An advisory company has to decide how to sell their client's hedge fund holdings in the secondary market, and thinks about their future. Shelley Capital was a a European advisory company operating in the hedge fund secondary market, a market that boosted in 2008 with the world financial crisis. Shelley had identified four final bidders for the $84.5 million portfolio of illiquid hedge fund holdings that one of their clients had commissioned them to sell and had now to decide to whom they should sell the holdings, if they should split up the portfolio, or if they should postpone the sale. At the same time, they needed to decide about their future business. The financial crisis was behind the exceptional growth of the hedge funds' secondary market, yet another crisis could follow and boost the secondary market again. What direction should Shelley take once the hedge fund industry fully recovered? But what if a second global crisis threw the hedge fund industry into disarray once again?
In the fall of 2010, Sarah Endline, CEO and Founder of sweetriot, an organic chocolate company, was deciding the best way to grow her organic chocolate company, while keeping her chocolate physically and conceptually on the shelf. She wanted to grow the offerings and profits of her company, while maintaining its social mission and unique flair. The case tracks the origins of sweetriot from Sarah's formative early career experiences, to the company's launch and beyond as Sarah prepares future products, establishes production channels, and seeks future funding. Sarah was not content to just be a small New York City candy company. Her goal was for sweetriot to be the number one natural chocolate company in the world and to thus be a vehicle to drive change globally. How can she meet that objective while also keeping the company true to its social roots?
At a time of market turmoil, a university investment manager wants to unload the school's entire private equity portfolio, yet no public market exists, so the assistance of a partner at a PE firm is sought. This case provides an introduction to a range of secondary transactions and the valuation challenges that arise.
This is a supplement to 9B11M016.The president and founder of New Deantronics (ND), launched her sales office in San Francisco, California, in 1985 and then set up her factory in Taiwan in 1987. Without any technical background or prior experience, through her system of management strategy and management philosophy, the president built ND's reputation as a trusted manufacturer and developer of medical devices. All ND products were directly exported to large global health-care companies, including Philips Medical Systems, Johnson & Johnson, and Covidien. With the rapid increase in Liu's business, the need for expanding production capacity became increasingly urgent. Sitting in her office in early 2009, the president knew that she could no longer postpone her decision to relocate. Several options were presented to her, and the factors that influenced her decision included considerations about the supply of quality human resources, geographical convenience, the willingness of her current employees to relocate, affordability, and the possibility for future expansion. The president pondered what would be the best bet.
The president and founder of New Deantronics (ND), launched her sales office in San Francisco, California, in 1985 and then set up her factory in Taiwan in 1987. Without any technical background or prior experience, through her system of management strategy and management philosophy, the president built ND's reputation as a trusted manufacturer and developer of medical devices. All ND products were directly exported to large global health-care companies, including Philips Medical Systems, Johnson & Johnson, and Covidien. With the rapid increase in business, the need for expanding production capacity became increasingly urgent. Sitting in her office in early 2009, the president knew that she could no longer postpone her decision to relocate. Several options were presented to her, and the factors that influenced her decision included considerations about the supply of quality human resources, geographical convenience, the willingness of her current employees to relocate, affordability, and the possibility for future expansion. The president pondered what would be the best bet.
The case describes a unique insurance scheme called Krupa Arogya Suraksha, promoted by the Shree Krishna Arogya Trust (Trust). The product was designed with the aim of extending basic health coverage to the "base-of-the-pyramid" (BoP) population at an affordable premium. The services were provided by Shree Krishna Hospital, of which the Trust was an associate. The Trust was looking at a win-win situation: in providing modern health services to a larger, lower-income group, the facilities and infrastructure of the hospital would be better utilized. In the five years since its creation, membership in the scheme had increased threefold to 43,000. These members/consumers accounted for 13 per cent of patients treated by the hospital. Thus, the twin objectives of extending affordable healthcare to the lower-income segment and increased utilization of the facilities at the hospital were achieved to some extent. However, the Trust was not able to meet the cost of the health care offered under the scheme from the premiums collected and was dependent on donors to absorb the shortfall. The Trust's management was concerned about the sustainability of such an arrangement and was looking for ways to make the scheme pay for itself.
The owner of South Side Restaurant, a mid-upper class restaurant located in Chicago, Illinois, must decide which of the three bottles of wine to add to the restaurant's wine list. Given the restaurant prides itself on its environmental and social positioning and that its consumers have come to expect performance in this area, the wine's carbon footprint represents an important decision criterion. South Side Restaurant is a for-profit restaurant and the owner must balance this environmental criterion with short- and long-term financial return.
The case is set in November 2007. Matthias Rebellius, head of the business unit Fire Safety and Security Products, has to make a decision about the China strategy for the fire systems unit. Siemens has a very strong position globally in fire systems. Especially in developed markets, in the so-called M1 segments, Siemens is often number one or two. But worldwide and especially in China, the so-called M2 and M3 markets (Siemens terminology) had strong growth, but Siemens was not very well positioned in these segments of the market. The case begins with a short introduction outlining the situation. It then gives a detailed background on Siemens, especially the operating division Building Technologies (BT), and within BT the business unit Fire Safety & Security Products (FS). The case illustrates that the BT division was mainly active in mature, developed markets with slow growth rates. At the same time, there was an aggressive goal of achieving annual growth rates of more than five percent with an EBIT margin of 7 to 10%.
Adam Famularo, general manager, Cloud Computing business, CA Technologies, and David Dobson, WVP and group executive, Customer Solutions Group, were preparing for a presentation on communicating and positioning CA Technologies' new strategy for cloud computing. Analysts had voiced concern over several 2010 acquisitions, and highlighted CA Technologies' need to clearly state its strategy and objectives and identify a compelling way to position and differentiate its cloud offerings. Industry pundits claimed the mainframe- CA Technologies' bread and butter- was dead and would go away. Famularo knew CA Technologies' line of products was anything but outdated, having evolved to help enterprises manage and secure their increasingly complex IT environments. In 2010, analysts reported that CA Technologies' mainframe business was strong and accounted for over 60% of the firm's revenues and a majority of its profits, with no sign of slowing down. But given the attractiveness of CA Technologies' current mainframe and distributed business lines, how firmly would the company back the emergent cloud business? Should CA Technologies' cloud business be positioned as an incremental, complementary addition to its mainframe and client-server businesses or should it be framed as a disruptive and entirely revolutionary technology?
In 2010, Sino-Ocean Land Holdings Limited was a highly successful, large real estate developer based in Beijing, China. Sino-Ocean Land had three main business segments-property development, property investment/management, and other real estate related businesses. From 2005-2009, the company focused on becoming a leading regional developer with a multiproduct offering. That strategy was successful, riding the wave of spectacular growth in the Chinese real estate sector from 1998-2008, following a loosening of Chinese state real estate regulations. Although Sino-Ocean Land had gone public in 2007, its key shareholders were still state owned enterprises. The state maintained significant influence on the company and the real estate market, in general. The case explores the interactions between the company and the state, examining land acquisition, financing, and corporate governance. Following the global financial crisis of 2008, Sino-Ocean Land must devise a new five year strategic plan. CEO Li Ming must grapple with the changing market dynamics and regulatory environment, to decide the best course for the company. Key issues that he must determine are: whether the focus should be local or national; whether to continue with multiproduct offerings, or specialize in one product type; and whether to continue to pursue primarily development, or to shift to property investment and holding.
This case describes the precarious fiscal situation of the Illinois public pension system in the spring of 2009 and the accounting of pension plans by nonfederal municipalities more generally. In February 2009, in the midst of a recession, recently appointed Governor Quinn had to lay out his budget for the coming fiscal year and tackle the state's underfunded public pension, its largest liability. Immediately, the governor needed to raise funds to make the state's annual contribution to the pension plan, and at the same time he needed to come up with a plan for pension reform to prevent the future insolvency of the state. Governor Quinn had a number of levers he could employ, including changing the asset allocation of the pension funds; directly tackling entitlements through a defined benefit or defined contribution plan; or implementing a package of pension bonds, taxes, and employee contributions. Through this case, students should more fully understand pension accounting and the hard choices that many states will face because of their outstanding pension liabilities.
In January 2010, global automotive manufacturer Toyota faced the task of notifying customers of a recall that involved a faulty accelerator pedal on 1.7 million vehicles, spread across eight different models. In some cases the faulty accelerator pedal was found to stick in depressed position and be slow to return to the idle position, causing unintended vehicle acceleration. With the throttle stuck in the open position a vehicle would continue to accelerate while the driver is trying to brake and slow the vehicle down. Toyota had already come under intense public scrutiny in the previous year over an existing floor mat recall that affected 4.2 million vehicles. Lessons in the automotive industry had been learned the hard way from tire manufacturer Bridgestone. A public backlash occurred in 2003, with class action law suits against Bridgestone for faulty tires that caused some vehicles to roll over. In an attempt to reach the masses, Toyota created a letter to customers that was featured in major newspapers and on its own website. The letter released caused anger and outrage as Toyota stayed clear away from apologizing to consumers. Instead it talks about the companies 50 year heritage and how they are halting production to focus on fixing the vehicles that are on the road. Just days later Toyota drafted and released a second letter to customers. This time they attempt to use better language, but missed the mark on taking full accountability for the problem.
This short case presents two typical conversations surrounding the issue of classroom teaching excellence. One conversation is from a student perspective, and the other is from a faculty perspective. Both conversations take the reader to the point of articulating, based on their own college experience, the attributes possessed by the great professors they have had in class or that they have observed.
Jonathan Day, a recent MBA, is tasked with evaluating tax efficient divestitures for his company. Through his perspective, this case provides an overview of taxable and tax-free structures for corporate divestitures. Students will then analyze Disney's sale of ABC Radio, its portfolio of radio stations, to Citadel Broadcasting Corporation using a tax-free structure known as the reverse Morris Trust, and the tax advantages and financial ramifications of the ABC Radio sale for Disney, Disney's shareholders, and Citadel.
Jonathan Day, a recent MBA, is tasked with evaluating tax efficient divestitures for his company. Through his perspective, this case provides an overview of taxable and tax-free structures for corporate divestitures. Students will then analyze Disney's sale of ABC Radio, its portfolio of radio stations, to Citadel Broadcasting Corporation using a tax-free structure known as the reverse Morris Trust, and the tax advantages and financial ramifications of the ABC Radio sale for Disney, Disney's shareholders, and Citadel.
Consultant Tom Li, an expert on the airline industry's use of yield management, had been asked by two colleagues to speak with trailer-leasing client TNG about the technique, which incorporates customer segmentation and other steps to optimize pricing. Li felt unsure whether the technique would work in trailer leasing, a highly fragmented commodity business in which companies rent out semitrailers to customers needing to ship merchandise. In this case students examine the trailer-leasing industry and lease data from one of TNG's branches before deciding whether yield management should be introduced by TNG management.The case illustrates the application of the deterministic linear programming model in settings beyond airlines and hotels.
Consultant Tom Li, an expert on the airline industry's use of yield management, had been asked by two colleagues to speak with trailer-leasing client TNG about the technique, which incorporates customer segmentation and other steps to optimize pricing. Li felt unsure whether the technique would work in trailer leasing, a highly fragmented commodity business in which companies rent out semitrailers to customers needing to ship merchandise. In this case students examine the trailer-leasing industry and lease data from one of TNG's branches before deciding whether yield management should be introduced by TNG management.The case illustrates the application of the deterministic linear programming model in settings beyond airlines and hotels.
When ICICI, an Indian private bank, entered the retail banking market in the 1990's with little technology infrastructure, capital, and retail expertise, had expected it to succeed. Public-sector banks, holding 75 percent of deposits, were dominating the retail banking market, and foreign giants had cornered the market for high-net-worth individuals living in the major cities across India. With a strategy to offer credit cards to the middle class, abolish annual fees, and enter into partnerships with major retailers, ICICI quickly proved the skeptics wrong. Revenues per employee grew to over $9 million compared to about $3 million for the Bank of India and slightly below $160,000 for Standard Chartered. The lofty number one position was achieved by Vaidyanathan, ICICI's head of retail, and his team. Their progressive initiatives were focused on developing new products and improving consumer service experiences. As the 2008-2009 financial crisis tripled the percentage of nonperforming assets in the Indian banking industry, Vaidyanathan had to plan how ICICI would adapt to the new environment and maintain industry leadership.