Kris Alexander is a newly appointed partner at the private equity firm Kohlberg & Co. Alexander is preparing an exit proposal for one of Kohlberg's portfolio companies, the TeeGolf Company. Alexander believes that TeeGolf has a great opportunity of selling for a purchase price that would achieve a return equal to or greater than the firm's target IRR of 25%. However, Alexander was concerned about the viability of the sale. Specifically, he wondered: would strategic buyers, who would pay premiums to financial sponsors, actually be interested in this business? How would the firm negotiate amongst potential buyers if several submitted bids? What if there was only one buyer interested? Had Kohlberg's valuation accounted for a potential recession? How should he account for the investment banking adviser fees in his recommendation to sell? To answer these questions, students will be required to evaluate different exit strategies from multiple perspectives, understand how to work with a leveraged buyout analysis, a discounted cash flow, and how to add in the effects of synergies. A negotiation exercise between Kohlberg and two potential buyers, private equity firm Leonard Green Partners and a strategic buyer GoGolf, can support the learnings around asymmetric information, ZOPA, and BATNA. This case works well in a module covering firm valuations and financial negotiations. It would complement the HBS note on negotiations and cases such as Kelly Solar and Wrigley/Mars.
In mid-2015, India-based Titan Company, a joint venture between Tata Group and Tamil Nadu Development Corporation, was active in several retail businesses: watches; jewellery; eyewear; and youth accessories (e.g. backpacks and helmets). As of July 2015, Titan Company operated 1,300 of its own stores in 240 Indian cities and towns, and its products were being sold abroad through 2,300 third-party retail outlets in 32 countries. Titan Company's board of directors had developed an ambitious target-revenues of INR300 billion by 2020. The chief executive officer and his team needed to outline a strategy to achieve this goal. In particular, they needed to decide whether Titan Company should continue to launch new businesses or instead focus on consolidating its existing businesses.
UAE Exchange began operations in 1980 and, through the years, established itself as a global remittance, foreign exchange and payroll solutions brand. Investing extensively in its people by adopting innovative practices, UAE Exchange won appreciation from its customers and employees alike. In 2008, the global financial crisis adversely impacted the Middle East and forced many expatriates to return to their home countries. With fewer people remitting money, UAE Exchange lost considerable market share. Leaders at UAE Exchange sensed an urgent need for change and made several strategic moves to navigate this challenge. The new direction proved successful, and management was then faced with the challenge of sustaining the momentum. The case asks students to identify the various positive practices that an organization could implement for change. It covers the importance of developing employee strengths, generating positive relationships and emotions, enhancing employee engagement, and supporting customer focus. After reading this case, students will gain a conceptual framework of organizational excellence in a competitive industry. Students will be able to identify the practices of positive organizational behavior, employee engagement, and positive change that can be applied at any corporation. In addition, students will build opinions on the key factors in developing and maintaining positive relationships in an organization with employees and customers from different nationalities.
In 2005, China National Offshore Oil Corporation (CNOOC) began investing in Canada, when it acquired 16.69 per cent equity of MEG Energy Corp., a private Calgary-based energy company. In 2011, it acquired OPTI Canada, a Canadian oil company that had gone bankrupt, followed in 2013 by the contentious acquisition of Nexen Inc., a Canadian oil and gas company. Despite this enticing potential market and the desire to fuel China's rapidly growing economy, CNOOC faced low oil prices, slow economic growth in Canada, fierce competition from other multinational oil companies, and pressure from environmental non-governmental organizations. Given these challenges, how could CNOOC achieve success in Canada?
In 2015, TELUS Corporation (TELUS) needed to decide whether to either ignore the concerns of the local community and power up its newly installed cellphone tower—located 84 metres from the University of Calgary's child care centre—or relocate it farther from the centre. Both TELUS and the University of Calgary claimed that the cellphone tower would emit radio frequency waves at a level well below the safety threshold according to Health Canada's Safety Code 6. However, parents of children at the centre were not satisfied with this claim. TELUS and the University of Calgary decided to hold a public consultation meeting to address the issue. What options did TELUS have? Was the socially responsible solution the best way to address the situation?
In 2010, when China surpassed the United States to become the largest global market for automobiles, China’s Geely Automobile Holdings Ltd. (Geely) entered the global automobile industry by acquiring Volvo Group’s cars division from Ford. Seven years later, Geely bought a controlling stake of 51 per cent in Lotus Cars, a stake in the truck maker AB Volvo, and a 10 per cent share of Daimler AG worth US$9 billion, becoming its largest shareholder. On August 31, 2018, Ford’s chief executive officer faced a strategic challenge: assess the level of threat that Geely posed and how to respond to it, if necessary. Was Geely’s rise in the market endangering Ford’s market position?
In early April 2018, Spotify Technology SA (Spotify) had planned a rare direct listing on the New York Stock Exchange. Unlike typical initial public offerings (IPOs), which used investment banks as underwriters to help set an IPO price, Spotify's direct listing would allow market participants to determine the initial price. In a typical IPO, investment banks shopped the potential offer to various clients and, in the process of book building, determined a range for the offer when it started trading. They also often provided support for the issue on the day it started to trade, limiting the downside for shareholders if demand was low. In Spotify's case, the investment banks were only being paid a nominal fee, and Spotify was not raising capital in the offering. The stock simply started trading on the prescribed day. A portfolio manager with a hedge fund that focused on growing technology companies was considering investing in the firm, but faced a challenge: how could she estimate Spotify's value when it started to trade?
Japan's number-one apparel brand and retailer, Uniqlo Co. Ltd. (Uniqlo), built its business by delivering high-quality basic casual clothing at low prices. Uniqlo's founder and chief executive officer of Uniqlo's parent company, Fast Retailing, stated that his goal was to become the world's number-one apparel retailer. He argued that success in the U.S. market was crucial to meeting this goal; yet, Uniqlo USA was not doing well. In mid-2017, after more than a decade of efforts, Uniqlo USA had relatively few stores and continued to lose money. As the gap between its goals and performance continued to diverge, the company needed to re-examine its U.S.-based business and potentially its globalization strategy altogether.
In 2017, a sports journalist based in Houston, Texas was confused about his editor’s latest idea. His editor had emailed him the night before proposing an article on the best (and worst) Major League Baseball hitters of all time. The first step was to provide a list of the players that would be profiled. This meant finding the 10 best (and worst) batters. However, after ranking the players, could he quantify the probability that he ranked them incorrectly? Because the article was based on data, he had to justify his choices and he wanted his decisions to be based on sound statistical grounds.
In March 2012, a flagship vocational program in Punjab, Pakistan-the Punjab Skills Development Fund (PSDF)-hit a roadblock. After months of planning, a pilot phase of training courses was launched in four of Punjab's poorest districts. The classes filled up, but the researchers in charge of evaluating PSDF's programs were worried. Earlier research indicated that a large portion of the target population-including a large number of women-were interested in vocational training. But, when it came time to enroll in the classes only a small fraction of the population showed up. The researchers wanted to find out why, before the program scaled up, but any delays in rolling out the program funded by the United Kingdom's Department for International Development and the Punjab government would not bode well for PSDF. A unique public-private partnership, PSDF hoped to overhaul skills training in Pakistan by using an evidence-based, demand-driven approach. At the core of the model was a close partnership between researchers and practitioners. But embedding rigorous research in a development program did not in and of itself ensure success. Instead, with PSDF, the approach created serious tensions between policymakers and researchers, as administrative demands routinely flew in the face of applying evidence-based program design. Case number 2122.0
Supplement to case KS1261. In March 2012, a flagship vocational program in Punjab, Pakistan-the Punjab Skills Development Fund (PSDF)-hit a roadblock. After months of planning, a pilot phase of training courses was launched in four of Punjab's poorest districts. The classes filled up, but the researchers in charge of evaluating PSDF's programs were worried. Earlier research indicated that a large portion of the target population-including a large number of women-were interested in vocational training. But, when it came time to enroll in the classes only a small fraction of the population showed up. The researchers wanted to find out why, before the program scaled up, but any delays in rolling out the program funded by the United Kingdom's Department for International Development and the Punjab government would not bode well for PSDF. A unique public-private partnership, PSDF hoped to overhaul skills training in Pakistan by using an evidence-based, demand-driven approach. At the core of the model was a close partnership between researchers and practitioners. But embedding rigorous research in a development program did not in and of itself ensure success. Instead, with PSDF, the approach created serious tensions between policymakers and researchers, as administrative demands routinely flew in the face of applying evidence-based program design. Case number 2122.1
The case is set in March 2018. Neha Bhatia Ramdas, Director of Sales at Juntos Global, is visiting a prospective partner bank of her company in Singapore, which wants to expand its outreach amongst the unbanked population in South East Asia. The partner bank is not comfortable in sharing their customer data with Juntos, and Ramdas has been entrusted with the difficult task of convincing the partner bank to share their data with Juntos. Juntos specialises in deploying SMS based solutions powered by data analytics capabilities for financial service providers to help them serve their newly banked customers more efficiently. The Juntos SMS based platform helps the newly banked customers to build formal savings habits through behavioural science strategies by building a relationship of 'trust' with their customers. By creating trusting relationships between financial service providers and their customers based on the principles of Human Centred Design (HCD), Juntos was able to generate measurable increases in account usage in many of its projects. The Juntos business model was a partnership model, wherein the partner financial service was equally involved in the implementation of the Juntos solution, especially at the beginning of the project. Juntos used an agile implementation process for project implementation that was preceded by a useful ethnographic study that allowed Juntos to customise their solution for their partner clients. Juntos typically implemented pilot projets with their partners, before implementing large-scale projects. The flipside of this arrangement was the long sales cycle that was the primary impediment to Juntos success.
With more than 72,000 employees and revenues approaching the $50B mark, Cisco Systems is one of the largest information technology and networking firms globally. As the company grew and expanded into different lines of businesses, Cisco consistently looked outwards for acquisition targets that could supplement its considerable size and reach. As a follow-up to its well-received $2.7B acquisition of SourceFire in 2013, which seamlessly integrated new cybersecurity offerings into the Security business group, Cisco began conversations with OpenDNS. OpenDNS was a fast-growing start-up with credibility in the cloud security space, but there were also concerns about how its Silicon Valley culture and flat organizational culture would mesh with Cisco's more staid corporate environment. This case considers the dilemmas that two Cisco executives, Karen Ashley and Dianne Nakanishi, face as they make a final decision about whether and how to acquire and integrate OpenDNS.
In 2016, a trial began to determine the future of Sabine Oil & Gas Corporation's $3 billion chapter 11 reorganization plan. The plan called for first and second lien secured creditors to receive new claims representing approximately 98% of the reorganized company's enterprise value, leaving unsecured creditors, owed $1.4 billion, to recover less than two cents on the dollar. The plan had the support of the secured creditors, but unsecured creditors were strongly opposed. At the heart of the unsecured creditors' objections to the plan was a dramatically different view on valuation. How much were Sabine's oil and gas reserves worth today? How much were they worth at the time Sabine filed for chapter 11? And, based on these valuations, what was a fair recovery for Sabine's creditors?
JD, China's second largest e-commerce company by gross merchandise volume (GMV) after Alibaba, had expanded rapidly from 2012 to 2016. When the company celebrated its 13th birthday in 2017, Richard Liu, its founder, deliberated on the company's growth strategies. The landscape of China's e-commerce market had changed drastically in recent years. The growth in the e-commerce market had declined significantly. Furthermore, the advancement of AI and big data was turning shopping into a boundaryless experience-consumers could purchase products tailored to their preferences anywhere and anytime. Finally, JD's rival, Alibaba, had made rapid moves to improve its logistics capabilities and expanded aggressively in the offline market. Liu must decide how JD should compete and how to expand the company's offline strategy.
In August 2015, the general manager of Western Regions Gas Pipeline Company was gazing at a natural gas pipeline map in his Beijing office. The multinational natural gas pipeline (MNGP) would deliver natural gas from the Republic of Timur to China through the Republic of Frespirit. The construction of the pipeline was at the planning stage. To construct and operate the MNGP, Western Regions Gas Pipeline Company was legally required to set up a joint venture with a local company in each of the transit countries. However, the construction period for the MNGP was extremely tight, and the relationships between the stakeholders were quite complicated. How to exercise control in the joint ventures to ensure the smooth construction and operation of the MNGP had become a difficult issue.