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MANAGING PROJECTS

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Projects represent nonroutine business activities that often have long-term strategic ramifications for a firm. In this chapter, we examined how projects differ from routine business activities and discussed the major phases of projects. We noted how environmental changes have resulted in increased attention being paid to projects and project management over the past decade. In the second half of the chapter, we introduced some basic tools that businesses can use when planning for and controlling projects. Both Gantt charts and network diagrams give managers a visual picture of how a project is going. Network diagrams have the added advantage of showing the precedence between activities, as well as the critical path(s). We wrapped up the chapter by showing how these concepts are embedded in inexpensive yet powerful software packages such as Microsoft Project. If you want to learn more about project management, we encourage you to take a look at the Web site for the Proj...
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The Global Economy

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Emerging markets refer to countries which are between developed and developing status and have low to medium GDP per capita.
Limited growth opportunities in developed countries mean that more businesses are turning to investing in emerging economies as the source of future growth.
Existing business models often cannot be replicated in emerging markets and as a result more creative and innovative ways of doing business may have to be thought of which meet the needs of populations which have very limited incomes.
A common currency area (currency union or monetary union) is a geographical area through which one currency circulates and is accepted as the medium of exchange.
The formation of a common currency area can bring significant benefits to the members of the currency union, particularly if there is already a high degree of international trade among them (i.e. a high level of trade integration). This is primarily because of the reductions in transaction costs in trade and the reduction in exchange rate uncertainty.
There are, however, costs of joining a currency union, namely the loss of independent monetary policy and also of the exchange rate as a means of macroeconomic adjustment. Given a long-run vertical supply curve, the loss of monetary policy and the lack of exchange rate adjustment affect mainly short-run macroeconomic adjustment, however.
These adjustment costs will be lower the greater is the degree of real wage flexibility, labour mobility and capital market integration across the currency union, and also the less the members of the currency union suffer from asymmetric demand shocks.
The problems of adjustment within a currency union may be alleviated by fiscal federalism – a common fiscal budget and a system of taxes and fiscal transfers across member countries. In practice, however, fiscal federalism may be difficult to implement for political reasons.
The national fiscal policies of the countries making up a currency union may be subject to a free-rider problem, whereby one country issues a large amount of government debt and pays a lower interest rate on it than it might otherwise have paid, but also leads to other member countries having to pay higher interest rates. It is for this reason that a currency union may wish to impose rules on the national fiscal policies of its members.
Businesses have used outsourcing as a means of cutting costs and increasing efficiency but there can be problems which have to be taken into consideration in making any decision to outsource.
There are cultural, religious and social issues that are involved in carrying out business abroad. The reduction in global boundaries means that more and more businesses operate in a global business environment and so these factors have to be taken into consideration.

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