This case examines the 2020 pricing decision for the master recordings of Taylor Swift's first six albums in consideration of a sale of the recordings by music executive Scooter Braun to Shamrock Capital (Shamrock), an investment company owned by the Roy E. Disney family. Swift, the most listened-to musician in the world, had expressed displeasure with Braun's ownership of her masters and a desire to own the recordings herself-even threatening to rerecord new versions of the master recordings. Inez Reynolds, an analyst at Shamrock, has been tasked with estimating the value of the masters and recommending how to advise the partners at Shamrock regarding a bid to Braun. The case provides a context for introducing students to firm valuation using discounted-cash-flow (DCF), market multiples, and the perpetuity model for terminal value estimation. The case is intended to provide a bridge between project valuation and firm valuation in a corporate finance course. This case is designed to be taught at Darden in the core finance curriculum as an introduction to firm valuation.
The managing director of Leosb Private Limited has to select a distribution channel for his factory-produced roti (a flat bread popular in India) in the city of Hyderabad, a large metropolitan city in India. In July 2022, he considered the best distribution channel, which would offer access to retail consumers, and be cost effective, easy to scale, and expandable to related product categories. His options were using one or more distributors, selling to modern trade outlets, developing a sales team to sell directly to retail outlets, or selling directly to the consumer through Leosb's website and mobile app. He was running out of funds, so his time was limited.
On April 12, 2022, a devastating mudslide covered 87 hectares of the Toyota South Africa Motors factory located in Durban, South Africa. The company's president and chief executive officer was facing various immediate issues including mud flooding of the plant, employees stranded within the plant, growing concerns over electrical shorting and possible electrocution due to rising water levels, and the plant's closure in response to the flooding. As a result of the flooding, the plant had to shut down for five months, which deeply impacted the entire supply chain of original equipment manufacturers and dealers who depended on Toyota South Africa Motors for their sustainability. The consequences of a prolonged plant closure could affect multiple stakeholders, including 8,000 employees and the larger South African economy. Toyota South Africa Motors contributed approximately 130,000 Toyota vehicles per year for the local market and for global export. The company's president needed to contain the immediate crisis and work with Toyota South Africa Motors stakeholders to lead a substantial recovery from the disaster.
In March 2020, the Government of India announced a nationwide lockdown to prevent the spread of COVID-19. Only organizations deemed to be working in essential services were allowed to continue operating. This lockdown lasted until May 2020, during which time companies faced transportation restrictions, supply chain issues, and staffing challenges, among others. Despite this, Oil and Natural Gas Corporation Ltd. (ONGC) managed to achieve crude oil production and profits similar to the previous year. However, the company battled crises both onshore and offshore as it fought to care for its employees and their families amid lockdown conditions.<br><br>Two years later, the organizational stress and personal toll exacted by the nation's lockdown still haunted the group. However, while the events had been traumatic and arduous, they also offered potential lessons for the company, something that the management team was interested in. What capabilities had aided the company during the lockdowns? ONGC's Human Resources Director, Dr. Alka Mittal, wanted to understand how employees had coped and managed during the lockdowns so she could formulate a future-oriented "People Strategy Plan" to combat potential similar future crises. However, she was also worried that revisiting such intense experiences could bring strong negative emotions to the forefront and increase employee stress, thereby decreasing morale and job satisfaction. ONGC's management needed to determine how best to handle the situation so that it could prepare for future crises without damaging its existing relationship with employees.
In late 2021, Vahe Dombalagian, a managing director at Madison Dearborn Partners (MDP), contacted MoneyGram International Inc. (MoneyGram) chief executive officer Alex Holmes to discuss the middle-market private equity (PE) firm's potential interest in a transaction with MoneyGram. MoneyGram was a global leader in the cross-border peer-to-peer (P2P) payment market, working to transition to the fast-growing digital payment market amid the emergence of low-cost financial technology competitors.<br><br>The case provides a discussion about deal evaluation metrics used by leveraged buyout (LBO) PE firms and provides necessary information to construct an LBO model to calculate the internal rate of return (IRR) and multiple of invested capital (MOIC) to determine an appropriate offer.<br><br>MDP was granted access to internal MoneyGram information and met with firm representatives as it worked with its financial advisers to obtain a debt commitment letter. The banks agreed to fund a debt financing package, and MoneyGram notified bidders that definitive acquisition proposals needed to be received by January 24, 2022. The MDP deal team needed to work quickly to finalize their offer.
This case focused on rapid prototyping in a startup company. Two students, Isaac Lewis and Nathaniel Herring, both suffered should injuries and had difficulty finding the right equipment for their rehab stints. As part of the Master's in Entrepreneurial Leadership degree program at Babson College, the two went into an extensive discovery and prototyping process to create a product to assist in that rehab. The case describes their process and ends with them having to make a launch decision.
This white paper examines pricing strategy and methods to determine target customers' willingness to pay (WTP). It examines the role of qualitative research and quantitative research to identify market opportunities and to determine the price point that best matches the WTP. The note uses examples of different consumer products to demonstrate the pricing decision exercise.
In 2022, the Crocs Classic Clog was the best-selling item of clothing on Amazon, the brand was one of the fastest growing brands in the U.S., and global net revenue had increased to approximately $3.6 billion. By most accounts, Crocs had become the "it" shoe. Crocs shoes were spotted on high-fashion runways, collaborating with luxury brands and designers including Balenciaga, Christopher Kane, and Christian Cowan, and on the feet of massively popular celebrities such as Justin Bieber, Post Malone, Bad Bunny, and Luke Combs. Crocs was also considered a top preferred footwear brand among U.S. teens in 2023. Few could have predicted Crocs' meteoric success given the state of the brand just ten years earlier. Indeed, in the late 2000's and early 2010's, Crocs shoes were often mercilessly mocked for their hideous appearance, and the organization had nearly gone bankrupt. So how did Crocs clogs go from internet meme fodder to sought-after cultural sensation? Could the Crocs brand maintain its popularity and grow more globally, or was the brand destined to fall out of favor once the tides of fashion changed again? How should Crocs evolve its product portfolio and marketing strategy to ensure a stable and permanent place in consumers' wardrobes?
The case explores the challenges of revenue recognition and financial reporting for Stride Funding (Stride), a fintech startup that has disrupted the student loan market. Stride leveraged proprietary machine learning and financial models to underwrite alternative student loans via Income Sharing Agreements (ISA). Under an ISA, borrowers agree to share a portion of their future earned income with a lender for a set period of time. Stride has adopted a distinctive business model that is analogous to the Software as a Service (SaaS) business. Rather than issuing ISAs directly, Stride performed as a program manager and created lending platforms that enabled educational institutions and programs to fund ISAs using their own capital. As a fund manager, Stride was responsible for developing credit models, administering the ISA contracts, managing account status, producing the loan documents, and updating the platform and program structure. In return for their services, Stride charged various fees to the institutions and programs. Having successfully completed its Series A round, Stride experienced substantial growth and improved business performance. As the company grew, its executives recognized the need to change its current financial reporting based on cash accounting to comply with U.S. GAAP. They anticipated that this change would affect how to report some of its revenues which are important financial metrics for early-stage companies like Stride. The CEO of Stride Funding wanted to know the full financial impact of this change and its implications for the next funding round. Moreover, they needed to determine whether it made sense for Stride, with its innovative business model, to adopt the GAAP reporting at this juncture.
<p align="justify">In late January 2020, the chief executive officer and third-generation successor of BEZNOSKA s.r.o., a traditional Czech manufacturer of joint implants, was preparing for an annual shareholders’ meeting with the family business owners. The annual report indicated that the company had experienced its worst financial year in its 30-year history. The company was also facing challenges from new competitors in the market and the need to comply with a new legislation. The chief executive officer was planning to stop issuing dividend payments from the company’s profits to the three owners of the family business, who were his family members. The chief executive officer knew that his decision would be contentious, especially for his aunt who was not active in the company but had criticized his performance in the past. The chief executive officer decided that the best solution to the ongoing problems was for his aunt to sell her stake in the family business, which she would likely reject. But even if she were to agree, how should the ownership shares be restructured?
A Bentley University and Gallup survey on businesses' role in making a positive impact on society and the environment found that despite some differences across demographics, overall consumers feel that companies should take action to minimize their environmental impact but that large companies in particular aren't doing enough. The author suggests several actions companies can take to improve their environmental sustainability performance.
The Germany-based startup Vytal operated the largest digital-native reusable packaging-as-a-service network globally, having raised nearly €15 million, established a large network of restaurant partners, and prevented the use of millions of single-use take-out food containers. However, Vytal's growth was slower than expected, challenging its unique pay-per-use model and environmental goals. This case highlights Vytal's growth trajectory in the years leading up to 2023, outlining its business model, utilization of digital technology, strategies for acquiring partners and customers, and regulatory developments within Europe. It also presents several options that the founders are considering to reach profitability, prepare for a Series B financing round, and expand internationally, such as charging partners for unused containers, implementing consumer fees on single-use containers, launching a loyalty program, and franchising to expand more rapidly.
Clair was founded with a simple mission: to expedite America's workers access to their hard-earned wages. In the headwinds of the COVID-19 pandemic, the startup had successfully raised a seed round of $4.5 million, and within two years the earned wage access (EWA) FinTech had partnered with 10 human capital management system providers to access over 8,000 employers and over 300,000 employees. However, as the economic outlook plummeted and available external capital began to dry up, Clair's founders considered whether other business models offered more attractive prospects for the startup's long-term success. Should Clair stay the course or choose to pivot, and what tradeoffs would each pathway entail? With investors requiring a clear long-term vision and a viable path to profitability, this decision would determine Clair's ability to thrive and fulfill its founding mission.
In late January 2020, the chief executive officer and third-generation successor of BEZNOSKA s.r.o., a traditional Czech manufacturer of joint implants, was preparing for an annual shareholders' meeting with the family business owners. The annual report indicated that the company had experienced its worst financial year in its 30-year history. The company was also facing challenges from new competitors in the market and the need to comply with a new legislation. The chief executive officer was planning to stop issuing dividend payments from the company's profits to the three owners of the family business, who were his family members. The chief executive officer knew that his decision would be contentious, especially for his aunt who was not active in the company but had criticized his performance in the past. The chief executive officer decided that the best solution to the ongoing problems was for his aunt to sell her stake in the family business, which she would likely reject. But even if she were to agree, how should the ownership shares be restructured?
Conventional wisdom suggests that marketers should play it safe in a polarized culture and focus on potential customers who haven't yet made up their minds those in the middle, where the majority of the market is. But brand messaging can be more effective if it targets the subcultures that are strong brand supporters. Using McDonald's successful fan-driven marketing strategy as an example, the author describes how the propagation effect can leverage existing customers to win over new ones.
Trinity Earth, founded by Zhu Jinfu, was a Chinese data solution provider focusing on the film and television industry. Since its establishment, Trinity Earth had launched a mix of products and services and continuously created value for the whole industry. While its earliest products tended to be functional tools, the company proceeded to synthesize these products for empowering and then enabling its clients. It started by acquiring data as a potential resource and proceeded to tap into this valuable asset which it ultimately aspired to capitalize.In the same time, the business model of Trinity Earth also changed a lot. The value of its data services was not a monolith, but was derived from collaboration on four levels - data, computing, analytics and human-machine interaction - with their own ways to generate revenues whose significance varied as the company kept developing. In the initial stage, profits came from product sales. With the enrichment and refinement of products, Trinity Earth turned to building a comprehensive network and hence its unique competence. However, with the rapid development of the film and television industry in China, Trinity Earth found itself difficult to fit into the mainstream, or majority market. What were the reasons？What would Zhu and Trinity Earth do to deal with this challenge?