In May 1998, the director of Research at Zeus Asset Management is reflecting on the current performance evaluation of Zeus's mutual funds (which include an equity fund, a bond fund, a balanced fund, and an international fund) and ways to improve the measurement of performance. Zeus has become increasingly aware that absolute returns, or relative returns (returns relative to a benchmark), will not suffice as a measurement of performance and that a measurement (or a series of measurements) of risk-adjusted performance must be added. Performance evaluation is key to structuring compensation and incentive schemes in general, as well as strategic planning for the company's future. Given Zeus's relatively risk-averse clientele, the "correct" measurement of risk is imperative. Students are asked to compute several measures of risk-adjusted performance. Familiarity with running regression models in Excel is required; alternatively, the case can be used to pursue that objective. The case comes with an Excel spreadsheet containing the relevant data (time series of returns [net of risk-free rate] of three mutual funds and corresponding benchmark indices).
The purpose of the case is to provide an opportunity for students to evaluate the relative performance of portfolios. In the case, students are asked to select one portfolio from among eight possible choices. Here the selected portfolio will be included in a larger pan-European portfolio. This a good application of the Sharpe, Treynor and Jensen indexes in an international setting. It can be used to draw clear distinctions about when each of the different performance measures should be used. In addition to the performance evaluation, students must also ask how each of the candidate portfolios fit into the overall objectives of the larger portfolio. This case can be used in a portfolio management class to introduce the different performance measures.
Jan Eriksson is the country manager of the Indonesian joint venture of Basel-based Novartis (Novartis Indonesia), the world's largest pharmaceutical company, formed by the 1996 merger between Sandoz and Ciba-Geigy. The case describes the actions he has taken since assuming his post in May 1996. He was in the middle of merging the Indonesian operations of Sandoz and Ciba-Geigy when the financial crisis struck Indonesia. He has prepared two plans to deal with the crisis. In January 1996, headquarters had still not approved Erickssons' plans and he needs to decide how to proceed.
Cisco is the world's largest manufacturer and distributor of routers and switches. In order to achieve this position, it has adopted an aggressive growth strategy, acquiring companies, their employees, and new employees at a rate of 250 to 300 employees per month. The Cisco Employee Connection (CEC), a corporate intranet, is the primary means by which new employees are absorbed and acculturated. The CEC is also the principal means of interaction for the multi-functional work team approach Cisco employs. This case critically assesses this approach to scaling an organization and the extent to which it can be maintained and transferred.
Display Technologies, Inc. (DTI) is a new joint venture between Toshiba and IBM Japan that is manufacturing the most advanced form of flat panel displays. With success in achieving significant production volumes, DTI has been asked to double its output as quickly as possible. Mr. Shima, DTI's president, must decide among three options, each of which has immediate and long-term strategic consequences.
This note takes students step by step through the evaluation of an interest rate swap. It assumes students have a strong grounding in the concepts of forward rates and spot rates.
This brief note explains how to set up a Monte Carlo simulation using @Risk for the purpose of valuing options. It should be used in conjunction with the Excel spreadsheet Monte.xls.
Conor O'Toole, Internet business executive, must consider how to take the Bank of Ireland on-line. The bank, and Ireland, and most of continental Europe, lagedlagged behind the United States in adopting Internet techologytechnology. O'Toole wondered how he should prioritize the limited resources he had to invest in Internet initiatives. He thought that the bank, established in 1783, was missing opportunities that competitors were captureingcapturing. He needed to decide what financial products to move successfully to the Internet and in what order. He wondered how he could justify the broad-ranging investments to build a new online infrastructure, a new selling context, and new product content simultaneously. Finally, he contemplated how to convey the Internet challenges and and the opportunities to senior management.
This 32-year-old nonprofit organization has dedicated itself to the care and social development of abandoned street children in Mexico. Examines the organization's efforts to achieve financial sustainability, particularly through earned income activities on its farm. Includes color exhibits.
A father and son working together in their family-owned publishing company are at a decision point because the son feels he is ready to become president at the age of 31.
Explores the management of family and business issues and helps to identify a range of topics with which families in business wrestle. Describes a dilemma faced by sixty-eight-year-old Charles Anderson, the semi-retired founder of the company and the father of three sons who work with him. Charles's youngest son, Peter, who recently joined the company, is proposing that the company do long-term planning and is suggesting ideas that he believes will improve the company's customer service. His brothers have routinely turned down Peter's proposals, and tension among the three brothers is growing. Charles wants to resolve the growing tension among his sons.