After a tsunami hits his island nation, Sahan Kumara believes that his family's business--one of the largest conglomerates in the region--should help with the country's recovery. He, his father, and his brother agree on the need to contribute financially. But Sahan wonders if that's enough. The Kumara Group has the resources and expertise to oversee the country's rebuilding program--which is faltering under the direction of the government and NGOs. As Sahan wrestles with the question of how involved Kumara should get, he weighs conflicting advice from his brother, others in the company, and an old friend at a different firm. This fictional case study by Christopher J. Malloy features expert commentary by Nirvana Chaudhary and Margaret Schuler.
After a tsunami hits his island nation, Sahan Kumara believes that his family's business--one of the largest conglomerates in the region--should help with the country's recovery. He, his father, and his brother agree on the need to contribute financially. But Sahan wonders if that's enough. The Kumara Group has the resources and expertise to oversee the country's rebuilding program--which is faltering under the direction of the government and NGOs. As Sahan wrestles with the question of how involved Kumara should get, he weighs conflicting advice from his brother, others in the company, and an old friend at a different firm. This fictional case study by Christopher J. Malloy features expert commentary by Nirvana Chaudhary and Margaret Schuler.
After a tsunami hits his island nation, Sahan Kumara believes that his family's business--one of the largest conglomerates in the region--should help with the country's recovery. He, his father, and his brother agree on the need to contribute financially. But Sahan wonders if that's enough. The Kumara Group has the resources and expertise to oversee the country's rebuilding program--which is faltering under the direction of the government and NGOs. As Sahan wrestles with the question of how involved Kumara should get, he weighs conflicting advice from his brother, others in the company, and an old friend at a different firm. This fictional case study by Christopher J. Malloy features expert commentary by Nirvana Chaudhary and Margaret Schuler.
Life insurance is an asset owned by the majority of American adults (61%). Note that this 61% penetration rate is essentially at parity with home ownership (64%), and higher than that of 401(k) retirement account ownership (53%). Life settlements, or life insurance settlements, allow individuals to sell their life insurance policy in a secondary market. A life insurance policy is a tradable asset, for many individuals possibly the most valuable one in their portfolio after real estate and perhaps a retirement account. The fact that the policy is tradable, however, is hardly known to the general public. When surrendering a policy to the insurance carrier, the policyholder often incurs a substantial discount on its economic value. At the same time, the insurer keeps the difference between the policy's economic value and its surrender value. By selling a policy in the secondary market, in contrast, it is common to achieve a price markedly above the surrender value. Hence, life settlements allow policyholders to capture a much larger, if not full, share of their contracts' economic value. In this Industry Note, we lay out the basic structure of the market, the important players, and the basic economics. We also go into the potential ways to maximize returns in this market for both investors and policy holders.
Connecting life insurance policyholders with potential investors (called Life Settlement Providers), Ashar Group plays a pivotal role in the industry. Its current position is however increasingly being challenged by consumer-direct models, led by major providers seeking to shortcut brokers. Ashar faces a strategic dilemma in cooperating --- but also competing --- with these providers. Maintaining a mutually beneficial dynamic with policyholders, downstream intermediaries and other actors thus constitutes a balancing act. The context of this case is an underdeveloped market whose reputation has suffered from broker misconduct. In light of the market's legacy issues and competing business models, this case study explores strategies Ashar may pursue to secure and enhance its market position. Discussions emerging from this case study have the potential to illuminate directions for market transformation.
Tianqiao Chen, founder and CEO of Shanda Group, has set up his family office in the U.S. in 2016 after exiting from Shanda's Internet games business in China in 2014, again pioneering an unconventional approach to the management of a family office.
This B case is a supplement to the Chaudhary Group: Rebuilding Nepal case. Having successfully spearheaded relief work in the aftermath of the Nepal earthquake the Chaudhary Foundation envisions creating a more comprehensive and sustainable development model. They are keen to build a model village that integrates components of shelter, education, skill development and livelihood creation and affords residents a basic standard of living. What should the blueprint of this sustainable ecosystem include? Who are the stakeholders they should collaborate with on this effort? Can this model be replicated at scale across the country?
After the 2015 Nepal earthquake, the Chaudhary Group, a billion-dollar conglomerate in Nepal decides to play a pivotal role in re-building the country. The Group's philanthropic arm (Chaudhary Foundation) works with stakeholders and develops a blue print for short and long- term relief measures. The management needs to address several questions as they navigate the foundations' course. What element of relief work should the foundation focus on? Should they go beyond addressing the immediate need for shelters and adopt a more holistic development plan? How should they acquire technical expertise and organize themselves to successfully execute this effort? The case focuses on how businesses can drive entrepreneurship and disaster management efforts and be agents for social change in the emerging markets grappling with institutional voids. How should they work with the government in this endeavor? How do they ensure an alignment of these efforts to the group and foundation's long-term focus areas and objectives?
This case examines the rise and competitive positioning of Lufax, an online marketplace headquartered in Shanghai, China, and a pioneer in the origination and trading of financial assets. The company had grown at a remarkable rate, and was awarded "Trading Platform of the Year" for 2017 by the Asian Banker Financial Markets Awards Programme. Case protagonist Gregory Gibb, Chairman & CEO of Lufax, must decide how to navigate the challenging regulatory and competitive landscape, in order to achieve Lufax's goal of transforming and expanding the wealth management industry in China. Whether the technology giants (e.g. Baidu, Alibaba, and Tencent, often collectively known as "BAT") would be able to develop strong capabilities in the "Fin" part of "FinTech," and whether traditional financial institutions would become technologically sophisticated enough for their "Tech" capabilities to materialize, were among some of the key uncertainties and potential challenges that Lufax had to confront. There were also looming risks and lingering uncertainties on the political and regulatory front. The focal point of the case centers around how Gibb can strategize and position Lufax going forward, and leverage its unique "finance DNA" to try to win market share in the rapidly changing FinTech and wealth management sectors in mainland China.
This case examines the intersection of two firms (Cogent Labs-a machine learning software firm in Tokyo; and Google, the technology infrastructure giant) attempting to exploit the benefits of artificial intelligence and machine learning in the financial services sector. The case protagonist, David Malkin, known as the "AI Architect" at Cogent Labs, must decide how best to position his firm for growth. Malkin knew that artificial intelligence had great potential to revolutionize several aspects of the financial services industry, but he also knew that artificial intelligence's greatest achievements to date were in very narrow functions. Malkin further knew that large, sophisticated financial service clients owned a vast array of proprietary datasets that were impossible to replicate. Meanwhile the major "cloud" providers like Google, Amazon, and Microsoft had large-scale computing infrastructures and multi-billion-dollar research and development budgets with which they could (and did) generate innovative artificial intelligence software of their own. Malkin wondered how a small software firm like Cogent Labs without its own proprietary datasets, or a large-scale computing infrastructure, or a multi-billion R&D budget could fit in? Would Cogent Labs' current approach of developing their own proprietary machine learning applications to run on the cloud and sell directly to financial services firms in Tokyo prove to be a sustainable model? Or would Cogent Labs ultimately need to partner/merge with one of the major cloud providers in order to provide the expertise necessary to customize their offerings for financial services clients? Or, was the future even more uncertain; would software firms like Cogent eventually need to create and own new datasets of their own, and build their own infrastructures to host their own new data, in order to avoid being disintermediated in the future if (and when) machine learning expertise became truly commoditized?
This case examines the strategic positioning of Dianrong, one of the largest online peer-to-peer (P2P) lending platforms in China, in its attempt to become a foundational player in the expansion of the FinTech sector in Asia. Dianrong had recently announced the acquisition of the asset-origination operations of Shanghai-based Quark Finance, augmenting Dianrong's asset management and credit evaluation capabilities across China, as well as a new initiative to develop the first blockchain platform for supply chain finance in China. The goal was to provide capital to smaller suppliers in the supply chain, and provide enhanced visibility and transparency of supply chains for large multinational manufacturers. The company had also made several recent forays into other related sectors, with their creation of "DR Group" as an umbrella corporate structure that included all wholly-owned businesses, joint ventures, and partnerships. This rebranded group structure encompassed the various aspects of "The New Finance," leveraging FinTech innovation to deliver value for borrowers, lenders, and investors. Case protagonist Soul Htite, Founder and CEO of Dianrong, and the former CTO of Lending Club, must decide how to execute on the firm's aggressive diversification plan. Recent advances at the company, while promising, were complicated by the uncertainties in the political and regulatory landscape. How should the company leverage its advantage in technology and position itself in the market? Which sectors within its larger umbrella structure were the most promising avenues to focus on? Was Dianrong tackling too many sectors and problems at once? Htite's view was that in order to truly succeed in China a technology company had to "create" much of the ecosystem and infrastructure oneself, as opposed to in the US where companies could simply "provide add-ons" to existing firms and capabilities. But the reality of trying to excel in so many different areas was daunting.
The principals at Domeyard, a start-up high frequency trading (HFT) hedge fund based in Cambridge, faced a myriad of important decisions: which markets to trade on, how to raise capital, and from whom to raise capital. Many of these decisions were standard for start-ups, but some were unique to hedge funds-among them choosing the right fund structure, as well as how to raise capital for the management company versus raising capital to invest. Given the recent backlash against HFT, the question of whether they should delay any launch also loomed large.