Profit-making corporations returned cash to investors through dividends or share repurchases. Market participants referred to the fraction of the profits paid to shareholders in the form of dividends as the "payout ratio." However, a large number of firms have never paid a dividend. For instance, over the past decade, more than half of the listed firms in the United States neither paid a dividend nor repurchased shares. For example, only 20 per cent of firms on the Singapore Stock Exchange consistently paid dividends over the past decade, with similar proportions observed in both US and European stock markets. The percentage of dividend-paying firms plummeted to a record low of 17 per cent in 2000. In fact, most of the "new economy" firms such as Amazon, Facebook, and Google, reinvested their entire savings. This note describes rational dividend theories, behavioural dividend theories, and outlines the four categories of dividend strategies followed by firms.
A new analyst has been asked to forecast the upcoming dividends for Singapore Airlines Limited. However, unlike most dividend-paying firms, which typically maintain stable, transparent, and simple dividend policies, Singapore Airlines maintained an opaque, complex, and irregular pattern of dividends. Further, the company did not respond to requests for information about expected dividends or the company's dividend policy. The analyst decided to gather historical data about the company and its competitors to gain insights on Singapore Airlines' dividend policy and to forecast its upcoming dividend.
With an ever-growing world population, rising living standards, pollution, and climate change's uncertain weather patterns, it became almost a platitude that "the previous war was about oil, the next war will be about water." Of all water-related situations that might lead to war, the Nile basin tension was probably most likely to escalate. In the early 2000s, Ethiopia conceived a plan to build the Grand Ethiopian Renaissance Dam across the Blue Nile, close to its border with Sudan, straining relations with downstream Egypt and Sudan. Could such smoldering tensions over water in a region with a history of conflict lead to war? This case is part of the "Global Economics of Water" course, a second-year elective for MBA students at the Darden School of Business. The case would also fit in any class that focuses on natural resources or international relations. It is used as an introduction to the water topic, as it touches upon some key aspects of water stress and the world's current water challenges.
In February 2018, Jerome Powell had taken over as chair of the FOMC. At first glance, the macroeconomic conditions inherited by Powell appeared favorable for continued stability: unemployment and inflation were low, and the economy had been steadily growing for nearly a decade. Yet despite the appearance of stability, the economy faced significant risks that required the Federal Reserve's attention. Was an uptick in inflation imminent, and if so, should Powell raise rates to limit any inflationary pressure? Or was the economy still operating below capacity, and if so, should the Federal Reserve take a more accommodative stance? To gain perspective, Powell needed to look back at the past fifty years of monetary policy in the United States.
In 2016, Elixir, a financial technology start-up, was developing a social banking application to provide mobile banking to young adults and other underserved banking customers. Elixir had a social finance business model called MillennialMoney, where existing customers had an opportunity to earn referral fees by introducing new customers. For the banks, Elixir provided a novel marketing solution to attract millennial customers. As a technology company in the social finance space, Elixir could use the strategic and operational advice of an experienced banker to help turn this vision into a reality. One such banker had been in discussions with Elixir’s chief executive officer and the chair of the advisory board. The banker had been conducting due diligence of the company all summer of 2016 and had even gone on sales calls in Malaysia to see what banks thought about Elixir. Now it was time to make a decision. Should he join the management team of Elixir and invest in the start-up?
The family-run Balaji Wafers Pvt. Ltd. (Balaji Wafers), a savoury snack manufacturer, had adopted a phased strategy in taking on the likes of global multinational corporation PepsiCo in India, an emerging economy. After operating successfully for more than three decades in western India, Balaji Wafers was planning to grow and to go national with forays into north and south India. Balaji Wafers had a strong foothold in western India, where in Gujarat and Maharashtra it had left PepsiCo's brand Lay's far behind; however, growing nationally would require more investments, robust business strategy, and marketing acumen. In pursuing growth, should Balaji Wafers expand nationally, or should it strengthen its leadership position in its home territory?
In April 2017, the co-founder and vice-president of Hitch Health in Minneapolis Minnesota was faced with an intriguing but challenging strategy decision. Hitch Health had been created as part of Upstream Health Innovations at Hennepin County Medical Center to improve transportation services for its many vulnerable patients. By using human-centred design, Hitch Health had succeeded in developing a system of ride sharing and sophisticated information technology that met its initial goal of reducing missed appointments. However, the development of Hitch Health had also presented a new opportunity to engage patients in many aspects of their own care. The co-founder realized that she had to make a key strategy decision. Was Hitch Health just a practical solution to Hennepin County Medical Center's transportation problem? Could it solve transportation problems at similar hospitals across the country? Could it be an idea big enough to serve as a platform with the potential to disrupt health care delivery?
The case captures the story of Worldview International Foundation (WIF), focusing especially in the 2012-2016 period during which the organisation started to restore and develop a mangrove forest in the Bay of Bengal on the west coast of Myanmar. The story focuses on the decision-making processes and choices that WIF's chief executive officer Arne Fjørtoft has to take. In 2012, Fjørtoft secures funding from the Letten Foundation in Norway for a three-year research project in Myanmar on mangrove restoration. While his initial project description was simply to start planting mangrove trees for carbon sequestration, the project was redesigned as a research project to align with the new rules the Letten Foundation had to follow. Fjørtoft decides to embark on a two and a half year journey in order to scale the operation within and beyond Myanmar. For this however, he needs funding. Obtaining that funding is the key objective we focus on. The case ends with the students being presented with three alternative options: (a) Kick-start the collaboration with Alan Laubsch from Lykke on the blockchain cryptocurrency called TREE; (b) Pursue Voluntary Carbon Standard accreditation in the hope that WIF could start selling carbon credits to organisations globally; (c) Try another grant application to either the Global Climate Fund or the Norwegian Ministry for Environment and Climate, this time with the help of the United Nations Environment Programme as the accredited agency.
In October 2016, a merger between the Canadian Cancer Society (CCS) and the Canadian Breast Cancer Foundation (CBCF) was announced. CCS was the largest cancer charity in Canada (revenues of $184 million in 2016), offering support programs and information services to patients and their families throughout Canada. CBCF was a large site-specific cancer charity (revenues of $36 million in 2016) and Canada's third-largest charity funder of cancer research. With declining donations and increasing administrative costs, both charities were facing financial challenges. This merger between the two charities was the largest in Canadian history. The leadership of both organizations hoped it would solve their financial problems by helping them to gain operational efficiencies and increase market power. Students are asked to decide whether the merger made strategic sense for both organizations. The answer lies in how well it addressed the financial, leadership, and brand awareness challenges facing each organization, while enabling them to remain relevant and impactful in an increasingly competitive market.
This case describes how Lufax, a corporate spin-off from its parent company---Ping An Group China, started its peer-to-peer lending business model in China and grew into a comprehensive asset management platform and hence a rather independent corporation on its own. The case documents the story behind the founding of Lufax and its milestone events. In particular, this case focuses on the internal tension between two competing business logics: "Internet logic" that values fast user growth and formalizes procedures later vs. "Finance logic" which emphasizes risk control and manageable growth. Such tension is exemplar among many Fintech companies in China, a developing country that experiences explosive growth in novel financial services and poor regulatory environment simultaneously. The instructor can use this case to illustrate key topics in strategy and corporate entrepreneurship such as how incumbent firms encourage innovation from within via spin-offs. The instructor can also adopt this case to examine the unique competition landscape in China Fintech and compare it to other Fintech cases such as P2P lending in US (e.g. Lending Club) or in UK (e.g. Zoppa).
Hunley, Inc. manufactures rods for the niche sport of fly fishing. It specializes in freshwater rods that are perceived as "middle-market" products, targeted at "avid" fly fishers, In the face of declining revenue and a decreasing price per unit sold, the company's president is considering several growth options, including introducing a rod made from state-of-the-art materials (moving up-market) and expanding distribution into Walmart (down-market). Hunley's president must decide whether either option is feasible and if so, what kind of marketing plan is necessary for each to succeed. If neither option is chosen, he must determine what other ways Hunley might grow. This is a rich marketing mix case that requires students to develop a qualitative and quantitative plan for Hunley's product line under two very different growth options. The discussion can illuminate numerous marketing issues that an instructor might want to emphasize, including: brand extension, product and company market position, positioning statements, market segmentation, introductory marketing programs, new product launches, channel conflict, sales force management of a strategic shift, among others. This case is suitable for an introductory marketing course for undergraduate or MBA students. It can also be used in a section on positioning and increasing consumers' willingness-to-pay within a strategy course. Further, the challenges facing Hunley are relevant to many courses in executive education.
From humble beginnings in Kerala, India, Mr. PNC Menon built a reputation for quality, detail, and trustworthiness, earning him major construction commissions in the Gulf region. This paved the way for venturing into real estate development in Dubai, UAE. Striving to control quality and schedule, his firm, Sobha Middle East, self-performs a wide range of tasks - an unusual set of choices in the global real estate and construction industry. In mid-2018, the 70 year old entrepreneur and his team are contemplating their longer term strategy, particularly regarding land acquisition, construction strategy, and financing. Is the backward integration model replicable and sustainable? Meanwhile, sitting in Bangalore, PNC Menon's son Ravi Menon, Chairman of publicly listed Sobha India, is facing a typical in-house versus outsource decision. Sobha India had pioneered the backward integration strategy prior to Dubai. Ravi Menon and his team are deciding on the structural system for Sobha Bellahalli complex of 5,000 apartments in Bangalore. Should they deploy a cast in place structural frame or invest in a precast concrete manufacturing plant on site? Additionally, should they purchase local ready-mix concrete or invest in their own mixing and batching plant? The cost and schedule implications will influence bidding strategy in an upcoming land joint venture. Father and son, on both sides of the continent, have a lot to think about.
Twenty-four-year old Ritesh Agarwal, founder and CEO of India-based online, hotel branding network OYO Rooms, has tackled the issue of unreliability in India's highly-fragmented budget hotel industry. In 2018, OYO branded 8,500 properties across 200 cities and managed to capture almost 1.5% of India's budget hotel market. Ritesh believes that in the process, OYO has honed technological skills and infrastructural capabilities that can transform the company from being a technology player to a hotel developer. OYO now aspires to convert corporate spaces and homes into accommodation spaces, and to make its mark worldwide.
In 2018, Ludovic Le Moan and Christophe Fourtet, co-founders of the French tech startup Sigfox, reflected on the evolution of their venture and the way forward. Founded in 2009, Sigfox was a company that provided a global connectivity network for devices connected to the internet. As the startup was scaling rapidly, the founders made the strategic decision to target fewer industry verticals and to focus on asset tracking as the common denominator of the business. With a committed target of reaching 1 billion devices connected to the Sigfox network by 2022, they wondered which consequential changes needed to be made in order to achieve success in the nascent IoT market. Which initiatives would help them bring the company to the next stage?
Beginning in the late 1990s and lasting through much of the next decade, the Arkansas Department of Health underwent multiple changes to its organizational structure. Part A of "A State of Flux" recounts how, after a brief period in which the director of health replaced traditional hierarchical leadership with team-based management, several findings of administrative shortcomings helped prompt Governor Mike Huckabee and the state legislature to merge the department with the Arkansas Department of Human Services. Supporters of the merger argued that not only would it force the health division to adopt the highly regarded administrative practices of human services, it would also result in substantial cost savings for the state budget. However, the public health community quickly grew frustrated with the new arrangement, arguing that instead of being the marriage of two equals, the merger had resulted in the subordination of health to human services. Soon a movement to end the merger emerged, and Part B of the case explores how public health officials and their political allies rallied both publicly and behind the scenes to reverse course and reestablish a fully autonomous health department. An epilogue to the case portrays the main tasks and challenges public health leaders encountered as they worked to rebuild a reconstituted Arkansas Department of Health after this tumultuous period of organizational change. Case number 2129.0
In August 2016, China’s home-grown ride-hailing company Didi Chuxing Technology Co., Ltd. (Didi) acquired the Chinese assets of Uber Technologies Inc. (Uber), including Uber China’s brand, business, and data. Didi had previously ventured into Uber’s territory by investing and collaborating with Lyft Inc., Uber’s main competitor in the United States. Didi’s transformation from its beginning as a humble mobile application into a technology giant that was re-shaping transportation both within and beyond China was related to significant transformations in its social and business context. These transformations included the rapid growth of China’s cities and China’s status as one of the first countries to formally recognize the legality of Internet-based private car services. Looking to the future, Didi faced questions about its development in a rapidly changing global digital economy: How could it expand its products and services to the international market? Could Didi achieve the same impressive market record abroad? How could Didi continue to innovate? What was a truly sustainable business model for an online ride-hailing firm? How could it maintain its current leading position in the market?
In August 2016, China's home-grown ride-hailing company Didi Chuxing Technology Co., Ltd. (Didi) acquired the Chinese assets of Uber Technologies Inc. (Uber), including Uber China's brand, business, and data. Didi had previously ventured into Uber's territory by investing and collaborating with Lyft Inc., Uber's main competitor in the United States. Didi's transformation from its beginning as a humble mobile application into a technology giant that was re-shaping transportation both within and beyond China was related to significant transformations in its social and business context. These transformations included the rapid growth of China's cities and China's status as one of the first countries to formally recognize the legality of Internet-based private car services. Looking to the future, Didi faced questions about its development in a rapidly changing global digital economy: How could it expand its products and services to the international market? Could Didi achieve the same impressive market record abroad? How could Didi continue to innovate? What was a truly sustainable business model for an online ride-hailing firm? How could it maintain its current leading position in the market?