Sensitivity In Business Strategies

Sensitivity in business strategies

Introduction

When carrying out an economic analysis projected to a future, there is always something that causes indecision or insecurity to be able These decisions. According to (Morales Castro & Morales Castro), “To determine the performance of an investment project it is done through: net cash flow, cost of resources used, amount of the resources used in the investment project.”Investment performance that is fundamental to be able to have adequate information that complements the analysis.

Developing

Emphasizing that changes in the environment and the estimated variables are impossible to forecast exactly. And that is why, the decision to invest or not in this project should not be based solely on the calculation of the VAN (net current value) previously calculated, but on the discernment of the origin of the profitability of the project and the possible change that may be caused in the estimated variables. Therefore, it is essential to perform this sensitivity analysis, according to (EDUPRISTINE) it defines it as, “the technique used to determine how the values ​​of the independent variables will affect a particular dependent variable under a given set of assumptions is defined as sensitive analysis."

To carry out this analysis, it is necessary They can be measured according to the NPV (Net current value) or the IRR (internal performance rate) to measure change. (Morales Castro & Morales Castro).

In addition to the fact that in this case the VAN also graphs the profile of the same with the new values ​​that determine the usefulness of the investment project.

When the Van profile line is greater, the result of profits is more sensitive to the modification of the factors compared to a minor slope. (Morales Castro & Morales Castro). IMPORTANCE: This analysis measures the change in the NPV or IRR, in order to improve the quality of information why the person who will invest in the project has an additional element that influences or taken into account when taking the decision to invest or not in the aforementioned project. Its use will depend on one or more variables that modify financial information, such as total costs.

Divided as shown in a state statement, income, production volume, rate and amount of financing, etc. It should be noted that the AS (sensitivity analysis) is not aimed at modifying each of these variables to observe its effect on the IRR (internal performance rate). (Baca Urbina). Additionally, its use is fundamental in decision making, this analysis is also used in: Indicate the sensitivity of simulation to uncertainties in model entry values. Predict the result of a decision if a situation turns out to be different compared to key predictions.

conclusion

Help evaluate the risk of a strategy. Identify how dependent is the output of a particular entry value. Analyze whether the dependency in turn helps evaluate the associated risk. Help make informed and appropriate decisions. Help the search for errors in the model. Methods used in sensitivity analysis. To carry out the analysis of the variations of the yields that determine the utility to know, there are the following methods: informal method. Decision tree. Monte Carlo Model.