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In this note, several measures to evaluate the performance of a mutual fund are discussed, including Sharpe Ratio, Treynor Ratio, Jensen’s Measure, and Modigliani’s Measure. It is well known that investors can increase expected returns by assuming higher risk, and hence performance measures must incorporate the concept of risk.

Termination of WorldSpace India’s satellite radio operations in 2009 was part of the restructuring efforts of the Maryland, U.S.-based parent company that had filed for bankruptcy in October 2008. As of June 30, 2008, WorldSpace Inc. (later 1 WorldSpace) had listed debt of US$2.1 billion and assets of US$307.4 million and had sought bankruptcy protection to help repay its debts. The parent’s two regional satellites, AfriStar and AsiaStar, and related ground assets had been acquired by U.S.-based Liberty Media, which also owned 40 per cent of satellite radio service provider Sirius XM Radio. The termination of WorldSpace raised a series of questions regarding early-mover disadvantages, business ideas, and pricing strategy. Analysts further extended the arguments to draw parallels with the satellite telephone service provider Iridium to question strategic decisions relating to the service-hardware mix, service provision and pricing, power of complementary products, power of substitutes, and consumers’ willingness to pay for incremental choice.

In 2004, Kaneo Itoh, president of the consumer electronics firm Pioneer Corporation, was considering acquiring the plasma display operations of another Japanese firm, NEC. Pioneer had decided some years ago that plasma display panel (PDP) technology was a good strategic area in which to invest. Recently, Pioneer had been selling increasing numbers of plasma television sets using PDPs. While the company was building a new PDP production facility that would soon become operational if demand continued to increase, additional capacity would become necessary. Buying NEC’s plasma operations would give Pioneer this capacity, the potential for realizing scale economies, and some valuable intellectual property NEC had developed. Itoh had to make a decision: Should Pioneer buy NEC’s plasma business?

This case, a supplement to Pioneer Corporation: The NEC Plasma Opportunity (A), is set in 2009.

The new vice president and general manager of Best Optical Ltd. is trying to formulate a strategy in response to his competitors’ actions. Best Optical is a distributor of vision hardware and other distributors are buying up retail outlets and threatening to shut Best Optical out of the market. The vice president has to decide how to respond to the threat and what implications his response will have on Best Optical’s business.

Most family businesses do not survive beyond two or three generations. One of the main reasons for this short lifespan is the lack of governance mechanisms in family businesses. With better family governance, business development becomes a richer experience and continuity is ensured across generations. This case is about an Indian family business, GMR Group, which was established a quarter-century ago, and by 2010 had become one of the major diversified infrastructure organizations in the country, with large-scale interests in infrastructure (energy, roads, and airports) and manufacturing (agri-business, mainly sugar). Since its founding, the Group had come a long way, from an independent proprietary enterprise to a family-owned holding corporation with several companies under its control, along with external stakeholders. The growth of the group had been led by the entrepreneurial zeal and organizational capabilities of its founder, G.M. Rao. Having seen many family businesses breaking up for lack of adequate governance mechanisms, Rao led the way for the writing of his family business's constitution with the help of several experts in 2007. The writing process of the constitution and the policies and processes developed were optimal for maximizing GMR's performance and the family's prosperity in current and future generations. This case captures the essential processes and outcomes of writing a family business constitution.

Ron Burkle is an activist investor and stockholder of Barnes & Noble, Inc. (BN). In September 2010, through his company, The Yucaipa Companies (Yucaipa), Burkle filed a “Definitive Proxy” to challenge BN’s slate of board-of-director nominees at the upcoming stockholder meeting. The proxy was made in response to a ruling against Yucaipa by the Delaware Chancery Court concerning a lawsuit that challenged Barnes and Noble’s poison-pill provision, which prevented outsiders from becoming majority stockholders. Burkle disagreed with BN’s founder, chairman, and owner of the majority stake in the company, Leonard Riggio, concerning BN’s long-term strategy. While Burkle wanted the company to cede ground to Amazon in the digital reader marketplace and instead concentrate on BN’s physical stores, Riggio believed that the Nook eReader should be the centrepiece of the company’s strategy. Riggio had to respond to the Yucaipa proxy in the short term and come up with a plan of action to retain control of the company in the long term.

CCM Hockey had been losing market share to competitors in the hockey skate business. In order to counter this trend, in March 2008 the most innovative pair of hockey skates ever developed by CCM was made available to customers. Soon after the launch, however, some quality issues developed. In 2009, new and improved skates were put on the market but they looked identical to the previous model. Buyers were skeptical and, as a result, sales were poor. Both the trade and individual consumers had lost confidence in the brand. CCM returned to the drawing board and redesigned the skates but also decided to launch them in fall 2010, instead of the normal industry cycle time of spring 2010. The decision was complicated by a stagnant market and indistinct consumer segments. The brand manager and his assistant were faced with developing a strong launch strategy because the future of the CCM skate brand depended on it.

After successfully establishing more than 33 retail stores in large cities across China, Decathlon, a large French sporting goods manufacturer and retailer, planned to open its official online shopping website in China. The marketing department head of Decathlon China had experimented with several new social media platforms in China in order to increase the brand awareness among online shoppers. At the upcoming executive meeting, the marketing department head wanted to persuade the chief executive officer to dedicate more resources to social media to both increase online sales in the short term and market share in the long term.

Crown Investment Corporation (CIC) of Saskatchewan and its partners, Mosaic Corporation and CIBC, have decided to sell a fertilizer plant that they jointly own. Now, CIC and its associates have to come up with a value assessment and mode of sale. Using different valuation methodologies, students are to determine the plant's value.

Godrej, a fast-moving commercial goods (FMCG) company in India that was historically known for its refrigerators in the Indian market, contemplated launching a new product for rural markets. Chotukool was an unconventional cooling solution targeted at the bottom of the pyramid (BOP) segment in India. More than 80 per cent of the Indian population did not own a refrigerator and 50 per cent earned less than US$2 per day. The study tracks Godrej’s journey of disruptive innovations from the conception of the idea to the marketing challenges faced by the company. It also focuses at length on how the organization planned to execute two parallel business models, with one aimed at the consumers of traditional refrigerators and the other simultaneously targeting current non-consumers. The case focuses on the management challenge of innovating across the value chain in order to succeed at social innovations.

There are not many families in the world that can claim continuity of existence for over 76 generations in business or otherwise. Families that survive over the long term tend to have strong values that are in line with the basic principles of trusteeship — to preserve and grow wealth (both material and otherwise) for the benefit of future generations. This case is based on the history and current challenges of the Mewar dynasty, who ruled part of India for 13 centuries. The family must consider the issue of succession and continuity in its palace hotel business and non-commercial activities.

In early 2008, Campbell Soup Company, a global food and beverage enterprise, is experimenting with a new way of understanding the mindset of its consumers. This has been prompted by the stagnation in sales of its soup products in the United States, its home market, where the soups category has matured. For decades, the company’s focus in marketing research has been on tracking how the end users, having bought its soup products at stores, consume them at home. But now, it is keen on tracking the shoppers while they are searching the retail aisles. The company is planning to deploy the techniques of consumer neuroscience, a relatively new discipline, for this purpose.

This note introduces the concept of risk or merger arbitrage. Risk arbitrage is an investing method that attempts to capitalize on announced transactions pertaining to mergers, spin-offs, takeovers, liquidations, and corporate restructuring. The arbitrageur attempts to create riskless profit by simultaneous purchases and/or sales of assets that are part of an announced transaction. In the note, we outline the basics types of deals — including cash mergers, stock mergers, cash-stock deals and embedded options — and the methods to evaluate their profitability. The note also provides information on using Bloomberg’s mergers and acquisitions database and the Bloomberg M&A Analysis function to track pending transactions in the early and mid-2000s.

Visual Basic for Applications (VBA) is a programming language built into Microsoft Office and other applications. In Microsoft Excel, VBA can be used to develop models, simplify repetitive tasks, and increase user-friendliness. This note is designed to provide students with a basic understanding of the building blocks of VBA programming. It is intended as an introductory reading for students with no prior experience in VBA programming.

This case focuses on a significant problem faced by county-owned Prairie Health Service’s administrators: What could be done to reduce multiple billings and other redundancies among the four divisions of the organization? The administrators’ goal was to implement an integrated records management system that would streamline the registration and billing processes for patients, thereby increasing efficiency and timeliness, as well as reduce financial losses. While this was a fiscally responsible goal for the organization, the records management software package selected by the CEO was inadequate for the task. Rather than listen to the recommendations of his division administrators who had spent considerable time researching potential software, the CEO seemed to be basing his selection decision on the personal relationship he had developed with sales representatives from one of the software firms.

This case deals with the challenges faced at L’Oseraie, a nursing home located in the northeast of France. The director of L’Oseraie had to meet her new boss and brief him on the organization’s challenges while offering suggestions. A key obstacle involved employee motivation and engagement, particularly after a recent absenteeism episode. Furthermore, the lack of health care staff in France meant that employees might need to be sourced from abroad, perhaps from Eastern Europe or the French-speaking countries of North Africa. How could the director implement a strategy that would alleviate the day-to-day problems of the nursing home?

The Chinese fireworks industry thrived after China adopted the open-door policy in the late 1970s, and grew to make up 90 per cent of the world’s fireworks export sales. However, starting in the mid-1990s, safety concerns led governments both in China and abroad to set up stricter regulations. At the same time, there was rapid growth in the number of small family-run fireworks workshops, whose relentless price-cutting drove down profit margins. Students are asked to undertake an industry analysis, estimate the industry attractiveness, and propose possible ways to improve the industry attractiveness from an individual investor’s point of view. Jerry Yu is an American-born Chinese in New York who has been invited to buy a fireworks factory in Liuyang, Hunan.

The majority owner and general manager of City Furniture and Mattress (CFM) needed to make several decisions that would determine the company’s strategy. CFM had continued to grow in terms of sales, but the general manager and his father, also an owner and manager at CFM, were concerned with profitability and the increasing competition from local and big-box stores. The general manager looked at several options including capital investment, expanding global outsourcing, store network expansion, and vertical integration.

In December 2009, about a year after it suffered a crisis when clients walked away from massive derivative losses, Gulf Bank’s new CEO is trying to change the governance and operation of Gulf Bank. This case focuses on a turnaround situation and provides students with insight into evolving corporate governance standards in Kuwait. After assessing the situation that the CEO faces, students have to decide what change he should pursue and how he should carry it out. From a broad industry governance perspective, students can examine the state of banking regulation and oversight in Kuwait and suggest ways that corporate governance can be strengthened.