones. Sometimes you come up with brand new channels like online marketing.  
  10. Doing a marketing analysis will help you to come up with newer ways to reduce cost. At the same time, it helps to create strategies for developing a competitive advantage of your rivals.
  11. Technical Analysis is the forecasting of future financial price movements based on an examination of past price movements. Like weather forecasting, technical analysis does not result in absolute predictions about the future. Instead, technical analysis can help investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of charts that show price over time.   Technical analysis is applicable to stocks, indices, commodities, futures or any tradable instrument where the price is influenced by the forces of supply and demand. Price data (or as John Murphy calls it, “market action”) refers to any combination of the open, high, low, close, volume, or open interest for a given security over a specific timeframe. The timeframe can be based on intraday (1-minute, 5-minutes, 10-minutes, 15-minutes, 30-minutes or hourly), daily, weekly or monthly price data and last a few hours or many years
  12. Over the years, numerous technical indicators have been developed by analysts in attempts to accurately forecast future price movements. Some indicators are focused primarily on identifying the current market trend, including support and resistance areas, while others are focused on determining the strength of a trend and the likelihood of its continuation. Commonly used technical indicators include trend lines, moving averages and momentum indicators such as the moving average convergence divergence (MACD) indicator. Technical analysts apply technical indicators to charts of various timeframes. Short-term traders may use charts ranging from one-minute timeframes to hourly or four-hour timeframes, while traders analyzing longer-term price movement scrutinize daily, weekly or monthly charts.
  13. Key Assumptions of Technical Analysis Technical analysis is applicable to securities where the price is only influenced by the forces of supply and demand. Technical analysis does not work well when other forces can influence the price of the security. In order to be successful, technical analysis makes three key assumptions about the securities that are being analyzed:
  14. In addition, low liquidity stocks are often very low priced (sometimes less than a penny per share), which means that their prices can be more easily manipulated by individual investors. These outside forces acting on thinly-traded stocks make them unsuitable for technical analysis.
  15.  No Artificial Price Changes - Splits, dividends, and distributions are the most common “culprits” for artificial price changes. Though there is no difference in the value of the investment, artificial price changes can dramatically affect the price chart and make technical analysis difficult to apply. This kind of price influence from outside sources can be easily addressed by adjusting the historical data prior to the price change.  
  16.  No Extreme News - Technical analysis cannot predict extreme events, including business events such as a company's CEO dying unexpectedly, and political events such as a terrorist act. When the forces of “extreme news” are influencing the price, technicians have to wait patiently until the chart settles down and starts to reflect the “new normal” that results from such news. It is important to determine whether or not a security meets these three requirements before applying technical analysis. That's not to say that analysis of any stock whose price is influenced by one of these outside forces is useless, but it will affect the accuracy of that analysis.
  17. Focus on Price If the objective is to predict the future price, then it makes sense to focus on price movements. Price movements usually precede fundamental developments. By focusing on price action, technicians are automatically focusing on the future. The market is thought of as a leading indicator and generally leads the economy by 6 to 9 months. To keep pace with the market, it makes sense to look directly at the price movements. More often than not, change is a subtle beast. Even though the market is prone to sudden knee-jerk reactions, hints usually develop before significant moves. A technician will refer to periods of accumulation as evidence of an impending advance and periods of distribution as evidence of an impending decline.
  18. Supply, Demand, and Price Action Many technicians use the open, high, low and close when analyzing the price action of a security. There is information to be gleaned from each bit of information. Separately, these will not be able to tell much. However, taken together, the open, high, low and close reflect forces of supply and demand. The annotated example above shows a stock that opened with a gap up. Before the open, the number of buy orders exceeded the number of sell orders and the price was raised to attract more sellers. Demand was brisk from the start. The intraday high reflects the strength of demand (buyers). The intraday low reflects the availability of supply (sellers). The close represents the final price agreed upon by the buyers and the sellers. In this case, the close is well below the high and much closer to the low. This tells us that even though demand (buyers) was strong during the day, supply (sellers) ultimately prevailed and forced the price back down. Even after this selling pressure, the close remained above the open. By looking at price action over an extended period of time, we can see the battle between supply and demand unfold. In its most basic form, higher prices reflect increased demand and lower prices reflect increased supply.
  19. Support/Resistance Simple chart analysis can help identify support and resistance levels. These are usually marked by periods of congestion (trading range) where the prices move within a confined range for an extended period, telling us that the forces of supply and demand are deadlocked. When prices move out of the trading range, it signals that either supply or demand has started to get the upper hand. If prices move above the upper band of the trading range, then demand is winning. If prices move below the lower band, then supply is winning.
  20. Pictorial Price History Even if you are a tried and true fundamental analyst, a price chart can offer plenty of valuable information. The price chart is an easy-to-read historical account of a security's price movement over a period of time. Charts are much easier to read than a table of numbers. On most stock charts, volume bars are displayed at the bottom. With this historical picture, it is easy to identify the following: Reactions prior to and after important events. Past and present volatility. Historical volume or trading levels. Relative strength of a stock versus the overall market.
  21. Assist with Entry Point Technical analysis can help with timing a proper entry point. Some analysts use fundamental analysis to decide what to buy and technical analysis to decide when to buy. It is no secret that timing can play an important role in performance. Technical analysis can help spot demand (support) and supply (resistance) levels as well as breakouts. Simply waiting for a breakout above resistance or buying near support levels can improve returns. It is also important to know a stock's price history. If a stock you thought was great for the last 2 years has traded flat for those two years, it would appear that Wall Street has a different opinion. If a stock has already advanced significantly, it may be prudent to wait for a pullback. Or, if the stock is trending lower, it might pay to wait for buying interest and a trend reversal.
  22. Analyst Bias Just as with fundamental analysis, technical analysis is subjective and our personal biases can be reflected in the analysis. It is important to be aware of these biases when analyzing a chart. If the analyst is a perpetual bull, then a bullish bias will overshadow the analysis. On the other hand, if the analyst is a disgruntled eternal bear, then the analysis will probably have a bearish tilt.
  23. Open to Interpretation Furthering the bias argument is the fact that technical analysis is open to interpretation. Even though there are standards, many times two technicians will look at the same chart and paint two different scenarios or see different patterns. Both will be able to come up with logical support and resistance levels as well as key breaks to justify their position. While this can be frustrating, it should be pointed out that technical analysis is more like an art than a science, somewhat like economics. Is the cup half-empty or half-full? It is in the eye of the beholder.
  24. Too Late Technical analysis has been criticized for being too late. By the time the trend is identified, a substantial portion of the move has already taken place. After such a large move, the reward to risk ratio is not great. Lateness is a particular criticism of Dow Theory. Dow Theory is an (stock price) analysis that explores the relationship between the Dow Jones Industrial Average (DJIA) and the Dow Jones Transportation Average (DJTA). When one of these averages climbs to an intermediate high, then the other is expected to follow suit within a reasonable amount of time.
  25. Always Another Level Even after a new trend has been identified, there is always another “important” level close at hand. Technicians have been accused of sitting on the fence and never taking an unqualified stance. Even if they are bullish, there is always some indicator or some level that will qualify their opinion.
  26. Trader's Remorse Not all technical signals and patterns work. When you begin to study technical analysis, you will come across an array of patterns and indicators with rules to match. For instance: A sell signal is given when the neckline of a head and shoulders pattern is broken. Even though this is a rule, it is not steadfast and can be subject to other factors such as volume and momentum. In that same vein, what works for one particular stock may not work for another. A 50-day moving average may work great to identify support and resistance for IBM, but a 70-day moving average may work better for Yahoo. Even though many principles of technical analysis are universal, each security will have its own idiosyncrasies.
  27. The process focuses on improving both the technical and people side of the business. For most companies, the design process leads to a more effective organization design, significantly improved results (profitability, customer service, internal operations), and employees who are empowered and committed to the business.
  28. As companies grow and the challenges in the external environment become more complex, businesses processes, structures and systems that once worked become barriers to efficiency, customer service, employee morale and financial profitability.
  29. Although adaptable to the size, complexity and needs of any organization, the design process consists of the following steps.   Charter the design process   As senior leaders, you come together to discuss current business results, organizational health, environmental demands, etc. and the need to embark on such a process. You establish a charter for the design process that includes a “case for change,” desired outcomes, scope, allocation of resources, time deadlines, participation, communications strategy, and other parameters that will guide the project. (At times, senior teams may go through either a strategic planning process or an executive team development process prior to beginning a redesign initiative, depending on how clear they are about their strategy and how well they work together as a team.)  
  30.  Assess the current state of the business   The assessment process is astounding in the clarity it brings an organization’s leaders and members, not only regarding how the organization currently works but how the various parts are interrelated, its overall state of health and, most importantly, what needs to be done to make improvements.  
  31.  Design the new organization   The senior team (and/or others who have been invited to participate in the process), look to the future and develop a complete set of design recommendations for the “ideal future.” At a high level, the steps in this process include the following: Defining your basic organizing principle. (Will you organize primarily around functions, processes, customer-types, technologies, geographies, etc.?) Streamlining core business processes—those that result in revenue and/or deliverables to customers. Documenting and standardizing procedures. Organizing people around core processes. Identifying headcount necessary to do core work. Defining tasks, functions, and skills. What are the performance metrics for each function/team? How are they evaluated and held accountable? Determining facility, layout and equipment needs of various teams and departments throughout the organization. Identifying support resources (finance, sales, HR, etc.), mission, staffing, etc. and where should these should be located. Defining the management structure that provides strategic, coordinating and operational support. Improving coordinating and development systems (hiring, training, compensation, information-sharing, goal-setting, etc.). At some point the design process morphs into transition planning as critical implementation dates are set and specific, concrete action plans created to implement the new design. And a key part of this step includes communicating progress to other members of the organization. A communications plan is developed that educates people in what is happening. Education brings awareness, and everyone’s inclusion brings the beginning of commitment.  
  32.  Implement the design   Now the task is to make the design live. People are organized into natural work groups which receive training in the new design, team skills and start-up team building. New work roles are learned and new relationships within and without the unit are established. Equipment and facilities are rearranged. Reward systems, performance systems, information sharing, decision-making and management systems are changed and adjusted. Some of this can be accomplished quickly. Some may require more detail and be implemented over a longer period of time.