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The announcement of Porsche's (Germany) intention to take a 20% equity interest in Volkswagen (Germany) in September 2005 was greeted with outright opposition on the part of many shareholders in both Volkswagen and Porsche. Major investment banks immediately downgraded Porsche from a buy to a sell, arguing that the returns on the massive investment, some €3 billion, would likely never accrue to shareholders. Although Porsche and VW were currently co-producing the Porsche Cayenne and Volkswagen Touareg, this ownership interest would take the two companies far down a path of cooperation way beyond the manufacture of a sport utility vehicle. Although Porsche had explained its investment decision to be one which would assure the stability of its future cooperation with VW, many critics saw it as a choice of preserving the stakes of the Porsche and Piëch families at the expense of nonfamily shareholders.

The leadership of Minera Las Piedras (MLP) of Chile, a privately held Chilean copper mining company, had an unusual problem in January 2005: the company had too much money. The company had earned $500 million more than expected in 2004, and as a result was now exploring its alternative uses for the funds. Although all agreed it was a nice problem, it still presented leadership with a rather complex set of choices of how and where to invest or distribute these new-found riches

On December 2, 2001, Enron Corporation filed for bankruptcy protection under Chapter 11. One of the most highly publicized business debacles in history-its settlements, criminal charges, civil charges, and workouts will continue for years. But outside of the courts and sensational press, what really happened? What caused the collapse of what at one time was the sixth largest company in the United States? The case explores the Enron story-in an attempt to not only answer the question of what happened, but what may be learned from this failure.

Tirstrup BioMechanics (Denmark) was considering an investment of $410 million in the United States, and Julie Harbjerg, Assistant Treasurer International for Tirstrup, was charged with evaluating different alternatives for raising the funds for the acquisition.

It was January and Porsche-the legendary manufacturer of performance sports cars-wished to reevaluate rate strategy. Porsche's management had always been unconcerned about opinions of the equity market, buts its currency hedging strategy was becoming something of a lighting rod for criticism. Although the currency hedging results had been positive, many experts believed that Porsche had simply been "more lucky than good." There was a growing nervousness among analysts that the company was actually speculating on currency movements, and that was not in the best interests of shareholders. Analysts were estimating that more than 40% of earnings were to come from currency hedging. Porsche's President and CEO, Dr. Wendelin Wiedeking, now wished to revisit the company's exposure management strategy.

The case discusses the international expansion efforts of the global coffee retailer, Starbucks. Starbucks had proliferated in several regions of the world, many of which had historical ties to a coffee heritage such as Western Europe. It had also challenged traditionally tea drinking countries such as Japan and China. In implementing its globalization strategy, the company relies on a set of sound principles that call for astute partner selection, real estate management, and managing the brands. While the company had witnessed critical success in most of its major markets overseas, it appeared to be facing significant challenges in every region. For example, in Japan, revenues had declined and so too profitability. New copycat competitors had emerged and many had started questioning the validity of Starbucks' market saturation strategies. In emerging countries, such as Mexico, China and India the company saw very good potential but this rosy picture was somewhat dampened by the ability of the consumer to pay close to $3 for a cup of coffee when local versions retailed at $0.50. The case with several questions related to the future of Starbucks in the global arena: whether it should alter its new store growth strategy, whether it should rethink its uniform pricing policy in emerging markets where affordability was of paramount importance, and where the next major thrust ought to be.

The case focuses on Starbucks Coffee (NSE: SBUX) in the early spring of 2003. The company has demonstrated rapid growth for over a decade, and is continuing to grow profitably through the current recessionary environment. The case details the history and development of the company, highlighting the evolution of the corporate concept of a "third place," and the key individuals in the organization in this development. The second part of the case details the international expansion activities of the firm, highlighting the potential cultural and economic challenges which it may increasingly face as it expands to more traditional coffee-drinking markets, and low-income emerging markets. The third and final section of the case details the increasing pressure placed on Starbucks by the anti-globalization movement. Although Starbucks has actively pursued a number of socially- responsible operating policies, such as the purchase of Fair-Trade coffee, the subsidization of health care facilities in Central America, and the introduction of a number of socially responsible coffee products in its stores, it continues to be the target of anti-globalization activities. The case concludes with the question as to whether the company will be able to continue to grow as rapidly and profitably as the recent past as it reaches saturation point in the domestic market.

LVMH Moet Hennessey Louis Vuitton (France) acquired a large interest in the Gucci Group (Italy and Netherlands) in January 1990. Gucci accused LVMH of undertaking a "creeping acquisition" and refused to cooperate in LVMH's efforts to gain representation in Gucci's management. The case details the actions of the purported takeover attempt, and the defense mechanisms employed by Gucci. The defenses employed included the use of a poison pill and a white knight. Ultimately, Gucci found a white knight, Pinault-Printemps-Redoute (PPR) of France to save it from LVMH's unwanted advances. The primary question, which the case addresses, is whether the actions taken by Gucci's management in defending its independence were actually in the best interests of shareholders.

Jan Karl Karlsen is the CFO of The Far East Trading Company, a 100-year old Swedish company with operations throughout Asia and Latin America. It is November 1997, and the firm has just issued its second official profit warning to its stockholders in Stockholm, its corporate home. The company is now feeling the effects of the Asian currency crisis, which began in July 1997 in Thailand, and then spread to the neighboring countries of Indonesia, Malaysia, the Philippines, Taiwan, Singapore, and Korea. As Jan Karl Karlsen pondered what specific actions were needed to navigate the treacherous waters of the market crisis, he focused on the "three C's of corporate financial management; control, confidence, and cash flow."

General Motors (US) and Avto VAZ (Russia) are, in the spring of 2001, in the final stages of forming a joint venture (JV) for the manufacture of a new automobile in Russia, the Chevy Niva. The car would be largely the result of Russian engineering and construction with limited GM input and the GM Chevrolet badge. The JV, if completed, would represent a $300 million combined investment by the parties and be a totally new approach used by Western investors in penetrating emerging markets. .

The national flag-bearer of Germany, Lufthansa, purchased twenty 737 Boeing aircraft in January of 1985 for $500 million. The payment was due in January of 1986 upon delivery of aircraft from the U.S. manufacturer. At the time of the purchase, the U.S. dollar was at a record high versus the Deutschemark, it had been steadily appreciating against the Deutschemark for five years. The CEO of Lufthansa, Herr Heinz Ruhnau, was responsible for determining what hedging, if any, would e used in conjunction with the dollar exposure.

British Columbia Hydroelectric found itself facing substantial foreign exchange losses in 1988 as a result of debt service requirements on large quantities of U.S. dollar denominated debt. The debt originated from the late 1970s and early 1980s when the U.S. dollar had been substantially weaker against the Canadian dollar. The Chairman of BC Hydro, Larry Bell, was now evaluating a number of alternative strategies to protect the provincial utility against further losses associated with this debt.

On July 6, 1998, the Indonesian government announced that Cementos de Mexico (Cemex) was the preferred bidder for the largest government-owned cement company in Indonesia PT Semen Gresik. The first round of bidding had pitted Cemex against Holderbank of Switzerland and Heidelberger of Germany, two of the largest cement manufacturing firms in the world, and a mere seven weeks had passed since the resignation of President Suharto, a turning point for Indonesia's political and economic future. Cemex was informed on August 20 that their first round bid would have to be restructured, the primary change being a maximum of 14% of ownership passing from the government to Cemex. Then, as preferred bidders, Cemex would wait for the other round bidders to submit second bids. If their second bids were superior to Cemex's first bid, Cemex would have the right to match them if it wished. The vice president for finance of Cemex, Hector Midina, and his acquisition staff and consultants, now had only a few weeks to finalize their position

The case provides the facts and figures for the complete financial evaluation of the construction and operation of an automobile manufacturing plant for the new GM Macaw in Brazil. Although the Macaw is to truly be produced by GM in Brazil, the financial and economic values used in the case are fictionalized. The challenge for GM is to evaluate the pro forma financial analysis as to whether the project is a viable investment for GM from both the subsidiary and the parent's viewpoint.

Spreadsheet supplement for TB0201.

A U.S.-based manufacturer of imitation Navajo rugs is about to initiate manufacturing operations offshore for the first time-in this case-in the United Kingdom. In the financial planning stages, the firm's principals discuss tradeoffs in parent earnings and subsidiary earnings/expenses, focusing on the various intra-firm cash flows common between sub and parent (material transfers, royalties and license fees, intra-firm debt, etc.). The focus of the case is to determine the preferred combination and form of rates and charges between parent and subsidiary to achieve the firm's financial goals.

This case focuses on the hedging of a currency exposure, a long Deutschemark position, by a U.S.-based multinational chemical company. The case takes place during the August-September period in 1992 when the European Monetary System experienced a crisis as a result of a variety of world political and economic events, including the monetary policies pursued by the Bundesbank of Germany.