In early 1997, Harrington Bank, a small Indiana savings and loan (thrift) wondered what its next move should be. Harrington was acquired in 1988 by the principals of Smith Breeden Associates, a money-management and consulting firm specializing in the application of modern financial technology to the pricing, hedging, and risk management of mortgage securities. The Smith Breeden principals had established an arms-length contract with Harrington, where Smith Breeden advised Harrington on the pricing, hedging, active management, and risk management of Harrington's assets and liabilities. Since the acquisition, the bank had done very well. Assets had grown from $75 million in 1988 to over $520 million at the end of 1996. Its net interest margin had more than tripled, core operating profits had grown by over 400%, and return on equity had been substantially increased. Still, Harrington in 1996 was not an average thrift. 80% of its assets consisted of mortgage-backed securities (vs. 30% for the median thrift), and most of its liabilities were not deposits but other forms of wholesale funding.
The Exxel Group, a private equity group based in Buenos Aires, is considering a buyout of Argencard, Mastercard's exclusive licensee in Argentina. To complete the deal, however, it will need to raise additional financing from U.S. investors. Both the valuation and the terms of the proposed deal prove problematic.
James McDowell, vice president of marketing at BMW North America, Inc., must design Phase II communication strategies for the launch of the new BMW Z3 Roadster. The program follows an "out-of-the-box" prelaunch campaign centered on the placement of the product in the November 1996 James Bond hit movie, "GoldenEye", and including other "nontraditional" elements such as a product appearance on Jay Leno's Tonight Show, an offering of a Bond Edition Roadster in the Neiman Marcus Christmas Catalog, and large-scale public relations activities. McDowell must assess the effectiveness of the prelaunch activities and design marketing tactics that can sustain product excitement until product availability in March. Includes color exhibits.
Jim Sharpe, 11 years after receiving his MBA from Harvard and working for others, has finally become his own boss and 100% owner of manufacturer of aluminum extrusions. After 10 months of an unfunded search, he acquires the business in an LBO and prepares to face his employees on the first day.
A venture-funded start-up runs into trouble when health care reimbursement policies change radically. With the help of its board, the company develops a new strategy, becomes profitable, and makes a public offering. The second wave of changes introduced by Clinton health-care initiatives create the need for strategic reevaluation and operational changes. The case traces the development and strategic changes
A proposed trade of air pollution emission credits between 3M (now Imation) and Procter and Gamble is described. Though such trading is encouraged under federal environmental laws, 3M had adopted a company-wide policy against such deals. Procter and Gamble needs the credits and is an important 3M customer. Local citizens and public officials are sharply divided on the proposed deal.
An epilogue to the (A) and (B) cases, this describes the final steps in implementing the agreement 3M made with Procter and Gamble and with local public officials and interest groups.
After a substantial devaluation in the value of the Mexican currency, a major automaker attempts to reduce the price it is paying to a Mexican based supplier. The supplier (Ventramex) is put in a difficult position because a large portion of its costs is based in US dollars. The company must decide how to respond to the automaker while considering options that would increase the proportion of its costs that are based in Mexican pesos.
The general manager of Qualibrands (QB), a Philippine company with interests in the auto components industry, must decide what to recommend to the owner of QB regarding a proposed four-way joint venture between QB, Autobelt (Malaysia), Autoliv (Sweden), and SMACA (Philippines) to produce seat belts in the Philippines. The financial projections look good, but the general manager is concerned that there may be other aspects of the proposed joint venture that might lead to the failure of the joint venture either in total or in reaching its financial and operational goals.
In 1997, an investment advisor with a major brokerage firm gave investment suggestions and helped clients manage their portfolios. Some of her clients had Coca Cola stock in their portfolios and she wondered whether to recommend the stock to any of her new clients or clients that did not currently have Coca Cola in their portfolios. The case can be used to introduce the dividend discount model, capital asset pricing model, and price-earnings models.
A small, rapidly growing retail distributor of automotive tires must present a set of forecasted financial statements to a bank in order to obtain a five-year loan. Expected growth rates given in the case and historical financial ratios derived from recent financial statements are used to forecast pro-forma income statements and balance sheets for the next two years.
Jim Sharpe, 11 years after receiving his MBA from Harvard and working for others, has finally become his own boss and 100% owner of manufacturer of aluminum extrusions. After 10 months of an unfunded search, he acquires the business in an LBO and prepares to face his employees on the first day.