In May 2016, a business student from Addis Ababa, Ethiopia, was considering expanding his print advertising business, which he had been operating out of his home for the past five years. He was about to graduate from the School of Commerce at Addis Ababa University, and he needed to put together an action plan for his company’s potential expansion. His options were: (1) continue operating his business as is; (2) invest in an office location and move the business out of his home; and (3) invest in new machines that would allow him to bring banner printing operations in-house. Now it was time to consider the pros and cons of these options and prepare an action plan, including how to obtain the financing for fixed asset investments.
NeoGenius Co., Ltd. (NeoGenius) was an early-stage entrepreneurial venture based in South Korea. Founded in February 2000, NeoGenius provided a wide range of business-to-business (B2B) e-business software and related services. In June 2001, the company was up and running, but it faced competition from larger firms, and the effects of a global economic downturn; as a result, its financial performance was falling short of expectations. NeoGenius had received significant offers from three different entities: a business partner, a competitor, and a venture capitalist. The chief executive officer had only a short time to choose from several options, including growth and exit.
In early 2013, three young Nepalese entrepreneurs were deciding whether to launch Kaffeine, the first of a large chain of coffee shops, in Kathmandu, the capital city of Nepal. As experienced entrepreneurs, the partners were interested in a recently vacated location near Durbar Marg, a major street and shopping destination in Kathmandu that represented a unique opportunity to build a highly successful coffee chain. Coupled with the increasing trend in Nepal toward coffee drinking rather than tea, this was an opportunity the trio felt they could not pass up. The entrepreneurs had many things to consider, such as location, competition, target market, and how to measure the feasibility of this new venture.
Spin Master, a children’s toy and entertainment company, was getting ready for an initial public offering (IPO). Its founders were weighing their options with regard to some core issues: What was the right positioning for Spin Master with potential investors? What was the right approach to valuing the business? How did that approach translate into enterprise value, equity value, and share price for the IPO?
The co-founder and CEO of StarTech.com is reviewing his firm’s strategic plan, including an aggressive target of $150 million in sales in three years. To achieve this goal, the company needs to leverage its knowledge to develop a meaningful presence in Europe. The challenge is to identify the best way to go to market, given country and regional differences in how people buy computer parts. The company can capitalize on several favourable trends: the economic weakness in Europe, which prompts consumers to extend the life of their electronic equipment; the lack of a European direct competitor; and the company’s ability to self-finance the venture.
Eveline Charles, the founder and chief executive officer (CEO) of EvelineCharles (a chain of upscale salon and spas focused in western Canada) was planning the next growth phase of her company. It was currently well positioned for growth: it had nine locations, a 26,000-square foot training facility, a warehouse and its own line of over 1,800 different spa and salon products. Despite these advantages, EvelineCharles was a small company and the CEO needed to be selective in her chosen growth strategy. She was trying to determine whether franchising her stores made more sense than relying on either organic growth or product distribution.
The chairman and chief executive officer (CEO) of Vancouver's Ondine Biopharma Corporation (Ondine) - a biotechnology firm specializing in the developing of medical devices - was faced with a strategic dilemma. Her publicly listed firm had developed a product that appeared to address an unmet need in the dental profession. She gathered her team to discuss whether management's efforts should be focused on maximizing returns from its new product by developing a new capability (building a direct sales force) or by capitalizing on its current expertise in photodynamic disinfection (PDD) technology to develop a host of new applications (navigating the complex regulatory approval process). Ondine did not have the financial resources to pursue both strategies, so had to choose one path and execute it well.
In late 2007, the CEO of British Columbia-based Bradley Smoker Inc. was considering a potential licensing opportunity with Beam Global Spirits & Wine, owner of the Jim Beam brand of bourbon drinks. Bradley Smoker was a small Canadian manufacturer of food-smoking machines and bisquettes, which it sold through a variety of retail channels around the world. The current opportunity would see Jim Beam-branded bisquettes produced from wooden barrels used in the production of Jim Beam bourbon. The CEO was excited by the possibility of co-branding his product with a well-recognized global brand, but was also intimidated about the negotiations and legal aspects of such an agreement. As head of a fast-growing company with many current projects, the CEO wondered if such a deal made sense.
In May 2008, the president of Montreal-based retailer of designer furniture store, Mobilia, was reviewing her workload. Mobilia's growth had required she to spend increasing amounts of her time in operations, finance and human resources and significantly less time on sourcing and purchasing. With a doubling of her direct reports in recent years, and recognizing that external hires would soon be necessary to support Mobilia's growth, she wondered if the organization might be best served by hiring an operations manager. A successful operations manager would need to be experienced, flexible and demonstrate a willingness to work in a family-owned enterprise; however, she also was cognizant of the costs to be incurred if the initiative stalled. She wondered what factors to consider when deciding whether outside help was needed or whether efficiencies could still be reached with her current team in place.
The Sun Life Financial cases allow students to take a cross-enterprise leadership approach in examining Sun Life's effort to re-enter the Indian insurance market. Set in March 1999, a vice-president in Sun Life's international team is looking at international expansion options. In its domestic market, Sun Life, relative to its peers, has had below average financial performance. With the domestic insurers demutualizing (i.e. converting from a policy holder-held mutual company to a public company), Sun Life needs to find avenues of growth. In addition, there are rumours that the domestic insurance industry will be opened up to competition from the Canadian banks, whose market capitalization dwarfs that of the insurance industry. The (A) case, Sun Life Financial: Planning for the Future, product #9B07M045 lays out the macro issues and describes in general the various insurance markets around the world. The (B) case, Sun Life Financial: A Potential Indian Life Insurance Joint Venture, product #9B07M046, hones in on Sun Life's decision to re-enter the Indian insurance market.
This supplement to Sun Life Financial: Planning for the Future, product 9B07M045, hones in on Sun Life's decision to re-enter the Indian insurance market.
On many levels and from serval perspectives, an entrepreneur's challenges are different. One of the most acute challenges may be managing in a credt cruch, specifically, finding cash when traditional sources of funding have all but stopped extending credit. This author, who has worked with many highly visible and successful entrepreneurs, offers helpful suggestions.
Chip Wilson, the founder of lululemon athletica, is thinking of wholesaling garments to achieve economies of scale. Deciding to wholesale is not an easy decision for Wilson because he has had difficulties collecting receivables in the past. To help him make his decision, he turns to real options-analysis. This case is the second in a series of lululemon athletica cases that focus on decision-making using real-options analysis. Other cases in the series are: 9B06M036, 9B06M038, 9B06M039, 9B06M040, 9B06M041 and 9B06M042.
With women's athletic wear doing extremely well, Chip Wilson, founder of lululemon athletica, is thinking about launching a menswear line to capitalize on the popularity of the lululemon brand. However, he has to weigh the costs of being distracted from his company's main concern - athletic yoga wear for women. This case is the third in a series of seven lululemon athletica cases that focus on decision-making using real-options analysis. Other products in the series are: 9B06M036, 9B06M037, 9B06M039, 9B06M040, 9B06M041 and 9B06M042.
lululemon athletica is on track to exceed $2 million in sales for 2001, a remarkable achievement considering it was founded in 1999. To achieve his targets of rapid growth, Chip Wilson, founder of lululemon athletica, is considering franchising his concept. But concerns remain, including control over branding and store-level operations. On the other hand, franchising would allow Wilson to rapidly expand and capture market share, as competitors are starting to take notice. This case is the fourth in a series of seven lululemon athletica cases that focus on decision-making using real-options analysis. Other cases in the series are: 9B06M036, 9B06M037, 9B06M038, 9B06M040, 9B06M041 and 9B06M042.
In 2003, lululemon athletica has sales of $30 million, and operations in Canada and the United States. Chip Wilson, the founder of lululemon athletica wants to expand his operations, opening up stores in either Asia or Europe. As his rapidly growing firm does not have resources to expand in both regions, he wonders how he should decide between the two options. This case is the fifth in a series of seven lululemon athletica cases that focus on decision-making using real-options analysis. Other cases in the series are: 9B906M036, 9B06M037, 9B06M038, 9B06M039, 9B06M041 and 9B06M042.
Should lululemon athletica shut down its Internet sales presence, leaving only an informational site? Chip Wilson, founder of lululemon athletica, has noticed that Internet sales have grown more slowly than stores sales. Faced with whether to invest $250,000 to create a appropriate online presence that would match his store presence, Wilson wonders what to do. This is the sixth in a series of seven lululemon athletica cases that focus on decision-making using real-options analysis. Other cases in the series are: 9B06M036, 9B06M037, 9B06M038, 9B06M039, 9B06M040 and 9B06M042.
In 2005, Chip Wilson, the founder of lululemon athletica is thinking about selling a 48 per cent stake in his firm. With $90 million in sales in 2005, lululemon athletica has a bright future ahead. In addition to U.S. expansion plans, the firm is expanding international operations. This case is the seventh in a series of seven lululemon athletica cases that focus on decision-making using real-options analysis. Other case in the series are: 9B06M036, 9B06M037, 9B06M038, 9B06M039, 9B06M040 and 9B06M041.