SAPMER SA was a Southern Ocean fishing company started by three Réunion Island entrepreneurs with one ship in 1947. The company grew from an entrepreneurial venture to a corporate acquisition, then back to a beloved family business not expected to make much money. But in 2006, SAPMER SA tested the waters with a new tuna venture. The venture was successful, but the company saw a better long-term opportunity in occupying a niche position. SAPMER SA launched a strategic rebirth with a five-year plan to develop a new segment: super-frozen tuna fishing and processing in the Indian Ocean, addressing premium Asian markets in sashimi, tataki, and tuna loins and steak. SAPMER SA’s strategy resulted in strong performance, but in early 2013, when examining the financial records and the terms for purchasing newly acquired ships, the owner could see challenges ahead. To manage the challenges, the owner needs to know the reason for the improvement in return on equity, what potential problems could be identified from a DuPont analysis of the financials, and what bottlenecks to anticipate in the coming years.
BYD Company Limited (BYD) manufactured rechargeable batteries, mobile phone components, and automobiles. In 2008, the company caught the attention of Warren Buffet’s investment group, and their investment in BYD caused BYD’s share price to increase 917.86 per cent over just a year, setting Chinese investors’ expectations high for BYD’s release of A-shares, planned for June 2011. <br><br>BYD’s 2010 annual report showed that the company’s performance had already taken a dip, but its prospectus was optimistic about the market prospects. The first quarter report for 2011, issued the day before the A-shares were to be released, was not as optimistic. BYD’s A-shares fared well on the first day of release, but the company’s net profits declined remarkably, and reports forecasted further decline. However, the company’s 2011 annual report showed a drop in operating profits of just 49.04 per cent year over year—just slightly less than the 50 per cent decline that would have triggered intervention by the securities regulators. <br><br>Was the company making a remarkable recovery? Were BYD’s A-shares still a sound investment, or had the company “managed” its financial statements to protect itself and its securities underwriters?
Case A describes the difficult situation facing the recently appointed plant manager of Shanghai Michelin Warrior Tire, a joint venture between a poorly performing Chinese state-owned enterprise and a France-based private company, Michelin Corporation. Michelin headquarters was pressing the plant manager to implement the Management System of Daily Production to improve the factory’s performance, but the plant manager sensed that the plant’s employees were not yet ready. He contemplates what changes to make in this factory and how best to do so. Case B, 9B14C013, reports on the plant manager’s actions to improve the joint venture’s performance.
Piron Smart Technologies Co. Ltd., a private enterprise located in an underdeveloped region of China, was transitioning from being a founder-centered to a professionally managed firm. In the summer of 2010, the founder and chairman of Piron attempted to hire a senior executive from a Western multinational firm as chief operating officer, with the promise of a later promotion to chief executive officer (CEO). The candidate turned down the offer and demanded to be appointed CEO from the onset, leading to a conflict between the newly arrived CEO and the insiders passed over in Piron’s search for a CEO. See supplement 9B15M016.