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Ford Motor Company was concerned that five tug operators, each costing $100,000 annually over three shifts, was too many. Colin Cruji was hired to look into the tug operators and see if Ford could eliminate one or more of the five positions per shift. Colin has now collected some data. How should he use the data he has collected to evaluate the position of tug operator? Does the data support the possibility of eliminating a tug operator without affecting the current level of garbage collection? (This is a sequel to Ford Motor Company and Cruji Management Consulting (A), case 9A99E013.)

The founder of English Street has decided to take the company to a group of venture capitalists. English Street is an Internet company that provides multimedia content for teaching English to Hong Kong and China residents. She has developed the idea of English Street into a prototype Web site, and is putting together a prospectus (proposal) for a presentation to obtain funding for full development of her business plan.

This note provides a brief overview of the relationship between the macro behaviour of the economy and the resulting impact on investment returns. It is designed to be used within a course on investments or portfolio management. The note starts by establishing a framework for estimating the long-run expected returns of the two major categories of financial assets - equities and (long-term) bonds - on the basis of the fundamental valuation theorem, which states that value comes from expected future discounted cash flows. The note demonstrates that this theorem implies that the long-run expected real returns on equities depend on the dividend growth rate and the expected average growth rate in dividends, which in turn depends on long-run macroeconomic growth. Expected long-term real returns on bonds depend on the yield to maturity and the long-run inflation rate. The note then goes on to establish the long-run behaviour of four key macroeconomic variables: output, inflation, interest rates, and exchange rates. An overview of how to identify business cycle positions is an important component of this analysis. Also, the analysis focuses on methods for identifying disequilibrium situations for interest rates. Finally, the note concludes by discussing some short-run influences on macroeconomic variables and the key role of monetary policy.

Nanpo (Holdings) Limited, a Hong Kong-based Chinese food distributor is planning for its initial public offering on the Stock Exchange of Hong Kong. Nanpo was established in 1981 with a mandate to be the sole distributor of poultry, fresh water fish, livestock, and fruit and vegetables produced in Guangdong, the bordering province of mainland China. Throughout the years, Nanpo has built up an admirable market share in many food categories and a distribution channel of 500 wholesalers. Recently, the Ministry of Foreign Trade and Economic Cooperation in the PRC reaffirmed its sole distributor status. The management of Nanpo has developed an aggressive growth plan which includes new food processing facilities and forward integration into retail outlets and restaurant chains. Nanpo has turned to the capital market of Hong Kong to finance its future growth. Nanpo's management has decided to float 25% of the company and has engaged a local merchant bank, Hinson Capital, as its lead underwriter. Three weeks away from the planned IPO, Jack Yang, a director of Nanpo, is once again reviewing the details of pricing.

An assistant manager of a branch has been asked by his superior to hide documents relating to a lawsuit outside of the office until the trial is over. He does not have the best of the relationships with this superior, and so he must decide what to do.

The Vancouver plant manager of British Columbia Box Limited was about to make a half-million dollar decision. The plant required a new $500,000 machine, and the manager must decide which manufacturer will get the order. The case illustrates many concepts in industrial buying.

The CFO of UniHost Corporation is faced with a requirement to raise capital. UniHost is involved in the development, syndication, franchising and management of motels and hotels in Canada. Most of its properties were flagged under the Quality and Comfort brands. UniHost required capital to repay a $52 million bridge loan facility and fund multiple growth opportunities. Financing alternatives included equity, convertible bonds and high yield debt. The CFO had to decide on both the form and structure of the financing. The case allows for discussion of a number of issues, including: the public financing process in Canada, financing strategy (i.e. choice of the form of financing in the context of a likely sequence of financings), optimal capital structure, and the impact of financing decisions on the overall strategy of a firm. With respect to the debt alternatives, data is provided which allows for analysis of the choice of debt maturity, bond covenants and bond rating agencies.

IFC Manufacturing, an automobile parts producer, was attempting to raise capital to fund expansion in Mexico. In order to secure financing, the creditor banks required an assessment of the IFC's financial risk management apparatus. IFC had exposures to foreign exchange and interest rates. IFC had grown aggressively by acquiring firms on both sides of the Canadian-U.S. border, funding these purchases in U.S. dollars. The case allows for discussion of a number of issues, including: internal controls (the Group of Thirty recommendations for good derivatives practices), risk measurement and management. Data is provided which allows students to qualify translational and transactional risk exposures. Information is also provided allowing students to evaluate IFC's portfolio of hedging instruments which includes plain vanilla options, single barrier options, double barrier options and average rate options.

The vice president, finance must quickly address several choices concerning a proposed office relocation. His analysis will likely include discounted cash flow analysis (DCF) and the topics of capital asset pooling and tax benefits. The case compares and contrasts the concepts of DCF and net present value analysis with Seagram's version of EVA (Economic Value Added). The case also provides a unique Asian focus for this type of decision. Office space location and the rent vs. buy option are extremely important decisions faced by a multitude of managers in Hong Kong. The traditional wisdom in Hong Kong has been that buying property was more efficient - especially given the phenomenal appreciation of property values. However, it can serve to distract a firm from its' core competencies and tie up working capital in non-producing assets. Finally, the case also provides a brief overview of capital asset pooling and depreciation tax law in Hong Kong. While the discussion is brief, it nevertheless provides an adequate first step towards further study in this area. Students from other areas of the world will also be interested in examining the differences between their country's tax laws and Hong Kong's.

Kandy Chan, the director of operations at the Hong Kong Convention and Exhibition Centre is trying to decide whether or not to purchase 2000 new chairs. As he looks ahead, Chan anticipates an occasional shortage of chairs during major events. He has a choice between purchasing the needed chairs outright, or signing an agreement to rent the chairs for the coming peak season with an option to rent them as well during the following season.

The newly appointed branch manager at a branch of PEB Securities was worried. He had just finished speaking to a sales assistant regarding a series of transactions made by him over the last few months. Earlier in the day, the branch manager had received a call from a client's lawyer regarding the mishandling of her account by the firm. As he sat down to review the file again, he wondered which of the transactions, if any, exposed the firm to legal liability and what his next course of action should be. The main pedagogical objectives of this case are to explore liability issues. Several transactions are presented; in each case, students must examine the legal as well as ethical issues and determine to what extent the individual or firm can be held liable.

Gervais Lavoie, managing director of the Canadian-Chinese joint venture, Beijing Oasis High Nutrition Food Co., needs to decide what means of distribution is most appropriate for the company's newly-developed fruit nectars. The decision is complicated by the fact that different means of distribution have different implications for the ultimate pricing and promotion of the products.

Kent Van Dyk and Ian Kennard are celebrating their third year anniversary as the owners of Willie's Cafe. Their restaurant has achieved impressive growth but the partners want to grow the business even further. They are contemplating renovating the basement of the restaurant and using the area to expand their catering operations.

Anthony Ng, the general manager of Kowloon Development Co. Ltd., has been approached by a real-estate agent proposing a new development project for possible investment by Kowloon Development. Although the project is attractive, there are a number of associated uncertainties that complicate Ng's decision about whether or not to recommend investment. He has only a few days to review the proposal and make a decision before the next board meeting.

Stock Research Group (SRG) is an information broker. SRG's primary business is serving as a collection point for information useful to investors seeking to invest in small-cap mining companies. SRG, in effect, pulls potential investors to its site, then channels them to the specific sites of companies in which the investors may have an investment interest. SRG's revenue comes from the mining companies, who generally pay on an impression basis (i.e. pay for eyeballs delivered to their web pages). The resource companies are willing to pay for this, since on their own they are much less likely to attract much investor traffic. SRG is also in the business of developing web pages for these small-cap resource firms, since generally the companies do not have in-house expertise to create and maintain their web presence. SRG thus represents a new kind of business - the specialized infomediary, or information broker. SRG is doing quite well financially, something that cannot be said of many web-based companies. SRG's main challenges involve managing growth, deciding on appropriate future directions, and determining how best to lever the virtual community they have created.

One of Canada's high-tech success stories, Bombardier, changed the airline industry with the introduction of its short-haul turbo-prop planes and jets in the early 1990s. By the mid-1990s, a new player from Brazil, Embraer, had entered the market and was capturing a lot of business from Bombardier. Bombardier claimed that the success of Embraer was due to unfair subsidies through a government program, so Bombardier challenged the policies through the WTO. Embraer charged back that Bombardier had long received subsidies through Canadian government loans and grants. In an industry which was expected to double in the next five years, the stakes were high. This case discusses the dispute resolution process within the WTO, and the impacts that subsidies and WTO subsidy restrictions may have on industry structure.

Tom Barnes, executive director of Asiasports Ltd., was evaluating several options for growth for the sports management company. Asiasports principal sports properties were the South China Ice Hockey League and the World Ice Hockey 5's tournament, both based in Hong Kong. Among the alternatives available: Barnes could develop hockey in other countries in Southeast Asia; he could acquire new sports properties; or he could expand into in-line hockey promotion in Hong Kong.

Grant Lewis, a Chartered Accountant (CA) and senior manager at a Big Six professional services firm, was investigating the feasibility of establishing a CA firm with two former colleagues. Mr. Lewis recognized the need for external financing during the start-up phase of the business. In preparation for a meeting with his bank manager, Mr. Lewis has been asked to prepare a projected monthly cash flow statement as well as a balance sheet and income statement for the first year of operations. The primary objective of the case is to get students to develop these financial statements and appreciate the links and differences between a cash flow and an income statement. The case also allows students to examine the bank lending process, discuss the merits and drawbacks of starting a small business, and become familiar with some of the basic components and sources of relevant market information for a new venture.

The manager of the West Coast Division plant of The Universal Pulp and Paper Co. Ltd. had just been informed that the head office had received several complaints from customers concerning product quality and late deliveries. He had two weeks to determine the cause of these problems and decide what to do.

The plant manager at Birmingham Megatron's manufacturing operation was looking to modify an existing production unit in order to expand output for an additional contract. This new contract was still at the bidding stage, and cost accounting had proposed a bid of $64.00/block for the required 1,400 blocks/week. She wondered if she could afford to offer a more competitive price in order to win this contract.