As one of China's top three major state-owned air transportation companies, China Eastern Airlines Corporation Limited (China Eastern) had built an international brand image with a global influence. With the airline's unique Shanghai-based globalization, China Eastern's strategy remained focused on expanding its global footprint. In the face of growing competition from domestic and international rivals, China Eastern strove to carry out cross-border business, strengthen its co-operation with partners in the aviation industry, and accelerate its globalization process. Over the past three years, China Eastern had introduced its "Pacific Plan" and made concerted efforts in expanding its route network and optimizing transit opportunities in the North American market. With the implementation of the Belt and Road Initiative (a global development strategy adopted by the Chinese government), what strategy should China Eastern use to continue to expand its Shanghai-based globalization?
A medium-sized Canadian provider of specialized educational products and services, Canada Specialization Providers, had a subsidiary, CS Publishing Inc. (CSPub), which sold specialty learning materials around the world. Although the company's costs and revenues were almost exclusively in Canadian dollars and its subsidiary, CSPub, had most of its costs in Canadian dollars, this subsidiary also had a large and growing revenue base in other currencies. Upon consolidation, the parent company was exposed to different currencies through CSPub. The foreign currency values were currently relatively minor, but in March 2019, CSPub was in the process of a large global expansion that would expose both the subsidiary and the parent to new sources of currency risk. The director of CSPub needed to clarify the company's current and expected future exposures to currency risk and determine how these exposures might affect the parent company. She also needed to identify the processes that could help manage these future risks and decide which of these processes to implement, if any.
In 2018, China was the biggest market for Internet services in the world. Along with the country's huge market size, its comparatively low penetration made it an immensely attractive market for search engine services. To capture this market, Google was planning to re-enter the Chinese market—after leaving in 2010—with a censored search engine codenamed “Dragonfly.” The move was opposed by human rights activists, Google’s own employees, and the U.S. government. Google had the opportunity to improve its share in the global search-engine segment if it could somehow tap into the vast Chinese market. But the tight control over Internet services by the Chinese government on one hand, and the protests by various interest groups on the other, had put Google in a tight spot. Google had to decide if it should go ahead with the plan to offer Dragonfly in China. Should Google instead explore other market and non-market strategies to re-enter the Chinese market?
In 2014, the Delhi Metro Rail Corporation (DMRC) had just taken over operations of the Delhi Airport Metro (DAM), which connected the Indira Gandhi International Airport to the New Delhi railway station. However, high capital expenditures, excess operational expenditures, and low ridership meant that the concessionaire, which had been operating since 2011 on a public–private partnership model, was continuously reporting losses and therefore decided to quit the project in June 2013. When project operations were transferred to the DMRC, the metro’s overall capacity utilization was a very low 5 per cent and the line had few riders and operational losses. The DMRC’s director of operations had the challenging task of making the DAM operationally viable. There were several available options. Should he consider rationalizing the fares; increasing ridership by connecting the Delhi Metro Airport Express Line to passenger hubs; improving the amenities or attractions at the metro stations; or offering hassle-free travel for different groups of customers?
In 2019, the chief executive officer (CEO) of Boston-based Feehan Investment Management faced a decision. After succeeding her father as CEO, she launched a quantitative research group, or quant group, which used statistical and mathematical methods to determine investment strategies that were applied to incubate a long/short equity strategy. After incubating the strategy for three years and realizing good returns, the CEO wanted to open up this fund strategy to outside investment; however, she needed to decide on which fund structure to wrap this strategy in—a hedge fund or a mutual fund.
This case is designed to support a lively discussion about the relative merits of shareholder vs. stakeholder perspectives in the context of a company that provides a vital public service that has important environmental implications. The 2007 purchase of TXU, the largest utility in Texas, was the largest leveraged buyout in history. Yet, within seven years TXU was bankrupt. TXU (A) examines the spectacular turnaround of TXU from 2004 through 2007, in which shareholders received a tenfold increase in the share price and the CEO was rewarded with nearly $280 million in compensation in four years. But other stakeholders objected to the company's strategy of aggressive price increases and building new coal-fired power plants. Amidst growing pressure from regulators, elected officials, and consumer groups the board decided to sell the company to the private equity firms KKR and TPG. TXU (B) covers the period after the transaction and the reasons for the buy out's failure, including its enormous financial leverage and a "one-way bet" on natural gas prices that exceeded the exposure of any of the world's largest integrated energy companies.
In July 2017, the government of India implemented goods and services tax (GST), which brought uniformity in the tax rates on all types of biscuits. Compared to the pre-GST regime, the uniform tax rate resulted in a higher tax rate on mass-market biscuits and a lower tax rate on premium biscuits. Parle-G, the most popular brand of Parle Products Private Limited (Parle), fell into the mass-market biscuit category. The Parle-G brand had 75 to 80 per cent market share in the mass-market biscuit category, and it contributed nearly 33 per cent of Parle’s total revenue. The brand was sold at a very low price point and was highly price sensitive. To mitigate the tax rate increase, one option was to raise Parle-G prices; however, any price increase or change in package size for a product in the highly price-sensitive category could reduce company revenue. Therefore, new business strategies were needed under the new tax regime and amid the country’s overall changing business and economic scenario so that Parle’s margins and leading position were retained.
Six years after its inception, Montréal-based social media marketing agency OVRGRND started a sister company, 66Agency, to tackle the growing need for brands to use Instagram influencers for their marketing needs. The new 66Agency acted as a facilitator between brands and influencers. However, the demands of managing people—the brands on one side and the influencers on the other—had become a burden that was distracting the agency from its original intention, which was be a social media marketing company. In May 2018, the company was looking for a creative business plan that would allow it to facilitate interactions between brands and high-quality influencers quickly and efficiently, while still ensuring that all parties were happy.
Unlike any other European airline, Ryanair DAC had long experienced impressive growth and performance thanks to its well-designed and ruthlessly executed low-cost carrier business model. However, the limits of growth did begin to appear, at which time the company adjusted its business model with an increased emphasis on customer orientation. As a result, cracks in the business model appeared and labour issues came to the fore. While the media and industry analysts were focused on these challenges, Ryanair was undergoing a quiet digital revolution, shifting the airline’s business model toward a technology-based travel platform. With the problems in the business model and a shifting business strategy, could Ryanair achieve the ambitious growth targets it set for 2024?
In 2019, 15 years after entering the Canadian wine industry, Diamond Estate Wines & Spirits Inc. (Diamond), located in the Niagara Peninsula of Ontario, was poised for growth. In a fragmented industry with local, national, and international competition from well-established and new players, Diamond had decent positions in many industry subsegments. One aspect of Diamond that set it apart from other small wineries was its distribution business, allowing access to valuable channels in the Canadian market. The company had proven itself capable of most aspects of the value chain in the wine industry and was poised for growth. The question was, which of the many attractive options should Diamond pursue?
At the end of 2017, the director of HY Capital, was facing an investment decision. Two years earlier, HY Capital had invested in Dalian New Vision Media Co. Ltd. (New Vision), a company working on augmented reality products for early childhood education. The investment provided New Vision with sufficient funds to enter the market. However, after a quick success, New Vision had saturated the market and could not make further significant progress. Thus, New Vision's management team proposed to alter the company's strategy to move into kindergarten to grade 12 after-school education. The strategic shift could be lucrative, but it was risky and would require more funds to support product development. The director was now wondering, should HY Capital support New Vision with further investments or just exit the investment?
The financially savvy (fictional) protagonist in this case is an independent artist, intrigued with the possibility of becoming a seller on the Etsy, Inc., marketplace. As such, she is seeking to learn about the company-that is, its culture, recent history, and incentive compensation philosophy and practices for top executives. The case provides pertinent, publicly sourced information for exploring and discussing such issues. This case is suitable for an undergraduate, graduate, or non-degree executive education course where the focal topic is, in general, performance management, and more specifically, the use and design of executive incentive compensation plans. A valuable secondary objective is to introduce students to some of the company information disclosed in a publicly available corporate proxy statement. That document, filed with the SEC as Form DEF 14A, is filed in preparation for a public company's annual shareholder meeting.
The searchable internet contains almost 2 billion websites. And new, text-rich sites are being added at a rapid pace: more than 700 million popped up from 2016 to 2017, according to the International Real Time Statistics Project. A lot of this web-based text is relevant to marketers: online product reviews, information about purchasing behavior, customer-to-customer interactions, and transcribed tele-sales calls. Marketers now have more information from consumers in the form of written words than ever before. The problem, as with any extremely large data set, is determining how best to use the information. The relatively new fields of text analytics and sentiment analysis offer marketers a solution, enabling them to turn vast amounts of emotion-rich, word-based data into actionable information about consumers. This note explores dictionary-based sentiment analysis using programming language R; it also introduces empirical sentiment analysis.
A new approach to e-commerce, one that blends the best of different online models, is emerging in China under the description "New Retail." Hema, a subsidiary of Alibaba, was founded in 2015 and is growing rapidly, demonstrating the power of an omnichannel strategy of merging online and offline grocery shopping experiences that integrates supply chain considerations into the business design. Overall, Hema represents a fusion of the centralised distribution model and store fulfilment model in the typical online grocery distribution. Each Hema store doubles as a distribution centre through an overhead conveyor system, which enables a 30-minute delivery time for customers within 3km of the nearest store. Hema's approach to transform online grocery demonstrates new possibilities in the future of grocery retail.
Managers need to be comfortable with financial statement forecasting. Forecasts allow managers to plan properly by weighing consequences and preparing for outcomes. A less-recognized but equally important benefit is that the act of forecasting forces managers to make explicit the many links that exist between decisions, possibly drawing attention to constraints that otherwise might have been overlooked. This is particularly important since financial statements integrate the financial and operating decisions of a firm. This note focuses on forecasting in the context of decision-making. Aspects of forecasting explored include: revenue growth estimates, sources of error, assumptions, typical ratios, and the T-account approach. It also includes a detailed example of a typical financial forecast. The concepts are applied to the hypothetical firm Morgan Industries, a setting that has been integrated across all the Financial Analytics Toolkit series of technical notes. While this note focuses on financial statements, the forecasting techniques described herein are readily transferred to related contexts, such as building cash-flow forecasts and using ratios to evaluate financial performance.
This case follows a senior loan officer who is reviewing requests from two customers of the bank to raise their credit limits. The two businesses are alike in many ways, but the loan officer believes one represents a greater problem. The students must use a ratio and financial analysis (all ratios are provided, as the challenge is not calculating ratios but interpreting them) to identify which of the two is worthy of concern. The emphasis in this case is on interpretation rather than calculation, though an instructor can explore definitions and calculations as desired. By hinting that there is a conclusion that can be reached, students are motivated to view their analyses as supporting a judgement. Just as ratios essentially link line items to provide insight, judgement links ratios to tell a story. An intentional feature of this case is that the judgement is relatively clear, and students will finish with a sense of success.