The equity research department of Credit Suisse and the expert network firm of Gerson Lehrman Group, historically competitors, have established a strategic alliance which both believe will give them a competitive advantage. Under the leadership of its head of equity research, Stefano NateIIa, Credit Suisse has responded to the continuing pressures on the sell-side research function with a focus on making it a revenue center. One pressure on sell-side research is the introduction of alternative business models for providing sell-side research, such as from expert networks like the Gerson Lehrman Group (GLG). GLG has established a network of nearly 200,000 experts who provide advice to institutional investors in a different way which emphasizes private consultations with these experts about questions of very specific interest to the investor. Natella and Saint-Amand have agreed to a two-year alliance which gives the analysts at Credit-Suisse access to the experts in GLG's network, as a way of improving the quality of their research. Credit Suisse can also get additional revenues by placing its analysis in the GLG network, although under some severe constraints. GLG gets additional revenues from its contract with Credit Suisse and from introductions to other potential clients that Credit Suisse will make. It also grows its network from the addition of the analysts at Credit Suisse. The alliance has been announced just before the financial markets began their meltdown in October of 2008, and both Natella and Saint-Amand are wondering what this means for the future of the alliance.
UBS, a global financial services company, must decide whether to continue to support the market for Auction Rate Securities in the face of a growing financial crisis. These instruments, underwritten by UBS, were marketed to clients as highly liquid and safe alternatives to cash. UBS' decision becomes urgent when Citigroup, another leading underwriter of ARS, decides to let their auctions fail, leaving clients with illiquid assets of uncertain value. The case explores theoretical and practical aspects of liquidity risk, and challenges students to evaluate the benefits of honoring implicit commitments to customers against the costs of acquiring billions of dollars in illiquid assets. The (B) and (C) cases consider the implications of UBS decision.
This is a note to introduce the principles for effectively implementing a new strategy. It emphasizes the interdependence of strategy and execution in developing and sustaining superior competitive performance. Primarily based on the notion that strategy should be a continual activity conducted by general managers, it outlines a practical methodology for realigning a firm's executional model whenever strategy changes.
Biofuels start-up KiOR was developing a proprietary technology that had the potential to dramatically impact the emerging renewable energy landscape: a process that converted cellulosic biomass into "bio-crude," a hydrocarbon mixture with properties to those of crude oil. KiOR had been operating as a virtual organization, but with venture financing in place, founder and chief technology officer Paul O'Connor and the KiOR board needed to decide where to headquarter their business.
Writing to Reflect introduces the use of writing as an aid to creative and critical thinking in the context of leading change. The note explains how the process of reflective writing slows thinking and encourages improved skills in sense-making, analysis, decision-making, and meta-cognition. Included are ideas on how to get started and 13 writing prompts related to leading change.
This case is designed as an introductory exercise to familiarize students with several methods used to value early-stage companies. The value of a young biotech company is compared under the venture capital (VC), discounted cash flow (DCF), and real option methods of valuation. Students are asked to value the firm under the VC and DCF methods and then compare those values to the value obtained under the real option method. It is suggested that the student spreadsheet (UV4357) be assigned in advance of the class with instructions to have students value the firm under the VC and DCF methods. A separate worksheet in the file (which can be hidden at the instructor's discretion) provides the option valuation for later discussion purposes. A technical note, "Valuing the Early-Stage Company" (UV1363), covering the basics of the VC and DCF methods of valuation can be assigned with the case.
This case is designed as an introductory exercise to familiarize students with several methods used to value early-stage companies. The value of a young biotech company is compared under the venture capital (VC), discounted cash flow (DCF), and real option methods of valuation. Students are asked to value the firm under the VC and DCF methods and then compare those values to the value obtained under the real option method. It is suggested that the student spreadsheet (UV4357) be assigned in advance of the class with instructions to have students value the firm under the VC and DCF methods. A separate worksheet in the file (which can be hidden at the instructor's discretion) provides the option valuation for later discussion purposes. A technical note, "Valuing the Early-Stage Company" (UV1363), covering the basics of the VC and DCF methods of valuation can be assigned with the case.
How can distressed investors take advantage of the procedures governing an international bankruptcy? Wilbur L. Ross, chairman and CEO of the private equity firm WL Ross & Co., LLC, has the opportunity to bid for debt and equity claims on Plascar Industria e Comercio Ltda., the Brazilian subsidiary of the bankrupt global auto components company Collins & Aikman Corp. In evaluating this opportunity, students must analyze Ross's strategy to reshape a global industry with significant overcapacity, consider the opportunities created by the legal procedures that govern cross-border insolvencies, study a debt overhang problem, and consider how restructuring alternatives can address this problem.
This case describes how Denmark has balanced the impacts of globalization, including outsourcing and movement of labor with its social welfare offerings. Reforms implemented during the past two decades drove down unemployment, promoted new company formation, and put the country at or near the top of international polls on the ease of doing business. The case describes how Danes forged a consensus that embraced international trade and outsourcing while supporting continuous upgrading of workplace skills. In April 2009, the new Prime Minister, Lars Løkke Rasmussen, is balancing short-term responses to a global recession against longer-term planning for the Danish labor market and macroeconomy. Can Denmark keep its borders open to the free movement of goods, services, and labor while also sustaining the breadth of its welfare offerings?
This four-page update to the case, "The Walt Disney Company and Pixar Inc.: To Acquire or Not to Acquire?" details the Walt Disney Company's acquisition of Pixar, including deal terms, executive appointments, and operating guidelines for the two studios.
In the summer of 2006 the chairman and CEO of Eurotunnel Group is faced with the decision whether to file for bankruptcy protection, after having failed to gain creditor approval of an ambitious out-of-court restructuring plan. The company, which has been attempting to restructure its debt and operations for the last ten years, faces a number of daunting challenges. Eurotunnel is jointly listed in the U.K. and France, and its shareholders, who are largely based in France, face the prospect of significant dilution under any restructuring plan. The current chairman and CEO has been with the company for only a year-and-a half, following a decade of senior management turbulence in which the company has seen nine different CEOs and chairmen. Eurotunnel's capital structure is staggeringly complex, and a large fraction of its debt has come to be held by U.S.-based hedge funds that specialize in investing in distressed companies. Finally, Eurotunnel's business is extremely challenging to value, and is faced with significant competition. If the current chairman/CEO decides to file for bankruptcy, he faces the additional choice whether to file for bankruptcy in the U.K. or in France, which take quite different approaches to restructuring troubled companies.
In mid-2007 the chairman and CEO of Eurotunnel Group, having elected to file for bankruptcy under a newly-enacted French insolvency law, awaits the outcome of a vote by creditors and shareholders. At least 50% of the shareholders must approve the plan, however they face significant dilution of their ownership interests in Eurotunnel. If the vote fails to pass, the possibility that the company may have to be liquidated becomes increasingly likely.
A shareholder and employee of a small laser and water jet cutting corporation in Toronto, Canada must make decisions regarding expansion, purchase of new equipment, hiring of more personnel and a move to a larger location. Students are expected to 1) complete an industry analysis of the manufacturing industry, including the current economic outlook; 2) perform a thorough company size-up; 3) identify the qualitative pros and cons of each decision; 4) perform two differential analyses, one with sensitivity and one without, after identifying items relevant to the expansion decision and categorizing them as either recurring or one-time flows; 5) assess the financing, timing and any other relevant factors to each option; and 6) use their analysis to make their decisions.
Northwest Newsprint, Inc. is a major producer of newsprint and pulpmills in the Pacific Northwest and Canada from which they supplied various North American markets. In Northwest Newsprint, Inc. (A), product #9A98E035, the assistant controller's supply chain optimization approach leads to the conclusion that Northwest Newsprint, Inc. has far too much manufacturing capacity. This supplemental case addresses the ability of price changes to mitigate supply chain issues and improve supply chain profitability.
A major sports league has decided to run its season opening game in Mexico City. When the teams arrive in the country four days before the event, two of Team A's star players are kidnapped. The (A) case provides relevant background information about the league, the team, the players, and the planned activities surrounding the season opening game. It also describes what is initially known about the crisis situation. In cases (B) through (F), additional information is revealed as the crisis unfolds. With each case, students are given important issues and questions to consider and discuss.
A major sports league has decided to run its season opening game in Mexico City. When the teams arrive in the country four days before the event, two of Team A's star players are kidnapped. The (A) case provides relevant background information about the league, the team, the players, and the planned activities surrounding the season opening game. It also describes what is initially known about the crisis situation. In cases (B) through (F), additional information is revealed as the crisis unfolds. With each case, students are given important issues and questions to consider and discuss.
A major sports league has decided to run its season opening game in Mexico City. When the teams arrive in the country four days before the event, two of Team A's star players are kidnapped. The (A) case provides relevant background information about the league, the team, the players, and the planned activities surrounding the season opening game. It also describes what is initially known about the crisis situation. In cases (B) through (F), additional information is revealed as the crisis unfolds. With each case, students are given important issues and questions to consider and discuss.