Presents a study of two oil rigs and their team relationships within a context of dissension in lower management ranks and a president who is trying to expand the business in a changing economy.
Fremont Financial is an asset-based lender to middle-market companies. The firm has three options to raise capital to finance its loan portfolio. Fremont can (1) extend its existing bank line of credit, (2) issue commercial paper through a special purpose-conduit, or (3) securitize and sell the loan portfolio into the capital markets. The case emphasizes the problems and potential solutions to asymmetric information and moral hazard problems that are endemic to financial intermediation.
Union Carbide's board of directors is asked to evaluate a proposal from the staff treasurer's that would articulate policies to manage its debt portfolio. The staff proposes that shareholder value will be maximized if the firm manages its exposure to interest rates by matching the duration of its liabilities to that of its assets. Based on statistical analysis, examination of rivals' policies, and reasoning, they argue that the firm, establish a benchmark duration for its liabilities against which all future active management activities be measured.
Officials at United Technologies Corp. (UTC) must decide on an ethics policy to govern competitive intelligence gathering. The flow of competitor information into the Pratt & Whitney division has declined sharply since adoption of UTC's code of ethics. A rewritten version of an earlier case.
Manville Corp.'s senior managers are surprised when Japanese government officials advise them not to go forward with their plan to add a cancer warning label to diatomaceous earth (DE) products sold in Japan. The International Agency for Research on Cancer has ruled that a component of DE is probably carcinogenic, and Manville has prepared to modify its labels and material safety data sheets and to mount a communications effort to inform customers of the cancer warning. Now, Manville's senior managers are being told that it is "culturally inappropriate" to proceed with this plan in Japan.
This is the first case in a two-part series about decisions relating to the introduction of a new product, Johnson's face powder, to the Philippines market. This case provides information about the Philippine market and the development of the introductory strategy for the product. The student is asked to assess the merit of the strategy, both in terms of market acceptance and their calculations as to projected contributions. (A two-minute video can also be purchased for this case, J & J (Philippines) Inc. - Johnson's Face Powder - Video.)
The newly appointed president of the Philippines' largest advertising firm arrives at her office to find a fax from New York. The fax says that Colgate-Palmolive is realigning its accounts worldwide. The effect of this move is that Basic/Black Zale Youngman Advertising will lose about 90% of its billings from its Philippines Colgate-Palmolive account. There are two very different discussion issues. The first issue is the decision(s) on what actions to take. The second issue is the handling of worldwide advertising in an environment which varies greatly from country to country.
Addresses contingent environmental liabilities that are the result of unforeseen environmental risks where the dollar amount of such liabilities is unknown and depends on future events. In contrast, fines for violating environmental laws are liabilities, but are not considered contingent liabilities as such fines are relatively predictable. Covers liabilities under common law doctrines (including toxic torts), the Resource Conservation and Recovery Act (RCA), and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In particular, discusses lender liability issues as of 1993 and briefly discusses financial reporting requirements. Concludes with a discussion of strategies for managing such liabilities.
Metallgesellschaft AG is a commodity and engineering conglomerate based in Frankfurt am Main, Germany. Metallgesellschaft Corp., a New York based subsidiary of the group, has made oil trading and hedging errors that could drive the group into insolvency. The impact of hedge accounting rules on the quality of the information available to top management is examined.
Charles Foley, vice president of the computer retailing firm Sayer MicroWorld, must decide whether or not to fire his employee, Kathryn McNeil, a 37-year-old product manager who has been unable to work as many hours as her colleagues due to her status as a single parent of a six-year-old boy. The company's recent risk-laden acquisition of another ailing firm has intensified the office's already high-pressure environment by necessitating that all employees work 13- and 14-hour days. Although McNeil appears to be doing her best to fulfill both her parental and professional responsibilities, her immediate supervisor insists that McNeil has not been able to complete her share of the work.
Leland O'Brien Rubinstein Associates, a small financial advisory firm founded in 1980, has created a successful business by selling a product commonly known as portfolio insurance. Portfolio insurance is a trading strategy that institutional investors use to establish a floor on the value of their equity portfolios, by essentially manufacturing a put option on a broad market index. The crash of 1987 highlights the flaws of this manufacturing process and forces principals of LOR to consider what to do next.
The senior vice president and head of Mutual Life's group division, was trying to decide whether to proceed with a plan to guarantee his division's services as a task force had recommended. If the division decided to proceed, he would have to decide whether to accept the task force's suggestions on the design of the guarantee and answer a number of questions that they have left unanswered. Students have to assess whether Mutual Life would benefit from a guarantee and the performance of the division and the task force so far, as well as address the design issues. A sequel to this case Mutual Life of Canada - The Group Client Service Guarantee (B), describes the guarantee and an issue that has arisen.
The regional group marketing director, was trying to decide what to do about Consolidated, a client who had made a claim for $9,500 under the company's new group client service guarantee. The problem was that, although she believed Consolidated's claim was completely without basis, the guarantee prominently said: If you have a problem, we will pay, no questions asked. Students have to assess Mutual Life's guarantee and decide what to do about both the Consolidated incident and the guarantee. This case can be used either alone, or in conjunction with Mutual Life of Canada - The Group Client Service Guarantee (A), which addresses several issues in the design of the guarantee.
The plant manager of Hammond Manufacturing's Guelph, Ontario transformer plant was concerned about problems with the delivery of enclosures from a sister plant ten kilometres away. These problems reduced the company's ability to compete for business by delaying production and shipments to customers. Both plant managers wanted to reduce not only the frequency of late deliveries, stockouts, and backorders, but also the level of frustration between their two plants. Students have to identify the source of these problems and propose a reasonable course of action to deal with them.