Choice of Business Process Modeling Methodology - Case Northern Dimension Research Centre (NORDI) in Lappeenranta University of Technology

The main outcome of the master thesis is innovative solution, which can support a choice of business process modeling methodology. Potential users of this tool are people with background in business process modeling and possibilities to collect required information about organization’s business processes. Master thesis states the importance of business process modeling in implementation of strategic goals of organization. It is made by revealing the place of the concept in Business Process Management (BPM) and its particular case Business Process Reengineering (BPR). In order to support the theoretical outcomes of the thesis a case study of Northern Dimension Research Centre (NORDI) in Lappeenranta University of Technology was conducted. On its example several solutions are shown: how to apply business process modeling methodologies in practice; in which way business process models can be useful for BPM and BPR initiatives; how to apply proposed innovative solution for a choice of business process modeling methodology.

Venture capital investment on SME

This thesis studies venture capital investment on small and medium-sized enterprises (SMEs). The specific objective of the study is to test whether venture capitalists have a positive effect on SMEs. In addition effect of several other factors is studied in financial crisis. Used determinants are formulated based on three capital structure theories. The pecking order theory concerns favoring on financing source over another. The agency theory and the tradeoff theory concentrate on the search of optimal capital structure. The data of this study consist of financial statement data and results of corporate questionnaire. Regression analysis was used to find out the effects of several determinants. Regression models were formed based on the presented theories. SMEs with and without venture capitalists were considered separately. It was found that venture capitalists have a positive effect on SMEs. Although some results between SMEs with and without venture capitalists were mixed.

Investment risks in Russia: A Finnish perspective

Purpose of this study is to analyze the effect of Russia's economic environment changes in the total return indexes of Finnish companies. The research data consisted of Finnish publicly listed companies, which have made physical investments to Russia, and operating in the area. The study used six different variables to model the Russian operating environment. The data consists of total return indexes of Finnish companies. From those we calculated the monthly mean interval between timeline of 1 January 2000 to 31 December 2009. Sample period is divided into two different parts. Variables impact on companies' total return indices is tested by regression analysis. By F-test we tested significance of model and squared coefficient correlation told us how much model explains from changes. Goodness of the β-coefficient is tested in the model by t-test. The research results shows that the Russian operating environment, or changes in which the active Finnish companies in total return indices. On partial sample periods results were not so significant.

Investment recovery period in electric motor of higher efficiency in pumping for irrigation

In this study, it was adjusted a mathematical model to measure the effect of electric motor efficiency on pumping system costs for irrigation on the tariff structure of conventional electricity and green horo-seasonal , and also to calculate the recovery period of the invested capital in higher efficiency equipment. Then, it was applied to a center pivot irrigation system in two options of electric motor efficiency, 92,6% (standard line) and 94,3% (high efficiency line), and the acquisition cost of the first corresponded to 70% the of the second. The power of the electric motor was 100hp. The results showed that the model allowed us to evaluate if a high efficiency motor was economically viable compared to the standard motor in each tariff structure. The high efficiency motor was not viable in the two tariff structures. In the green horo-seasonal tariff, would only be viable if its efficiency was 4.46% higher than the standard motor. In the conventional tariff, it would only be viable if the efficiency overcame 2.71%.

Risk Parity: A Modern Tool for Diversification

The purpose of this study is to examine how well risk parity works in terms of risk, return and diversification relative to more traditional minimum variance, 1/N and 60/40 portfolios. Risk parity portfolios were constituted of five risk sources; three common asset classes and two alternative beta investment strategies. The three common asset classes were equities, bonds and commodities, and the alternative beta investment strategies were carry trade and trend following. Risk parity portfolios were constructed using five different risk measures of which four were tail risk measures. The risk measures were standard deviation, Value-at-Risk, Expected Shortfall, modified Value-at-Risk and modified Expected Shortfall. We studied also how sensitive risk parity is to the choice of risk measure. The hypothesis is that risk parity portfolios provide better return with the same amount of risk and are better diversified than the benchmark portfolios. We used two data sets, monthly and weekly data. The monthly data was from the years 1989-2011 and the weekly data was from the years 2000-2011. Empirical studies showed that risk parity portfolios provide better diversification since the diversification is made at the risk level. Risk based portfolios provided superior return compared to the asset based portfolios. Using tail risk measures in risk parity portfolios do not necessarily provide better hedge from tail events than standard deviation.

Performance Comparison of Behavioral Finance -based Investment Strategies in the Finnish Stock Market 1996-2010

In this thesis traditional investment strategies (value and growth) are compared to modern investment strategies (momentum, contrarian and GARP) in terms of risk, performance and cumulative returns. Strategies are compared during time period reaching from 1996 to 2010 in the Finnish stock market. Used data includes all listed main list stocks, dividends and is adjusted in case of splits, and mergers and acquisitions. Strategies are tested using different holding periods (6, 12 and 36 months) and data is divided into tercile portfolios based on different ranking criteria. Contrarian and growth strategies are the only strategies with improved cumulative returns when longer holding periods are used. Momentum (52-week high price1) and GARP strategies based on short holding period have the best performance and contrarian and growth strategies the worst. Momentum strategies (52-week high price) along with short holding period contrarian strategies (52-week low price2) have the lowest risk. Strategies with the highest risk are both growth strategies and two momentum strategies (52-week low price). The empirical results support the efficiency of momentum, GARP and value strategies. The least efficient strategies are contrarian and growth strategies in terms of risk, performance and cumulative returns. Most strategies outperform the market portfolio in all three measures. 1 Stock ranking criterion (current price/52-week highest price) 2 Stock ranking criterion (current price/52-week lowest price)

IT Investment Portfolio Management Over Joint Ventures: Case Study in a Multinational Oil & Gas Company

With information technology (IT) playing an increasing important role in driving the business, the value of IT investment is often challenged because not all of those investment decisions are made in a reasonable way or aligned with business strategies. IT investment portfolio management (PfM) is an effective way to prioritize and select the right IT projects to invest in, by taking all the project proposals into consideration as a whole, based on their business value, risks, costs, and interrelationships. There are different decision models to prioritise projects, and the Analytic Hierarchy Process (AHP) is one of the most commonly-used methods and is discussed in this master thesis. At the same time, there are IT projects on different levels for a multinational company, from global to local. For instance, many of them are probably proposed by joint ventures on local level. In the oil & gas industry, joint ventures are often formed especially in the area of the upstream (exploration & production). How to involve those projects into the IT investment PfM approach of the parent company is a challenge, because the parent company cannot make the decisions on its own. It needs to prioritize all projects in an adequate way, communicate with JVs and influence them. Also, different control levels on JVs need to be considered. This paper hence attempts to introduce a tailored approach of IT investment PfM for a multinational oil & gas company to address the issues around JVs.

Diversification benefits for a Finnish non-industrial private forest investor: Real Estate Investment Trusts in the USA

This thesis examined both domestic and international forest investment options for a Finnish non-industrial private forest investor. The focus was on forest-based investment instruments. The influence of movements of currency exchange rates on foreign returns were also taken into account. Annual data from 1995 to 2011 was used. The main portfolio optimization model in this study was the Mean-Variance model but the results were also validated by using the Value at Risk and Expected Shortfall models. In addition, the exchange rate risk hedging was established by using one-week-maturity forward contracts. The results suggested that 75 % of the total wealth should be invested in Finnish private forests and the rest, 25 %, to a US REIT, in this case Rayonier. With hedging, the total return on the portfolio was 7.21 % (NIPF 5.3%) with the volatility of 6.63 % (NIPF 7.9%). Taxation supported US investments in this case. As a conclusion, a Finnish private forest investor may, as evidenced, benefit in diversifying a portfolio using REITs in the US.

Of milquetoasts and daredevils : personalities in female eiders

Traditionally biologists have often considered individual differences in behaviour or physiology as a nuisance when investigating a population of individuals. These differences have mostly been dismissed as measurement errors or as non-adaptive variation around an adaptive population mean. Recent research, however, challenges this view. While long acknowledged in human personality studies, the importance of individual variation has recently entered into ecological and evolutionary studies in the form of animal personality. The concept of animal personality focuses on consistent differences within and between individuals in behavioural and physiological traits across time and contexts and its ecological and evolutionary consequences. Nevertheless, a satisfactory explanation for the existence of personality is still lacking. Although there is a growing number of explanatory theoretical models, there is still a lack of empirical studies on wild populations showing how traditional life-history tradeoffs can explain the maintenance of variation in personality traits. In this thesis, I first investigate the validity of variation in allostatic load or baseline corticosterone (CORT) concentrations as a measure for differences in individual quality. The association between CORT and quality has recently been summarised under the “CORT-fitness hypothesis”, which states that a general negative relationship between baseline CORT and fitness exists. I then continue to apply the concept of animal personality to depict how the life-history trade-off between survival and fecundity is mediated in incubating female eiders (Somateria mollissima), thereby maintaining variation in behaviour and physiology. To this end, I investigated breeding female eiders from a wild population that breeds in the archipelago around Tvärminne Zoological Station, SW Finland. The field data used was collected from 2008 to 2012. The overall aim of the thesis was to show how differences in personality and stress responsiveness are linked to a life-history context. In the four chapters I examine how the life-history trade-off between survival and fecundity could be resolved depending on consistent individual differences in escape behaviour, stress physiology, individual quality and nest-site selection. First, I corroborated the validity of the “CORT-fitness hypothesis”, by showing that reproductive success is generally negatively correlated with serum and faecal baseline CORT levels. The association between individual quality and baseline CORT is, however, context dependent. Poor body condition was associated with elevated serum baseline CORT only in older breeders, while a larger reproductive investment (clutch mass) was associated with elevated serum baseline CORT among females breeding late in the season. Interestingly, good body condition was associated with elevated faecal baseline CORT levels in late breeders. High faecal baseline CORT levels were positively related to high baseline body temperature, and breeders in poor condition showed an elevated baseline body temperature, but only on open islands. The relationship between stress physiology and individual quality is modulated by breeding experience and breeding phenology. Consequently, the context dependency highlights that this relationship has to be interpreted cautiously. Additionally, I verified if stress responsiveness is related to risk-taking behaviour. Females who took fewer risks (longer flight initiation distance) showed a stronger stress response (measured as an increase in CORT concentration after capture and handling of the bird). However, this association was modulated by breeding experience and body condition, with young breeders and those in poor body condition showing the strongest relationship between risktaking and stress responsiveness. Shy females (longer flight initiation distance) also incubated their clutch for a shorter time. Additionally, I demonstrated that stress responsiveness and predation risk interact with maternal investment and reproductive success. Under high risk of predation, females that incubated a larger clutch showed a stronger stress response. Surprisingly, these females also exhibited higher reproductive success than females with a weaker stress response. Again, these context dependent results suggest that the relationship between stress responsiveness and risk-taking behaviour should not be studied in isolation from individual quality and that stress responsiveness may show adaptive plasticity when individuals are exposed to different predation regimes. Finally, female risk-taking behaviour and stress coping styles were also related to nest-site choice. Less stress responsive females more frequently occupied nests with greater coverage that were farther away from the shoreline. Females nesting in nests with medium cover and farther from the shoreline had higher reproductive success. These results suggest that different personality types are distributed non-randomly in space. In this thesis I was able to demonstrate that personalities and stress coping strategies are persistent individual characteristics, which express measurable effects on fitness. This suggests that those traits are exposed to natural selection and thereby can evolve. Furthermore, individual variation in personality and stress coping strategy is linked to the alternative ways in which animals resolve essential life-history trade-offs.