This is the second of a two-part case study about Ambienta, a leading European asset manager focused on environmental sustainability. Case A introduces students and participants to the company and its unique profile in the industry. Ambienta's mission statement is "Sustainability adds value." The company has developed a proprietary methodology (the Environmental Impact Analysis or EIA) to demystify the linkage between financial returns and doing good for the planet. Case B is an exercise in which participants put themselves into the shoes of Ambienta's Sustainability & Strategy head as he applies the EIA to four hypothetical companies (based upon investment candidates actually analysed by Ambienta).
Data analytics is key to gaining a clear picture of diversity, equity, and inclusion in an organization and designing more effective interventions, but few managers are collecting the right data in the right way. The authors review common missteps and problematic approaches and provide guidance to managers to improve their data collection strategies and practices around DEI.
A renowned "short selling activist," Muddy Waters Capital LLC (Muddy Waters) claimed that 90% of YY Live's live streaming revenue was fake. YY Live was one of the live streaming platforms JOYY Inc. (JOYY, NASDAQ: YY) operated. The vast majority of JOYY's revenue came from live streaming, in particular, the YY Live platform. Revenue was in the form of virtual gifts that paying users (PUs) sent to performers (channels). Muddy Waters used various methods to substantiate that most PUs were fake paying users (FUs) under direct control of JOYY itself. Rather than substantiating Muddy Waters's work, students will grapple with questions about how to assess the reasonableness of the 90% fraud estimate from financial and statistical points of view. They will answer the question of how to choose an appropriate reporting period or year for adjustments. Across the balance sheet, profit and loss, and cash flow statement, which financial items should be adjusted and how? Based on the adjusted financial statements, how would various profitability ratios, insolvency ratios, liquidity ratios, P/E, and price-to-book ratio (P/B), and so on be affected?
What started as a FMCG distributor in 1967 in Kenya as Export Finance Company, is now a dynamic global conglomerate across 48 countries and 5 continents - Export Trading Group. ETG was taken over by the then CFO Mahesh Patel after exit of the founding stakeholders. It was then when the company shifted its focus to being a key regional player. In the next 35 years, the company grew systematically. Business focus evolved when Patel saw an opportunity in logistics in remote sub-Saharan Africa. This was followed by business expansion with supply chain diversification and significant infrastructure investments. All the different businesses amalgamated under a single group for better operations and ease of scaling up. They were later divided into six separate verticals for better management. Vamara (FMCG vertical) was launched in 2018 as the company moved towards digitalisation - externally and internally. ETG plans to focus on new business opportunities and continue to diversify across geographies and portfolios.
Jennie O’Keefe and Chris Johnson, owners of Rough Waters Brewing Company, were deliberating how to make further inroads into an increasingly competitive provincial craft beer market. The new entrepreneurs were at a crossroads as they considered several possibilities for business growth in the face of a highly uncertain environment that included an unfavourable economic outlook and a global pandemic. They knew there were many things to consider in weighing their options, and that they did not have all the information they wanted or needed to confidently decide. O’Keefe and Johnson needed a framework to guide their decision-making in charting the best course for the brewery in the midst of so many unknowns.
Kingold Jewelry, Inc. (NASDAQ: KGJI), was one of mainland China's largest gold processors and gold jewelry manufacturers. In 2002, Jia Zhihong, chairman and CEO, founded the company, which was based in Wuhan, Hubei Province. In August 2010, it was listed on NASDAQ using "backdoor listing." It sold gold jewelry, ornaments, and investment-oriented products. Between 2015 and 2020 Jia decided to increase Kingold's reliance on gold as collateral to obtain loans at around CNY20.6bn (USD3.2bn) from 14 Chinese commercial banks and trusts across different provinces, including China Minsheng Trust Co. Ltd., Hengfeng Bank, and Dongguan Trust Co. Ltd. The 83 tonnes gold bars were largely secured physically in bank vaults after independent testing institutions certified them and insurance companies examined them; other financial institutions did not have access to the gold bars. In late 2019, Kingold defaulted on a loan repayment to Dongguan Trust and in February 2020, the bank demanded to liquidate the collateral and discovered the fraud. In June 2020 a Beijing-based financial news outlet, Caixin, published a story about Kingold's counterfeit gold scandal that was initiated by Dongguan Trust and other defaulted loan cases. On 11 August 2020, Kingold filed for voluntary delisting from NASDAQ without filing its overdue financial reports. On 26 August 2021, the Wuhan court began to press charges against Jia and Kingold and detained Jia and other personnel. How could Kingold's corporate governance be improved to disallow such a situation and protect lenders and investors? How could lenders reduce their credit risk in accepting gold bars as collateral when they could not fully rely on their clients, independent testing companies, and insurance companies? Do you consider US regulators' listing and other regulations were adequate for foreign companies? Did Friedman LLP as auditors make a best effort to examine Kingold's assets and present its client's financial information fairly.
This case talks about the 3P (People Planet Profit) strategies of Ant Group backed MYbank, which was established as an online bank in China, as part of Alibaba's ecosystem, with the vision of providing inclusive finance services to SMEs and farmers in rural China. In April 2022, however, the Chinese economy was grappling with the after effects of the Covid-19 pandemic and macro-economic trends had predicted slower growth for the year. The aggregate net profit of China's commercial banks was expected to grow at around 10% in 2022, compared to 12.6% in 2021. However, despite the challenges, there was optimism at MYbank as the company had reported a year-on-year growth of 31.6% for the first quarter of 2022, with loans and advances for the first quarter totalling a staggering US$ 27 billion. Banking had traditionally always paid more attention to high-net-worth individuals, fewer accounts and more one-on-one relationships. MYbank however, had focussed on technology, innovation, quick transactions, large volume of low-income consumers, and lower operational costs to create a sustainable business model. However, ripple effects of the pandemic were plaguing its target customer segment - SMEs and farmers from low-income backgrounds in rural China - who were grappling with economic uncertainties. Could MYbank continue to adopt a low margin, high volume model like assembly line businesses to target large swathes of the rural population and generate profit in the process? Could MYbank become the McDonald's of digital banking in China?
Legal decisions made at the state and federal levels on controversial social policies have a direct impact on business, particularly when such rulings conflict with stakeholder values. The authors provide examples that illustrate why companies need to be prepared to respond strategically to sudden public policy changes and political upheavals, and offer five principles to help leaders plan a course of action.
The case focuses on the transformation of OCP, a state-owned monopoly that mined and exploited Morocco's phosphate reserves. By 2021 it had become an organization with a mission to contribute to the sustainability of food security as the custodians of 70% of the world's phosphate reserves. Phosphate is one of three vital ingredients in fertilizers that are used to grow healthy, drought-resistant plants, and contributes to sustainable agriculture. This is nowhere more urgent than in Africa: sub-Saharan Africa has the world's fastest-growing population, but an impoverished agricultural system and only one-third of its arable land is cultivated. Helping smallholder farmers to cultivate more land with robust crops could improve the continent's sustainable agriculture and better feed its population. In 2016 OCP Group's Chairman, Dr Mostafa Terrab, launched "the Movement," a vaguely defined initiative to "liberate energy" and develop collective intelligence to build a more purposeful sustainable future. The Movement's goal was to continue the group's transformation from a hierarchical phosphate producer to a global, digital and learning organization with a mission to create sustainable growth for everyone. The case describes the Movement's philosophy, intention and principles: self-organization, an advice process, and collective intelligence based on a shared vision that all people can contribute to the organization and its ecosystem through collaboration. The Movement brings people together to anticipate future challenges and stakeholder expectations and to bring innovative ideas to life. By 2019, the Movement had launched 60 projects involving 9,000 people that have diversified the group's business activities, enhanced the employee experience, created growth opportunities and community engagement in Morocco and across Africa. Several of these projects have been anchored into the Group and have increased its focus on inclusive business and sustainable development.
This case focuses on the customer loyalty program of Qutoutiao Inc. (QTT, NASDAQ: QTT). Financial analysis, unit economics, and accounting treatments will be explored in the case. QTT operated a mobile content platform, "Qutoutiao," in China, which literally meant "fun headlines" in Chinese. QTT aggregated mobile content from various sources and used AI-based algorithms to present customized content to users. The data analytics capabilities of the algorithms enabled QTT to analyze user data and customize feeds to users in order to generate more advertising revenue. In December 2019, Wolfpack Research (Wolfpack) published a report on QTT, casting serious doubts about the sustainability of its business model, in particular, the customer loyalty program. The program comprised "user engagement" and "user acquisition" activities that were found to be "extremely expensive." Days later, Wolfpack published a follow-up report extensively using unit economics to support its claims. Students will be asked to apply unit economics to analyzing QTT's operating and financial data. For financial analysis and forensic accounting purposes, students will also grapple with questions on how to substantiate the loyalty program expenses and liabilities, and to assess the financial implications of QTT's accounting treatment in recording the loyalty program expenses.
This case describes the efforts of City Football Group (CFG) to purchase Esporte Clube Bahia (Bahia), a Brazilian professional soccer club. CFG's strategy was to acquire under-performing clubs worldwide, invest money in high-profile players, and improve the teams' performances. The company also aimed to develop young players on its lower-tier teams and then funnel them to Manchester City, its highest-performing team, once they matured. CFG instructed the teams to follow a similar style of play and, in some cases, changed teams' jerseys and names to conform to CFG's brand. Purchasing Bahia presented the opportunity to gain a foothold in Brazilian soccer, an under-monetized market poised for rapid growth. Yet Bahia was a mid-tier team with no star players. It was also unclear whether Bahia's fans and players would meld with CFG's culture and expectations. At the conclusion of the case, CFG CEO Ferran Soriano discovers that the price for Bahia is significantly higher than reports had initially indicated. Is the club worth the price?
One of the most iconic American companies, General Electric (GE) was founded in 1892 in New York state. Named among the original dozen companies on the Dow Jones index in 1896, it was the list's most tenacious holdout, maintaining its "blue chip" stock status for over one hundred years. Throughout its history, GE survived, indeed initiated, revolutions across industries, technologies, and managerial practices. By the time award-winning "Manager of the Century" Jack Welch retired from his position as CEO in 2001, GE's market capitalization was over $410 billion. That peak was never surpassed, and the subsequent decline tested company leadership. Welch's hand-picked successor CEO Jeffrey Immelt oversaw GE's near-bankruptcy in 2008 and warranted SEC penalties for misleading investors between 2015 and 2017. Media critiqued his replacement, John Flannery, for lacking urgency as he slashed the company's once-coveted dividend in half. In October 2018, H. Lawrence Culp became the first outsider CEO in the company's history after another Board intervention. With a changing landscape that had rendered Welch's handbook outdated and recent leadership that had been heavily criticized, Larry Culp faced looming strategic challenges. Would Culp's financial, managerial, and structural transformation empower long-term value creation?
In 2018, Francisco Staton, Managing Director of Arcos Dorados in Colombia had to decide on the company's strategy to expand its food ordering and delivery business in the country. Arcos Dorados stood as McDonald's largest independent franchisee, and Colombia was one of the 20 markets and territories in Latin America and the Caribbean where the company operated. Arcos Dorados had analyzed the conditions under which the company would offer delivery services at its restaurants, following the announcement of agreement entered into by McDonald's corporation for offering delivery globally through a last-mile delivery company. As there were local limitations not addressed by the global agreement, Arcos Dorados' Colombia's management team were considering two potential alternatives that could help to address them. The first alternative hinged on stepping up the company's efforts to consolidate its own delivery service. With the second alternative, the company would pursue partnering with last-mile delivery platforms under more favorable conditions than the ones agreed upon by the global agreement. What would be the best alternative to move forward?