Public-private partnership investments in dry ports – Russian logistics markets and risks

The investments have always been considered as an essential backbone and so-called ‘locomotive’ for the competitive economies. However, in various countries, the state has been put under tight budget constraints for the investments in capital intensive projects. In response to this situation, the cooperation between public and private sector has grown based on public-private mechanism. The promotion of favorable arrangement for collaboration between public and private sectors for the provision of policies, services, and infrastructure in Russia can help to address the problems of dry ports development that neither municipalities nor the private sector can solve alone. Especially, the stimulation of public-private collaboration is significant under the exposure to externalities that affect the magnitude of the risks during all phases of project realization. In these circumstances, the risk in the projects also is becoming increasingly a part of joint research and risk management practice, which is viewed as a key approach, aiming to take active actions on existing global and specific factors of uncertainties. Meanwhile, a relatively little progress has been made on the inclusion of the resilience aspects into the planning process of a dry ports construction that would instruct the capacity planner, on how to mitigate the occurrence of disruptions that may lead to million dollars of losses due to the deviation of the future cash flows from the expected financial flows on the project. The current experience shows that the existing methodological base is developed fragmentary within separate steps of supply chain risk management (SCRM) processes: risk identification, risk evaluation, risk mitigation, risk monitoring and control phases. The lack of the systematic approach hinders the solution of the problem of risk management processes of dry port implementation. Therefore, management of various risks during the investments phases of dry port projects still presents a considerable challenge from the practical and theoretical points of view. In this regard, the given research became a logical continuation of fundamental research, existing in the financial models and theories (e.g., capital asset pricing model and real option theory), as well as provided a complementation for the portfolio theory. The goal of the current study is in the design of methods and models for the facilitation of dry port implementation through the mechanism of public-private partnership on the national market that implies the necessity to mitigate, first and foremost, the shortage of the investments and consequences of risks. The problem of the research was formulated on the ground of the identified contradictions. They rose as a continuation of the trade-off between the opportunities that the investors can gain from the development of terminal business in Russia (i.e. dry port implementation) and risks. As a rule, the higher the investment risk, the greater should be their expected return. However, investors have a different tolerance for the risks. That is why it would be advisable to find an optimum investment. In the given study, the optimum relates to the search for the efficient portfolio, which can provide satisfaction to the investor, depending on its degree of risk aversion. There are many theories and methods in finance, concerning investment choices. Nevertheless, the appropriateness and effectiveness of particular methods should be considered with the allowance of the specifics of the investment projects. For example, the investments in dry ports imply not only the lump sum of financial inflows, but also the long-term payback periods. As a result, capital intensity and longevity of their construction determine the necessity from investors to ensure the return on investment (profitability), along with the rapid return on investment (liquidity), without precluding the fact that the stochastic nature of the project environment is hardly described by the formula-based approach. The current theoretical base for the economic appraisals of the dry port projects more often perceives net present value (NPV) as a technique superior to other decision-making criteria. For example, the portfolio theory, which considers different risk preference of an investor and structures of utility, defines net present value as a better criterion of project appraisal than discounted payback period (DPP). Meanwhile, in business practice, the DPP is more popular. Knowing that the NPV is based on the assumptions of certainty of project life, it cannot be an accurate appraisal approach alone to determine whether or not the project should be accepted for the approval in the environment that is not without of uncertainties. In order to reflect the period or the project’s useful life that is exposed to risks due to changes in political, operational, and financial factors, the second capital budgeting criterion – discounted payback period is profoundly important, particularly for the Russian environment. Those statements represent contradictions that exist in the theory and practice of the applied science. Therefore, it would be desirable to relax the assumptions of portfolio theory and regard DPP as not fewer relevant appraisal approach for the assessment of the investment and risk measure. At the same time, the rationality of the use of both project performance criteria depends on the methods and models, with the help of which these appraisal approaches are calculated in feasibility studies. The deterministic methods cannot ensure the required precision of the results, while the stochastic models guarantee the sufficient level of the accuracy and reliability of the obtained results, providing that the risks are properly identified, evaluated, and mitigated. Otherwise, the project performance indicators may not be confirmed during the phase of project realization. For instance, the economic and political instability can result in the undoing of hard-earned gains, leading to the need for the attraction of the additional finances for the project. The sources of the alternative investments, as well as supportive mitigation strategies, can be studied during the initial phases of project development. During this period, the effectiveness of the investments undertakings can also be improved by the inclusion of the various investors, e.g. Russian Railways’ enterprises and other private companies in the dry port projects. However, the evaluation of the effectiveness of the participation of different investors in the project lack the methods and models that would permit doing the particular feasibility study, foreseeing the quantitative characteristics of risks and their mitigation strategies, which can meet the tolerance of the investors to the risks. For this reason, the research proposes a combination of Monte Carlo method, discounted cash flow technique, the theory of real options, and portfolio theory via a system dynamics simulation approach. The use of this methodology allows for comprehensive risk management process of dry port development to cover all aspects of risk identification, risk evaluation, risk mitigation, risk monitoring, and control phases. A designed system dynamics model can be recommended for the decision-makers on the dry port projects that are financed via a public-private partnership. It permits investors to make a decision appraisal based on random variables of net present value and discounted payback period, depending on different risks factors, e.g. revenue risks, land acquisition risks, traffic volume risks, construction hazards, and political risks. In this case, the statistical mean is used for the explication of the expected value of the DPP and NPV; the standard deviation is proposed as a characteristic of risks, while the elasticity coefficient is applied for rating of risks. Additionally, the risk of failure of project investments and guaranteed recoupment of capital investment can be considered with the help of the model. On the whole, the application of these modern methods of simulation creates preconditions for the controlling of the process of dry port development, i.e. making managerial changes and identifying the most stable parameters that contribute to the optimal alternative scenarios of the project realization in the uncertain environment. System dynamics model allows analyzing the interactions in the most complex mechanism of risk management process of the dry ports development and making proposals for the improvement of the effectiveness of the investments via an estimation of different risk management strategies. For the comparison and ranking of these alternatives in their order of preference to the investor, the proposed indicators of the efficiency of the investments, concerning the NPV, DPP, and coefficient of variation, can be used. Thus, rational investors, who averse to taking increased risks unless they are compensated by the commensurate increase in the expected utility of a risky prospect of dry port development, can be guided by the deduced marginal utility of investments. It is computed on the ground of the results from the system dynamics model. In conclusion, the outlined theoretical and practical implications for the management of risks, which are the key characteristics of public-private partnerships, can help analysts and planning managers in budget decision-making, substantially alleviating the effect from various risks and avoiding unnecessary cost overruns in dry port projects.

Toimintokohtainen kustannuslaskenta muovialan teollisuusyrityksessä

Jatkuva teknologioiden kehittyminen ja globaalin talousjärjestelmän lainalaisuudet pakottavat yrityksiä kiinnittämään enenevässä määrin huomiota kilpailukykyyn ja kannattavuuteen. Kustannuslaskennan tarkkuus on yksi tärkeimmistä taloushallinnon elementeistä kilpailukyvyn ylläpitämisessä. Virheisiin ei ole varaa, sillä väärin perustein tehdyt kustannuslaskennat ajavat yrityksen nopeasti taloudellisiin vaikeuksiin. Tässä tutkimuksessa oli tavoitteena etsiä teollisen muovialan yrityksen tarpeisiin parhaiten sopiva kustannuslaskentajärjestelmä. Tutkimuksen teoriaosassa tutustuttiin eri kustannuslaskentamenetelmiin, ja tarkemmin toimintolaskennan yksinkertaisempaan muotoon, aikaperusteiseen toimintolaskentaan, sen toimivuuden ja käytettävyyden kannalta. Tutkimus toteutettiin konstruktiivisena case -tutkimuksena, jossa pyrittiin kuvaamaan ja havainnollistamaan uusi laskentamalli eli konstruktio. Tutkimuksen empiirisessä osuudessa suoritettiin esimerkkilaskelmia case yrityksen valmistamalle tuoteryhmälle ja vertailtiin laskelman tuloksia nykyiseen laskentamalliin. Saatujen tietojen pohjalta yritys pystyy muokkaamaan hinnoittelua vastaamaan kannattavuustavoitteita ja parantamaan kilpailukykyään, sillä malli tuottaa tarkempaa tietoa kustannuksista ja asiakaskohtaisista kannattavuuksista.

Innovaatiosta tuottavaksi yritystoiminnaksi Case: Vuokranmaksu Suomi Oy

Tutkimuksen lähtökohtana oli tilanne, jossa Startup- yritys on kehittänyt innovaation ja haluaa selvittää miten se on vastannut markkinatarpeeseen ja miten sen markkinaosuutta voidaan vahvistaa. Case-yritys on Vuokranmaksu Suomi Oy, jonka sovellus on kehitetty asunto- ja kiinteistösijoittajien tarpeisiin. Työn empiirinen osuus toteutettiin haastattelujen sarjana yrityksen asiakkaille. Työn teoriaosuudessa käsitellään yrittäjyyttä, innovaatiota ja internet-taloutta. Tutkimus osoitti, että asiakkaat ovat tyytyväisiä sovellukseen ja markkinatarpeeseen on vastattu. Asiakkaiden kokema hyöty sovelluksen käytöstä ei kuitenkaan ole ollut ideaali, sillä asiakkaat eivät ole hyödyntäneet kuin osaa toiminnoista. Tutkimuksen mukaan sovelluksen käytettävyyttä tulee parantaa. Entistä paremman käyttäjäkokemuksen kautta sovelluksesta ja vuokraustoiminnan digitalisoimisesta tulee houkuttelevampi vaihtoehto myös uusille asiakkaille. Markkinapotentiaalin kasvattamisen esteenä vaikuttaisi olleen käyttäjien kokema rajallinen hyöty, myös sovelluksen hinta. Tutkimusprosessi on antanut syytä miettiä vaihtoehtoa sovelluksen muuttamiseksi ilmaiseksi. Tutkimusprosessi auttoi myös hahmottamaan uuden asiakassegmentin, jolle sovellusta on syytä lähteä markkinoimaan asiakasmäärien kasvattamiseksi.

Liquidity Risk in the Finnish Stock Market

This study explores the pricing of liquidity risk and its effect on stock returns in the Finnish stock market. In addition to that, it investigates whether there is a trend in liquidity risk. Finally, it analyzes whether the two chosen liquidity measures provide different results. The data consists of all the common shares listed in the Finnish stock market during the period of 1/1997–7/2015. To examine whether liquidity risk affects stock returns in the Finnish stock market, this study utilizes a conditional version of liquidity-adjusted capital asset pricing model (LCAPM) by Acharya and Pedersen (2005). Two recently proposed illiquidity measures – PQS and AdjILLIQ – are used in the empirical estimation to see whether there are differences in the results between the measures. The time-varying conditional liquidity risks are estimated by using a multivariate DCC-GARCH model, while the pricing of the liquidity risk is conducted by applying fixed effect panel regression. The results imply that investors in the Finnish stock market are willing to pay a premium to hedge from wealth shocks and having liquid assets during the declined market liquidity. However, investors are not willing to pay a premium for stocks with higher returns during illiquid markets. The total annualized illiquidity premiums found in the Finnish stock market are 1.77% and 1.04%, based on the PQS and AdjILLIQ measures, respectively. The study also shows that liquidity risk does not exhibit decreasing trend, and investors should consider liquidity risk in their portfolio diversification in the Finnish stock market.

How Cloud Services may Enable SMEs to Overcome International Growth Challenges: Finnish SMEs in the IT Industry

Digitalization and technology megatrends such as Cloud services have provided SMEs with a suitable atmosphere and conditions to internationalize and seek for further business growth. There is a limited amount of research on Cloud services from the business perspective and the limitations and challenges SMEs encounter when pursuing international business growth. Thus, the main research question of this study was how Cloud services may enable Finnish SMEs to overcome international growth challenges. The research question was further divided into three sub-questions dealing with matters related to features and characteristics of Cloud services, limitations and challenges Finnish SMEs experience when pursuing international growth of business, and benefits and advantages of utilizing Cloud services to mitigate and suppress international growth challenges. First, the theoretical framework of this study was constructed based on the existing literature on Cloud services, SMEs, and international growth challenges. After this, qualitative research approach and methodology were applied for this study. The data was collected through six semi-structured expert interviews in person with representatives of IBM, Exidio, Big Data Solutions, and Comptel. After analyzing the collected data by applying thematic analysis method, the results were compared with the existing theory and the original framework was modified and complemented accordingly. Resource scarcity, customer base expansion and retention, and lack of courage to try new things and take risks turned out to be major international growth challenges of Finnish SMEs. Due to a number of benefits and advantages of utilizing Cloud services including service automation, consumption-based pricing model, lack of capital expenditures (capex) and huge upfront investments, lightened organization structure, cost savings, speed, accessibility, scalability, agility, geographical expansion potential, global reaching and covering, credibility, partners, enhanced CRM, freedom, and flexibility, it can be concluded that Cloud services can help directly and indirectly Finnish SMEs to mitigate and overcome international growth challenges and enable further business growth.

Siirtohinnoitteluoikaisut oikeuskäytännön perusteella

Tässä tutkimuksessa tarkastellaan konsernien sisäisten liiketoimien hinnoittelua eli siirtohinnoittelua Suomen oikeuskäytännön perusteella. Tutkimuksessa käydään läpi kolme korkeimman hallinto-oikeuden siirtohinnoittelua koskevaa ratkaisua ja selvitetään näiden kautta niitä tekijöitä, jotka johtavat siirtohintojen jälkikäteiseen oikaisuun. Tutkimuksessa tutkitaan myös siirtohinnoitteluoikaisujen taustalla vaikuttavia yhteisiä tekijöitä ja siirtohinnoitteluun liittyviä tulkinnallisia erimielisyyksiä veronsaajan ja veronmaksajan välillä.

Kaukolämpöliiketoiminnan kehittäminen Mäntsälän Sähkö osakeyhtiössä

Tämän diplomityön tarkoitus oli selvittää Mäntsälän Sähkö Oy:n kaukolämpöliiketoiminnan nykytila ja kehityskohteet. Tutkimuskysymykset olivat: 1) Millaisilla toimenpiteillä varmistetaan kaukolämpöliiketoiminnan kannattavuus tulevaisuudessa? ja 2) Millaisia mahdollisuuksia älykäs kaukolämpö tuo kaukolämpöliiketoiminnalle? Tutkimus suoritettiin perehtymällä aiheen kirjallisuuteen ja uutisiin. Takaisinmaksuajan menetelmällä arvioitiin maakaasun korvaamisen kannattavuutta. Työn tuloksena voitiin todeta, että kaukolämmön hinnoittelua kannattaa kehittää kustannusvastaavampaan suuntaan. Nykyinen kaukolämmön energiankulutukseen painottuva hinnoittelu ei sovi uusille rakennuksille, jotka kuluttavat vähän energiaa. Yleistyvät hybridilämmitysjärjestelmät on otettava huomioon hinnoittelussa. Kaukolämmön kausihinnoittelu toisi etuja asiakkaalle, kaukolämpöyhtiölle sekä ympäristölle. Kaukolämmön kulutuksen tuntimittaus mahdollistaisi siirtymisen kaukolämpötehoon perustuvaan hinnoitteluun. Kaukolämmön hinta on ollut Mäntsälän Sähkö Oy:llä suhteellisen korkea. Korkea hinta johtuu enimmäkseen maakaasulla tuotetun kaukolämmön korkeista tuotantokustannuksista. Kaukolämmön tuotantoa voidaan kehittää kannattavammaksi, vaikka lämmöntalteenottolaitoksen oletettu lämmöntuotanto kattaa Mäntsälän lämmöntarpeesta noin puolet ja vähentää tuotantokustannuksia. Nykyisten maakaasukattiloiden käyttäminen pelletin pölypolttoon olisi teknisten muutoksien avulla mahdollista. Pölypolton kannattavuus riippuu erityisesti puupelletin ja maakaasun hintaerosta. Älykäs kaukolämpöjärjestelmä voisi automaattisesti tasoittaa kaukolämmön kysyntää yhdessä lämpövaraston kanssa. Tällöin huippulämpölaitosten käyttö vähentyisi ja lämmöntuotannon kustannukset pienentyisivät. Älykäs kaukolämpöjärjestelmä ja kaukolämpötehon tuntimittaus mahdollistaisivat myös kaksisuuntaisen kaukolämpökaupan.

Earning logics of a portal solution for a medical device manufacturer

The need behind this thesis was in the development of a more modern earning logic for a pelvic floor muscle home training device to which a portal solution is going to be introduced as a part of new upgraded version of the device. The goal is to offer useful guidelines and recommendations for the medical device manufacturer to use in the process of creating the new business model around the new product version. In the theoretical part of this thesis, the used theoretical frameworks for business model generation and pricing models are presented. The special characteristics of healthcare technology industry are also introduced as initial data for the empirical part. The empirical data is collected via interviews and meetings from both inside and outside of the company to gain a comprehensive picture of the issue at hand. The needed changes in the business model as well as possible pricing options are gone through in the empirical chapters with the main focus being on the incoming revenue streams and pricing. As results of the thesis recommendations are presented for the changes that are needed in the business model after the introduction of the portal solution. The results of this thesis can be used for finishing the development process of the new version of the device and especially the earning logic of it.