In April 2021, Jo Santiago, account manager of the London, Ontario, branch of Goliath National Bank (GNB) was reviewing a request for a $400,000 long-term loan and a $50,000 working capital loan for Atlohsa Gifts (AG). AG's general manager, April White, had made the request. AG was a subsidiary of Atlohsa Family Healing Services (AFHS) and its mandate was to use its net earnings to fund initiatives for the betterment of Indigenous people. White was planning to use the long-term loan to open a stand-alone location in downtown London on Richmond Street to expand operations outside of AFHS headquarters and accommodate a surge in AG's retail and wholesale growth due to recent events. Santiago felt good about AG's successful sales and aligned with the organization's mission and vision; however, he felt unsure about White's ability to manage this level of debt.
Luthra Engineering Industries (LEI), a small-scale, family-run manufacturing business, based in a small Indian city, is going through a crisis. Due to COVID-19 lockdowns, LEI had been shut for two months but has received the government's permission to re-open, albeit, if it complies with certain conditions. LEI can invite only 30 per cent of its employees back to the office amidst proper safety, leading to challenges of maintaining equity due to salary dilemmas and implementing various safety protocols. However, LEI's management are not only dealing with a pandemic looming large along but also macroeconomic uncertainty, business continuity, financial crunch, and employee motivation, equity, and safety. LEI's leaders need to make sense of this multi-pronged crisis.
The fictional company Airinit, now a division of the conglomerate ArgentAxis Holdings (AAH) after a recent merger, manufactures air fresheners, and at the start of the year it planned to generate a healthy profit. However, during the year, several events occur that cause the company's financial outcomes to deviate significantly, in an adverse way, from the original plans. To diagnose why the deviations occurred and more importantly whether any actions could be implemented to prevent the adverse outcomes from reoccurring, Airinit's accounting area has prepared a detailed variance analysis for consideration. This case is taught at the Darden School of Business as a full-class role-play in an Executive Education setting. It is also suitable for inclusion as a full-class role-play in an introductory core class in MBA or Master of Accounting management accounting. Alternatively, where the interpretation of a budget variance analysis has not been covered in a core course management accounting, the case is suitable for inclusion as a full-class role-play in an MBA, Master of Accounting, or undergraduate intermediate management accounting elective class. Students at all levels can relate to the fundamentals of the business and the value chain that the business develops-from raw inputs to an in-house manufacturing process and finally to the marketing and distribution of a product. The case takes on an enterprise approach so that the students can see how the budget variance analysis framework can be used to diagnose the internal financial health of an overall business.
This technical note provides an overview of the financial reporting process. It includes a discussion of key players in the process, financial reporting requirements, the external audit process, and the annual report.
E-commerce as a share of retail continues to grow, accelerated by the pandemic. This is particularly true of the online grocery market. As one of the largest online grocery markets in the world, the UK has many players, but two of the most dynamic are the market leader - Tesco - and Ocado. These two companies have taken markedly different approaches to executing and fulfilling online grocery orders from customers. Tesco has an extensive network of stores and primarily uses them as picking locations to prepare and ship customer orders. Ocado has no retail stores and uses highly automated distribution centers to prepare and ship customer orders. This case describes the UK online grocery market, the two companies and invites students to consider the different approaches: In what ways do they offer advantages to the company and customer and, ultimately, which one is better suited to the UK online grocery market?
Companies need to find a compelling growth strategy and can pursue several options. They can grow internally via organic means, they can grow through mergers and acquisitions, or they can use various venturing tools such as corporate venture capital, partnering with ventures groups, or hybrid models. All of these involve tradeoffs, and the success of any particular strategy depends on external factors as well as a firm's organizational design. When looking at corporate venturing options, there is no "right" or "wrong" option, and strategic choices will need to be considered in light of internal and external factors. Hilti is a large established legacy company, active worldwide. It has traditionally grown its hardware business via organic growth and internal development. Over the past 10-15 years Hilti has increased its enterprise value, mainly by internal growth and by improving and optimizing financial controls and resource allocation. At the same time Hilti, began a process to use other corporate venturing strategies and to increase the share of turnover earned from software - as opposed to hardware - lines of business.
Philippines-headquartered cloud kitchen CloudEats harbored the ambition of becoming the largest cloud kitchen in Southeast Asia, but it was considering several strategic paths forward.
In May 2022, the founder and chief executive officer of Just Kitchen Holdings Corporation (Just Kitchen), a Canada-based and publicly listed operator of ghost kitchens in Taiwan, met with the company’s management team to deliberate on the company’s plan to expand into new markets, specifically, the Philippines. Their optimism for the Philippine market stemmed from the country’s growing online food delivery industry, favourable demographics, and supportive government policies. While the founder his team explored this expansion possibility, they recognized that entering the thriving online food delivery market presented advantages and disadvantages, and questions loomed: What would be the most effective approach to enter this market? And, equally importantly, what challenges and pitfalls should they anticipate as they ventured into such a business opportunity in the Philippines?
In June 2020, Steven Zwane, founder and chairperson of the Youth Leadership and Entrepreneurship Development (YLED) program, based in Johannesberg, South Africa, faced managing the uncertainty of COVID-19’s impact on the program’s long-term sustainability. YLED, a non-profit social enterprise aimed at empowering underprivileged youth, relied on donors and sponsorships to deliver its face-to-face entrepreneurship and leadership training program to grade eleven learners from township schools around Gauteng Province, South Africa. YLED's funding sources were affected by their sponsors’ and donors’ economic constraints during the pandemic, leaving uncertainty about the program's future. Should Zwane suspend YLED’s operations until the end of the pandemic or find an alternative means of delivery? If he suspended operations, what would happen to the young people, whose hopes and dreams could be crushed? If Zwane continued and found other means of delivery, how would he be able to do so without support from donors and sponsors?
In July 2022, the joint general manager of personnel and administration at the Indian Farmers Fertilizer Cooperative Limited (IFFCO)’s Paradeep unit received a call from the Delhi corporate office informing him of a complaint filed by the wife of a deceased employee against a current employee of the unit. The complaint alleged that the employee had defrauded the widow of approximately US$40,000—the sum total of her husband’s terminal death benefit. As the joint general manager worked to investigate the matter and prepare a report for senior management, he found himself struggling with the managerial need to safeguard the organization’s image. As a human resources manager, he contemplated several questions: How could an ethical culture be established and sustained in IFFCO? What strategic human resources measures should be adopted to avoid such situations in future? How could communication be used as enabler in this critical situation? Despite his mixed emotions and the limited time available to present his findings, he knew that he needed to ensure a fair and thorough investigation to resolve the issue.
Creditas Solutions Pvt. Ltd. (Creditas), a debt-collection and recovery start-up, had revolutionized the loan recovery process in India by combining data and technology to educate and empower its consumers. Ethera, its software-as-a-service platform, was a great success, and the company was on track to make $7.39 million in the financial year 2021–22. In order to increase its customer base and profits, the company was now faced with two challenges. First, it needed to determine how to convince its clients to accept a new fee structure. To establish additional and consistent revenue streams, the company was attempting to implement a licensing-based monetization model rather than its current recovery amount–linked model. Second, it needed to determine how it should plan for business expansion. The company had received queries from banks in west and southeast Asia, creating expansion potential abroad, and it was also contemplating entering other banking operations, such as lending and insurance. The chief executive officer wondered which of these growth strategies made the most sense for the business at this moment. Should the company increase its services in the areas of lending and insurance or expand to a global market?
Nestlé SA (Nestlé), as a multinational company, engaged strategically with societal issues at the local level and had tasked Nestlé East and Southern Africa Region (ESAR) with evaluating its shared value initiatives. Nestlé ESAR’s chairperson and managing director had to determine whether to take forward one of the of the organization’s strategic initiatives, the Makhoba Trust initiative. The managing director believed the model that he and the team had created through the work developing the Makhoba Trust initiative could be a sustainable framework for future Nestlé stakeholder collaboration. He was keen to share the progress with the global leadership team, but he knew hard questions would be asked. Was the project a successful shared value partnership and therefore worthy of more investment? Any decisions would have widespread implications for the company and the community of 1,400 rural households and 7,000 people.
On April 24, 2019, the founder and owner of Lifely Wellness Ltd. in the village of La Jolla, near San Diego, California, received a call from a customer who wanted to purchase some Jordan’s Oil, Lifely Wellness Ltd.’s best-selling product. Jordan’s Oil was an activated hemp-based cannabidiol tincture named after the founder’s son. However, the shop could not supply the product immediately to the customer because the delivery from its supplier was late—again. The founder had been investigating possible alternative sources of supply and wondered whether this was the right time to act. After sourcing two new suppliers, she faced a pressing business operations dilemma. Should she continue working with her current supplier, which controlled a significant part of the supply chain? Or should she develop a new relationship with one or two smaller suppliers? The founder knew that this decision could determine the future and survival of her operation; therefore, she needed to take an in-depth look at her business options, from a strategic perspective.
In early 2020, during the COVID-19 pandemic and subsequent lockdown periods, the marketing director of Anand Milk Union Limited (Amul) was in a virtual meeting with his marketing manager. The two men were discussing plans for a marketing campaign for the hotel, restaurant, and cafes (HoReCa) market segment to be run during the pandemic. The campaign was expected to target and engage the key stakeholders (or influencers) of the HoReCa segment-the chefs in the food service industry. Before the pandemic, Amul engaged with chefs mainly through personal relationships, based on individual in-person meetings. However, in context of the adversity caused by the outbreak of the COVID-19 pandemic, in-person meetings were no longer feasible. The challenge for Amul was to build a scalable and executable marketing campaign that would engage chefs, the market's key influencers.
Bay Towel Linen and Uniform Rental Inc. (Bay Towel) was a family-owned business based in Green Bay, Wisconsin, that had been serving the state and growing organically for about 100 years. The company provided uniform and linen rental and laundry services from its head office in Green Bay and two distribution centres in central and southern Wisconsin. But in the wake of disruptions to global supply chains caused by the COVID-19 pandemic in 2020, Bay Towel faced challenges in serving customers better while reducing operating costs. The company had a few options to do so, but how could it choose the most cost-effective solution with the least investment?
The founder of Zentein Nutrition Inc. needed a short-term plan for 2023 to maximize his goals for business growth and customer reach. The company was based in London, Ontario and provided natural, simple, healthy, and nutritious food alternatives to an affluent, health-conscious, and health-knowledgeable customer base. Its competitors included many large companies in a highly competitive and fragmented market, but the company had a competitive edge by offering a simple and sustainable ingredient list, use of collagen as a protein source, and made-to order protein bars. With demand outpacing supply, the founder paused all promotional efforts but the company continued to grow exponentially with only word-of-mouth promotion and a social media presence. The founder was now wondering which sales and distribution channels he should pursue for the rest of 2023, and also for the future, after supply would be increased with automation. The three sales channel options-the company website, the Amazon online platform, and traditional retail stores-each offered specific benefits and drawbacks, but the founder had to make a decision that would deliver both quantitative and qualitative results.
In May 2022, the founder and chief executive officer of Just Kitchen Holdings Corporation (Just Kitchen), a Canada-based and publicly listed operator of ghost kitchens in Taiwan, met with the company's management team to deliberate on the company's plan to expand into new markets, specifically, the Philippines. Their optimism for the Philippine market stemmed from the country's growing online food delivery industry, favourable demographics, and supportive government policies. While the founder his team explored this expansion possibility, they recognized that entering the thriving online food delivery market presented advantages and disadvantages, and questions loomed: What would be the most effective approach to enter this market? And, equally importantly, what challenges and pitfalls should they anticipate as they ventured into such a business opportunity in the Philippines?
In 2021, Hitachi Limited was reconsidering its ownership of Hitachi Construction Machinery (HCM). The decision about HCM's future was one of the last steps in a more than decade-long effort to reorient Hitachi from a manufacturing conglomerate to a service-oriented company. HCM was a global player in the construction and mining equipment business, and although it no longer relied on Hitachi for product technology, Hitachi's technological capabilities might once again become more valuable to HCM as automation and electrification of construction and mining equipment gained importance. Would there be greater synergies from more closely integrating HCM with Hitachi's other businesses, or would both sides be better off if HCM was completely independent?