On September 23, 2008, in the midst of an historic crisis in the U.S. financial markets, Warren Buffet's Berkshire Hathaway invested $5 billion in Goldman Sachs. Goldman CEO, Lloyd Blankfein, said: "We are pleased that given our longstanding relationship, Warren Buffett, arguably the world's most admired and successful investor, has decided to make such a significant investment in Goldman Sachs." He added that the deal "will further bolster our strong capitalization and liquidity position," calling Buffett's decision "a strong validation of our client franchise and future prospects." For his part, Buffett called Goldman "an exceptional institution" with "...an unrivaled global franchise, a proven and deep management team, and the intellectual and financial capital to continue its track record of outperformance." This case provides an opportunity to evaluate Goldman's decision to raise capital, the cost of the firm of Buffett's investment, and the decision by Warren Buffett to make the investment, all in the context of a profound market crisis that may have altered the usual metrics for such decisions.
John Mason, a principle at Oldwell Partners, was facing a decision of whether or not to invest in DiagnoFirst, a molecular diagnostics firm. DiagnoFirst's key product was a genetic test that identified a subset of prostate cancer patients with a high risk of clinical progression and death. DiagnoFirst had applied for patents, in both the U.S. and EU, for the sequence of 40 genes, the new methodology for gene amplification, and the specific mechanics of the genetic tests. Mason's decision to invest in DiagnoFirst was based in part on the likelihood of obtaining patents and in part on the projected cash flows of the business under various scenarios. This case examines issues of intellectual property in science, international differences in patent law, and the decision-making process of venture capital in biotechnology deals.
This case describes the history and activities of the A-Team, a major alliance of bicycle assembly firms and parts suppliers in Taiwan, which was created in 2003. A strategic alliance with competitors posed challenges. For the A-Team, it was more complicated because the alliance was between both competing bicycle assembly firms and between parts suppliers. By 2006, progress had been made in making the alliance work but the senior executives were wondering what they could do to ensure future progress. The case can be used in a strategy module or course on alliances/joint ventures in a section examining the competition versus cooperation challenge.
The case describes existing performance management systems at a leading business school in India, the National Institute of Management (Central India campus) (NIM (CI campus)). The institution, which ranked among the top 20 business schools in India, is facing critical issues of attracting and retaining faculty members. The director of NIM (CI campus) has implemented a unit based performance measurement and incentive system that has worked favourably and enabled the institute to recruit top academicians. However, the management committee believes that the system has outlived its utility and desires to replace it with more robust systems that are less vulnerable to misuse. The faculty members, however, support retention of the existing system. The key teaching objective of this case is to understand performance management systems from perspectives of different stakeholders and develop a framework that meets all objectives of performance management. The case enables users to understand all steps in performance management and examine shortcomings at each stage. The role of incentive systems both as a tool to enhance individual performance and as a management control mechanism is also discussed. The case provides users an opportunity to evaluate the strategic significance of performance management. The case is to be used along with Performance Management at the National Institute of Management (Central India Campus) (A) No. 9B08C020.
In 2008, the acquisition of the General Healthcare Group (GHG) in the United Kingdom had propelled Netcare Limited (Netcare) from a predominantly South African operation into one of the largest private hospital groups in the world. One of Netcare's key long-term goals was to deliver innovative, quality health-care solutions to patients in every continent. Recent South African parliamentary legislation had introduced the potential for regulated pricing and collective bargaining in medical centres, which could change the industry structure and possibly affect Netcare's strategy. As acquisition at home would be increasingly subject to stringent scrutiny from competition regulators, Netcare wondered what the impact of global acquisition would have on executing its strategy. What lessons could be learned from the GHG acquisition, how could those lessons be leveraged for further international growth, and what continent would be best suited to expansion? The case illustrates the international expansion strategies of Netcare, and illustrates the challenges of operating in an emerging market. The ability to overcome these challenges is the basis of a competitive advantage when entering developed markets.
IMAX was involved in several aspects of the large-format film business: production, distribution, theatre operations, system development and leasing. The case illustrates IMAX's use of its unique capabilities to pursue a focused differentiation strategy. IMAX was initially focused on large format films that were educational yet entertaining, and the theatres were located in institutions such as museums, aquariums and national parks. However, IMAX found that its growth and profitability were constrained by its niche strategy. In response, IMAX sought to grow by expanding into multiplexes. Additionally, IMAX expanded its film portfolio by converting Hollywood movies, such as Harry Potter and Superman, into the large film format. This shift in strategy was supported by the development of two technological capabilities - DMR for conversion of standard 35 mm film into large format, and DMX to convert standard multiplexes to IMAX systems. The shift in strategy was partially successful, but carried the risk of IMAX losing its unique reputation.
Ho Tak Kee was originally a professional publisher and printer that started in the 1950s in Hong Kong. Having faced static performance for decades, the founder and grandfather of the family decided to close the printing department. This pushed his youngest son, On-ping, to a critical decision: whether and how to continue the family business. Under pressure, On-ping turned to his son John for support but the request put John in a difficult position of choosing between a professional career and the family business. As a young man without much life and work experience, John had to go through a personal development process to shape up as a leader in order to make the family business thrive again and keep the family together. Case (A) is from John's point of view as he is making his decision and is intended to stimulate students to look at a family business from a third generation's perspective. Case (B) starts with John's decision to join Ho Tak Kee.
Ho Tak Kee, originally a professional publisher and printer that started back in the 1950s in Hong Kong, faced static performance for decades. This forced the founder and grandfather of the family to decide to close down the printing department. This decision pushed his youngest son, On-ping, to a critical point resolving whether and how to continue the family business. Under pressure, On-ping turned to his son John for support but the request put John in a difficult position of choosing between a professional career and the family business. As a young man without much life and work experience, John had to go through a personal development process to shape up as a leader to be able to make the family business thrive again and keep the family together, while formulating his entrepreneurial vision for the future of the business and family. Case (A) runs from John's point of view as his is making his decison and is intended to stimulate students to look at a family business from a third generation's perspective. Case (B) starts with John's decision to join Ho Tak Kee.
Reliance Baking Soda is Stewart Corporation's oldest and most established product. The new Domestic Brand Director needs to create a 2008 marketing budget that delivers a profit increase of 10% over 2007 levels. She must first evaluate the effectiveness of past consumer and trade promotions and determine if a price increase will have net bottom line benefits. Then she must decide on the optimal allocation of her marketing budget, taking into account the brand's apparent "cash cow" role in the Household Division of Stewart Corporation. Students are expected to complete a quantitative assignment: create and defend a budget.
Although the global trend toward liberalization of electric utilities forced Enel, the largest power company in Italy, to give up some of its assets in its home base, it also opened up many opportunities abroad, including in Russia, one of the largest electricity markets in the world. The case outlines Enel's internationalization strategy and then focuses on one piece of the company's strategic puzzle of global expansion: acquisition of major power-generation assets in the course of the break-up of RAO UES, the Russian electricity monopoly. The case highlights the decision-making process by the company executives in the context of possible political risks to foreign investment in Russian strategic industries and economic risks to investment in the yet-to-be-formed liberalized and deregulated electricity market in Russia.
In 2008, Daqi was one of the largest Internet portals for user-generated content and leading word-of-mouth marketing provider in China. Grace Zhou, Daqi's CEO, was contemplating the risks and benefits of expanding Daqi's services into three new content areas-news, music, and popular bloggers. Each potential area of Daqi's expansion offered extensive benefits, such as major growth opportunity, as well as risks, including private lawsuits, government censorship, and significant capital investments. The case focuses on how Zhou must weigh the pros and cons of expansion both in each of these three areas, as well as the potential of a merger.
Orix Investment Bank Pakistan Limited (OIBPL) was a non-bank financial institution (NBFI) providing corporate finance, brokerage and other services to large enterprises and was listed on the Karachi Stock Exchange. The annual financial statements for the year ended June 30, 2008 revealed that, as a result of default by one customer, the bank had incurred an enormous loss of over half a billion rupees, which had seriously eroded the bank's capital base. As a consequence, the bank had to seek new capital through a rights issue and this had required support of the Japanese sponsor, Orix Japan, to underwrite the issue. The customer in default was Callmate Telips Telecom Limited (CTTL); details are in Callmate Telips (A) - Choice of Accounting Policy case, No. 9B08N028. The case includes the instance of share price volatility that had been faced by the stock market in Pakistan. Two investigations had been done into the abnormal rise of the market. One of these investigation reports had identified OIBPL as a key player in the speculative dealings that were financed through the overnight financing system known as badla. Another investigation by the NBFI regulator, Securities Exchange Commission of Pakistan (SECP), had examined the abnormally large volume of CTTL share trades on the KSE and found the directors of Callmate involved in manipulating the company share price. The directors were prosecuted and the judge had issued warrants for their arrests. The directors, faced with a difficult situation of a very large loss, decided to delay disclosing the loss by six months. There was circumstantial evidence in the case that would suggest that the directors should have known about the conviction of the directors of Callmate and that this would have an adverse affect on the share price of the company. The auditor's report also was the standard clean report, in spite of the seriousness of the court decision, as it made the shares of Callmate worthless. The case can be used to examine corporate governance by analyzing a) the decisions of the directors b) the report of the external auditor c) the composition of the board of directors. If Case A is also being used, the dealings of CTTL with the regulator of publicly listed companies can also be included. There is an ethical dimension of governance and this viewpoint can also be discussed especially where both cases are being used.
Although Google had a stellar performance in Web search, many of its other services, such as Google Video, were less successful. This case describes how YouTube came to dominate the video market for user-generated content (UGC), while Google Video tried various entry strategies and ultimately failed, ending with the acquisition of YouTube. It also reviews the various competitors in the UGC market, chronicles the entry of established and new players in the area of professionally generated content (PGC), and outlines the key challenges related to monetizing the acquisition of YouTube for Google.
Underserved urban and rural areas have found venture capital support via U.S. Community Development Venture Capital institutions, which numbered 68 and managed $870 million as of 2008. Suitable for MBA, undergraduate, and executive learners studying venture capital, urban development, and private equity, this stand-alone backgrounder is also an excellent companion to cases about specific venture capital organizations. CDVCs face challenges unique in the field of private equity, including where they operate and how much lower their rates of return and compensation are.
An intern has completed her summer internship as Brussels and Bradshaw (B&B), an investment bank in Toronto, Ontario. She now faces her final performance review where she will be told whether or not she has been offered full-time employment following her graduation. After a grueling summer during which she received little training, no formal mentorship and worked tireless 100 hour weeks with no praise, she was frustrated, hurt and bitter about the experience. Despite enjoying finance and the actual work, the intern is unsure whether taking B&B's offer is a good idea, should B&B extend her the opportunity. Despite it being one of the most prestigious banks in the world, she had seen little to no improvement in the abusive approach of her superiors. As she walks to the business department manager's office, she reviews whether or not she should bring up the unresolved issues that transpired during the summer, the mounting frustration of working in teams that gossiped and did not respect her work, and finally her inability to understand why she had been treated so poorly despite her diligent work ethic. On the one hand, the intern could bring up such issues and try to explain herself before the business department manager decides whether or not to extend her the offer. Or, she could listen to the review and continue to take full responsibility for the problems which were not her making in the hopes that it might make her look more mature and professional and potentially aid her in obtaining her full-time offer.
This case describes the history and activities of the A-Team, a major alliance of bicycle assembly firms and parts suppliers in Taiwan, which was created in 2003. A strategic alliance with competitors posed challenges. For the A-Team, it was more complicated because the alliance was between both competing bicycle assembly firms and between parts suppliers. By 2006, progress had been made in making the alliance work but the senior executives were wondering what they could do to ensure future progress. The case can be used in a strategy module or course on alliances/joint ventures in a section examining the competition versus cooperation challenge.
In April 2005, Alexandra was the owner of an Australian farm that produced olives, including Kalamata table olives. Alexandra had invested in the expansion of her farm in anticipation of the evolution of her market from domestic trade in Australia to international export. There was, however, a disruptive dispute before a WTO tribunal between Australia and the EU regarding the protection of Geographical Indications, which identify a product's origins and are treated as trademarks in some respects by international trade rules. Though Alexandra prepared her Kalamata olives in the traditional Kalamata technique, her use of the regionally specific name was threatened by the intellectual property rights provided by GIs. The case focuses on what should be the legal outcome of the WTO dispute, as well as possible business strategies by Alexandra in the event of an adverse outcome to Australia.