In December 2017, Jacobs Douwe Egberts (JDE, a Dutch coffee company) made an offer to acquire OldTown Berhad (OTB), a Malaysian coffee company. Three large shareholders, representing more than half of the outstanding shares, have agreed to tender their shares and analysts who follow OTB are recommending that investors accept the offer. The remaining shareholders must decide if the acquisition offer is reasonable and whether to tender their shares or not.
One of the hallmarks of the digital revolution is the rise of the socially-connected consumer. Concomitantly, the ability of companies to affect and measure the social interactions among customers has grown tremendously. Consequently, in assessing the full value of each customer to the firm it is no longer sufficient to only consider a customer's worth in terms of the discounted cash flows he or she provides through direct payments, it is also critical to incorporate the indirect value generated through the customer's social influence. In this note we develop a framework for measuring and quantifying the social value that a customer generates. We derive a simple expression for Customer Social Value (CSV) and show how to combine it with the commonly used expression for Customer Lifetime Value (CLV). The combined entity is termed Customer Lifetime Social Value (CLSV). The note uses concrete examples to illustrate the main ideas and explores a host of issues related to how customers create value for the firm through their social interactions, such as the duration of social influence, reduction in acquisition costs, segmentation implications, relevance for influencer marketing programs, and connection to firm-level valuation.
Portugal was not ready to join the European Monetary Union in 1999. With strong unions, weak competitiveness and a legacy of socialism, it could not compete with north-European countries. After borrowing extensively to fund deficits, Portugal went into debt crisis in 2011 and had to borrow from the Troika. As banks failed, structural adjustment followed. Today several structural issues and the threat of external risks continue to cast a shadows on its otherwise remarkable recovery.
Saudi Arabia's King Salman faces several challenges, both domestic and foreign. Domestically, he need to build the country's economy to accommodate a "youth bulge" while balancing between liberals and conservatives. And he needs to diversify the economy away from its reliance on oil. Internationally, he must cope with the Arab Spring, with war in Syria and Yemen as well as the threats from Iran and ISIS and continuing friction between Palestinians and Israelis. The key to these issues is Vision 2030 - the plan his son, the Crown Prince, has introduced and begun implementing.
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.
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.
It is difficult to find evidence that Canada’s finance sector is serious about keeping up with the fintech revolution happening in other parts of the world. Of particular concern is the fact that Canada is falling behind in robo-advice solutions. A major reason for this is a fear of a killing off of industry jobs. But in reality, the future of the advice sector won’t be dominated by robots. It will be a hybrid market in which human advisors use digital techniques to gather data and generate recommendations faster and more objectively than they do today. The conclusion that financial advisors are moving to a “behavioural-based” world was laid out in Financial Advice in Canada: A Way Forward, an Ivey paper written with Ivey’s Scotiabank Digital Banking Lab. With the industry about to change, the following five things need to happen: 1) finance education needs to include more behavioural (and not just technical) skills; 2) regulators need to change their licensing and proficiency requirements to include more skills in interpreting and explaining numbers; 3) firms need to add to their hiring criteria a new component that demonstrates a candidate’s capacity to learn and deliver behavioural-based insights; 4) existing advisors need to go back to school to be as up to date as new recruits; and 5) product providers (e.g., fund companies) will need to nudge their value propositions.
When appointed chief executive in 2014, Mary Barra was tasked with completing the company’s post-bankruptcy recovery while shifting GM’s strategic gears. Shortly after, GM’s restructuring was threatened by a defective ignition switch scandal linked to over 100 deaths. In this Ivey Business Journal interview, topics include the automobile industry’s new trend towards software validation (with an emphasis on constant upgrades and minimum viable products), versus the old approach of mechanical validation (with an emphasis on heavy retesting and seeking initial perfection). Barra has been surprised by autonomous driving, and says that due to emerging technologies, workers of all education levels must be prepared to change careers multiple times. When GM faces a crisis, she assembles a team guided by three principles: doing the right thing for customers, being honest and transparent, and doing everything possible to ensure the issue never recurs. Barra has seen significant positive movement in terms of corporate responsibility versus when she attended business school in the late 1980s, and sees an opportunity for business scholars to study the importance of long-term perspectives over short-term results.
Charles Brindamour is the CEO of Intact Financial Corporation, an insurance firm that makes profits purely from selling insurance—unlike most insurance firms, which rely on investing insurance premiums to make profits. In this Ivey Business Journal interview, he explains how for the last five years, Intact has been focused on three trends: changing customer expectations, software, and data explosion and democratization. Besides technology, the most important change in the industry has been customers’ expectations of their suppliers, which have been amplified by social media. Software has changed how people access information and share expertise and experience. Other changes affecting the industry are resulting from increased data generation and climate change. In Brindamour’s view, disruption and preparing for disruption constitute a continuum. The first step is dealing with the basics of disruption that can occur. The second step in the continuum is to invest in enabling technology and skills. The third step is to invest in innovation. The fourth stage is “research and venture.” Brindamour says that a gap in business school learning is the process of learning not just as an individual or leader, but as an organization. Disruptors, he claims, are not software geniuses; they are the ones who see the gap between what is and what is expected and provide strong design ideas.
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?
Supplement to case P93A. In 2015, the Nevada Public Utility Commission (PUC) passed a ruling that essentially eliminated net metering, dramatically reducing the compensation rate for home solar owners selling excess electricity back to the utility company. As a result, solar companies, including Sunrun, were forced to close down operations, severing 3,000 industry jobs. This case profiles the PUC's decision, and Sunrun's strategy in dealing with out-of-market forces in order to retain a sales presence in the state of Nevada.
Sandy Sim is a senior consultant at Future Solutions, a strategy consulting firm. She was tasked by Comfort Del Gro (CDG), a multinational land transport company, to help revive their taxi business in Singapore. Companies like Grab, a regional third-party taxi-booking app, and Uber, a global transportation app, made use of technology to improve the booking of taxis and introduced private cars to meet the demand for taxis, especially at peak hours. Many customers found their services better and more convenient to use. Some taxi drivers prefer to use the Grab app for client bookings or drive private cars instead. What should Sim recommend for CDG to turn around its flagging fortunes in the taxi segment?