Project Finance for Autopistas del Centro

Project Finance for Autopistas del Centro Description

In late spring 2009, Osvaldo MartA­nez, Finance Manager at Autopistas del Centro, a private company operating a toll road bypass in Madrid, was analysing with growing concern the financial impact of reduced traffic on its toll road. In 2008, overall freeway traffic in Spain fell by 12%, and the trend did not suggest any improvement in 2009. Mr. MartA­nez believed the situation to be basically unsustainable. The company's lenders wanted to renegotiate costs and deadlines, due to the increase in risk of the project. Due to the drop in revenues and operating earnings, the project would need an additional two million euros and the current shareholders refused to agree to all the refinancing of the project coming out of their pockets. Operational and financial improvements would be needed in order for the project to be viable and offer at least a minimal return. The case describes the progress of a project finance operation from its beginnings in 2004, and the situation of the project in 2009 in the face of a crisis and consequent failure to meet the initially expected cash flows. The case offers an excellent opportunity to discuss what to do when a Project Finance fails, analysing the alternative ways of ensuring the project's viability and profitability.

Case Description Project Finance for Autopistas del Centro

Strategic Managment Tools Used in Case Study Analysis of Project Finance for Autopistas del Centro

STEP 1. Problem Identification in Project Finance for Autopistas del Centro case study

STEP 2. External Environment Analysis - PESTEL / PEST / STEP Analysis of Project Finance for Autopistas del Centro case study

STEP 3. Industry Specific / Porter Five Forces Analysis of Project Finance for Autopistas del Centro case study

STEP 4. Evaluating Alternatives / SWOT Analysis of Project Finance for Autopistas del Centro case study

STEP 5. Porter Value Chain Analysis / VRIO / VRIN Analysis Project Finance for Autopistas del Centro case study

STEP 6. Recommendations Project Finance for Autopistas del Centro case study

STEP 7. Basis of Recommendations for Project Finance for Autopistas del Centro case study

Case Analysis of Project Finance for Autopistas del Centro

Project Finance for Autopistas del Centro is a Harvard Business (HBR) Case Study on Finance & Accounting , Texas Business School provides HBR case study assignment help for just $9. Texas Business School(TBS) case study solution is based on HBR Case Study Method framework, TBS expertise & global insights. Project Finance for Autopistas del Centro is designed and drafted in a manner to allow the HBR case study reader to analyze a real-world problem by putting reader into the position of the decision maker. Project Finance for Autopistas del Centro case study will help professionals, MBA, EMBA, and leaders to develop a broad and clear understanding of casecategory challenges. Project Finance for Autopistas del Centro will also provide insight into areas such as – wordlist , strategy, leadership, sales and marketing, and negotiations.

Case Study Solutions Background Work

Project Finance for Autopistas del Centro case study solution is focused on solving the strategic and operational challenges the protagonist of the case is facing. The challenges involve – evaluation of strategic options, key role of Finance & Accounting, leadership qualities of the protagonist, and dynamics of the external environment. The challenge in front of the protagonist, of Project Finance for Autopistas del Centro, is to not only build a competitive position of the organization but also to sustain it over a period of time.

Strategic Management Tools Used in Case Study Solution

The Project Finance for Autopistas del Centro case study solution requires the MBA, EMBA, executive, professional to have a deep understanding of various strategic management tools such as SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

Texas Business School Approach to Finance & Accounting Solutions

In the Texas Business School, Project Finance for Autopistas del Centro case study solution – following strategic tools are used - SWOT Analysis, PESTEL Analysis / PEST Analysis / STEP Analysis, Porter Five Forces Analysis, Go To Market Strategy, BCG Matrix Analysis, Porter Value Chain Analysis, Ansoff Matrix Analysis, VRIO / VRIN and Marketing Mix Analysis.

We have additionally used the concept of supply chain management and leadership framework to build a comprehensive case study solution for the case – Project Finance for Autopistas del Centro

Step 1 – Problem Identification of Project Finance for Autopistas del Centro - Harvard Business School Case Study

The first step to solve HBR Project Finance for Autopistas del Centro case study solution is to identify the problem present in the case. The problem statement of the case is provided in the beginning of the case where the protagonist is contemplating various options in the face of numerous challenges that Project Marta­nez is facing right now. Even though the problem statement is essentially – “Finance & Accounting” challenge but it has impacted by others factors such as communication in the organization, uncertainty in the external environment, leadership in Project Marta­nez, style of leadership and organization structure, marketing and sales, organizational behavior, strategy, internal politics, stakeholders priorities and more.

Step 2 – External Environment Analysis

Texas Business School approach of case study analysis – Conclusion, Reasons, Evidences - provides a framework to analyze every HBR case study. It requires conducting robust external environmental analysis to decipher evidences for the reasons presented in the Project Finance for Autopistas del Centro.

The external environment analysis of Project Finance for Autopistas del Centro will ensure that we are keeping a tab on the macro-environment factors that are directly and indirectly impacting the business of the firm.

What is PESTEL Analysis? Briefly Explained

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Project Finance for Autopistas del Centro case study. PESTEL analysis of " Project Finance for Autopistas del Centro" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

How to do PESTEL / PEST / STEP Analysis? What are the components of PESTEL Analysis?

As mentioned above PESTEL Analysis has six elements – political, economic, social, technological, environmental, and legal. All the six elements are explained in context with Project Finance for Autopistas del Centro macro-environment and how it impacts the businesses of the firm.

How to do PESTEL Analysis for Project Finance for Autopistas del Centro

To do comprehensive PESTEL analysis of case study – Project Finance for Autopistas del Centro , we have researched numerous components under the six factors of PESTEL analysis.

Political Factors that Impact Project Finance for Autopistas del Centro

Political factors impact seven key decision making areas – economic environment, socio-cultural environment, rate of innovation & investment in research & development, environmental laws, legal requirements, and acceptance of new technologies.

Policy Making Impact on Project Finance for Autopistas del Centro

Government policies have significant impact on the business environment of any country. The firm in “ Project Finance for Autopistas del Centro ” needs to navigate these policy decisions to create either an edge for itself or reduce the negative impact of the policy as far as possible.

Data safety laws – The countries in which Project Marta­nez is operating, firms are required to store customer data within the premises of the country. Project Marta­nez needs to restructure its IT policies to accommodate these changes. In the EU countries, firms are required to make special provision for privacy issues and other laws.

Competition Regulations – Numerous countries have strong competition laws both regarding the monopoly conditions and day to day fair business practices. Project Finance for Autopistas del Centro has numerous instances where the competition regulations aspects can be scrutinized.

Import restrictions on products – Before entering the new market, Project Marta­nez in case study Project Finance for Autopistas del Centro" should look into the import restrictions that may be present in the prospective market.

Export restrictions on products – Apart from direct product export restrictions in field of technology and agriculture, a number of countries also have capital controls. Project Marta­nez in case study “ Project Finance for Autopistas del Centro ” should look into these export restrictions policies.

Foreign Direct Investment Policies – Government policies favors local companies over international policies, Project Marta­nez in case study “ Project Finance for Autopistas del Centro ” should understand in minute details regarding the Foreign Direct Investment policies of the prospective market.

Taxation & Regulation Impact on Project Finance for Autopistas del Centro

Corporate Taxes – The rate of taxes is often used by governments to lure foreign direct investments or increase domestic investment in a certain sector. Corporate taxation can be divided into two categories – taxes on profits and taxes on operations. Taxes on profits number is important for companies that already have a sustainable business model, while taxes on operations is far more significant for companies that are looking to set up new plants or operations.

Tariffs – Chekout how much tariffs the firm needs to pay in the “ Project Finance for Autopistas del Centro ” case study. The level of tariffs will determine the viability of the business model that the firm is contemplating. If the tariffs are high then it will be extremely difficult to compete with the local competitors. But if the tariffs are between 5-10% then Project Marta­nez can compete against other competitors.

Government Scheme & Subsidies Impact on Project Finance for Autopistas del Centro

Research and Development Subsidies and Policies – Governments often provide tax breaks and other incentives for companies to innovate in various sectors of priority. Managers at Project Finance for Autopistas del Centro case study have to assess whether their business can benefit from such government assistance and subsidies.

Consumer protection – Different countries have different consumer protection laws. Managers need to clarify not only the consumer protection laws in advance but also legal implications if the firm fails to meet any of them.

Political System & Stability, and its Impact on Project Finance for Autopistas del Centro

Political System and Its Implications – Different political systems have different approach to free market and entrepreneurship. Managers need to assess these factors even before entering the market.

Freedom of Press is critical for fair trade and transparency. Countries where freedom of press is not prevalent there are high chances of both political and commercial corruption.

Corruption level – Project Marta­nez needs to assess the level of corruptions both at the official level and at the market level, even before entering a new market. To tackle the menace of corruption – a firm should have a clear SOP that provides managers at each level what to do when they encounter instances of either systematic corruption or bureaucrats looking to take bribes from the firm.

Independence of judiciary – It is critical for fair business practices. If a country doesn’t have independent judiciary then there is no point entry into such a country for business.

Government attitude towards trade unions – Different political systems and government have different attitude towards trade unions and collective bargaining. The firm needs to assess – its comfort dealing with the unions and regulations regarding unions in a given market or industry. If both are on the same page then it makes sense to enter, otherwise it doesn’t.

Economic Factors that Impact Project Finance for Autopistas del Centro

Social Factors that Impact Project Finance for Autopistas del Centro

Technological Factors that Impact Project Finance for Autopistas del Centro

Environmental Factors that Impact Project Finance for Autopistas del Centro

Legal Factors that Impact Project Finance for Autopistas del Centro

Step 3 – Industry Specific Analysis

What is Porter Five Forces Analysis

PESTEL stands for political, economic, social, technological, environmental and legal factors that impact the external environment of firm in Project Finance for Autopistas del Centro case study. PESTEL analysis of " Project Finance for Autopistas del Centro" can help us understand why the organization is performing badly, what are the factors in the external environment that are impacting the performance of the organization, and how the organization can either manage or mitigate the impact of these external factors.

Step 4 – SWOT Analysis / Internal Environment Analysis

Step 5 – Porter Value Chain / VRIO / VRIN Analysis

Step 6 – Evaluating Alternatives & Recommendations

Step 7 – Basis for Recommendations

References :: Project Finance for Autopistas del Centro case study solution