The managing director and director of overseas marketing of Midea Group, China's largest air conditioner manufacturer, had concerns about the company's domestic and global competitive position. They felt the company needed to develop a strategy to defend its home market in the wake of more liberalized imports, and simultaneously, develop the resources and skills required to play in a global market where its cost advantages had been nullified because international players were also exporting from China. To do so, they needed to review the company's current international strategy and examine both branding and private label options.
A 23-year-old sales executive for a multinational office furniture and supply company was thinking of leaving the company over a dispute regarding her compensation. After doing some cost analysis on the feasibility of starting a recruiting agency, the young entrepreneur decided it was worth trying. One year later, the company had experienced a successful and profitable first year. This follow-up to the (A) case, 9A99B033, provides the opportunity to compare estimates with actual financial performance.
Shanghai Jahwa is the largest domestically owned Chinese manufacturer of cosmetics and personal care products. In recent years, it has been part of a booming market with growth rates of 35 per cent per year. This spectacular growth rate has attracted and been fuelled by the entry of major multinationals, including Unilever, Procter & Gamble, Shiseido, Kao, and others. The marketing challenge for Shanghai Jahwa is to carve out viable and defensible positions in the marketplace, in the face of competition from some of the most powerful global players in the industry. The case illustrates management issues with respect to extending a very successful brand of Chinese eau-de-toilette named into the shower cream product category. Unilever already has a strong and established shower cream on the market under its well-known Lux brand. In addition, other international players are entering in the market. The case calls for the development of a brand strategy, taking into consideration market position, brand extension, and competitive issues. A follow-up case (9A98A024) is available.
Shanghai Jahwa is the largest domestically-owned Chinese manufacturer of cosmetics and personal care products. The (A) case, 9A98A023, illustrates management issues with respect to extending a very successful brand of Chinese eau-de-toilette named into the shower cream product category. This case provides an update of the market; specifically, the new competitive situation faced by Jahwa in the shower cream market in 1996.
Far Eastern Textile, a major Taiwanese textile and telecommunications company, is considering its options for raising US$130 million in a new round of global fund raising. The options of a new common stock or long term debt issue are explored but specific attention is paid to an option raised by the company's investment banker. This option entails the issuance of an innovative convertible debt instrument which combines a zero coupon and a significant conversion premium over the current price of the company's common stock. The benefit and costs of a delayed equity instrument for both corporations and investors is examined, as well as issues regarding security pricing in different financial markets.
The managing director and director of overseas marketing of Midea Group, China's largest air conditioner manufacturer, had concerns about the company's domestic and global competitive position. They felt the company needed to develop a strategy to defend its home market in the wake of more liberalized imports, and simultaneously, develop the resources and skills required to play in a global market where its cost advantages had been nullified because international players were also exporting from China. To do so, they needed to review the company's current international strategy and examine both branding and private label options.
PepsiCo Inc. spanned more than 190 countries and accounted for approximately one-quarter of the world's soft drinks. The vice-president of finance for PepsiCo East Asia had been collecting data on the firm's proposed equity joint venture in Changchun, People's Republic of China (PRC). While PepsiCo was already involved in seven joint ventures in the PRC, this proposal would be one of the first two green-field equity joint ventures with PepsiCo control over both the board and day-to-day management. Every investment project at PepsiCo had to go through a systematic evaluation process that involved using capital budgeting tools such as new present value (NPV) and internal rate of return (IRR). He needed to decide if the proposed Changchun joint venture would meet PepsiCo's required return on investment. He was also concerned what the local partners would think of the project. The final decision would be made after a presentation to the president of PepsiCo Asia-Pacific.
<p style="color: rgb(197, 183, 131);"><strong> AWARD WINNER - Regional Asia-Pacific Case Writing Competition</strong></p><br>The Internet investment craze was starting to catch on in Hong Kong. Tom.com Limited, a Hong Kong based Internet company, was planning an initial public offering at the Hong Kong Stock Exchange. A portfolio manager for EuroGlobal Funds was to provide his professional opinion on the value of this investment and its appropriateness for different investors. He was aware of the difficulties in valuing Internet companies and the debate over the choice of valuation methods. Among these, one approach was to analyze the implied hyper-growth rate that Internet companies had to achieve in the next five years in order to justify their current valuations. He decided to apply this approach to Tom.com. Students will have the opportunity to discuss the different valuation methods and the development of Internet and e-commerce companies, especially topics such as business models and expected growth.
The Hong Kong Convention and Exhibition Centre (HKCEC), a trade infrastructure owned by the Hong Kong Development Council and operated by the New World Group, was the most prestigious convention and exhibition venue in Hong Kong. After hosting several musical events in Hall Three of HKCEC, the management of HKCEC decided to actively market Hall Three to concert organizers during the off-season. These events could bring in substantial rental income per day. Seat-risers had been leased and temporarily installed for these events, but the cost was prohibitively expensive for concerts booked for short durations, such as concerts by visiting international performing artists, a segment that HKCEC intended to target. The director of operations of HKCEC had been trying to find the most cost effective solution to provide a seat-riser for Hall Three. There were three options: to purchase a seat-riser, to rent a seat-riser for the duration of booked events, or to rent a seat-riser for the entire off-season period. He must analyse the options and find the solution that would be attractive to concert organizers, the most cost effective with the least risk to HKCEC, and consistent with HKCEC's current operations.
A 23-year-old sales executive for a multinational office furniture and supply company was thinking of leaving the company over a dispute regarding her compensation. A friend had suggested setting up her own business: a recruiting agency. The sales executive had known some human resources managers and office managers throughout the years, however, she also realized that it was a very competitive business and she had no experience. She did some cost analysis and had to decide whether it was worth doing. This case could be used as an introduction to management accounting or entrepreneurial finance.
A 23-year-old sales executive for a multinational office furniture and supply company was thinking of leaving the company over a dispute regarding her compensation. After doing some cost analysis on the feasibility of starting a recruiting agency, the young entrepreneur decided it was worth trying. One year later, the company had experienced a successful and profitable first year. This follow-up to the (A) case, 9A99B033, provides the opportunity to compare estimates with actual financial performance.
Hutchison Whampoa was considering strategies for its long-term capital structure. The HK$35 billion Hong Kong-based conglomerate had ambitious growth plans in multiple business sectors in different geographies. Traditionally, like many of its domestic peers, Hutchison had relied entirely on short to medium-term bank loans. Its demand for long-term financing, attractive rates in other capital markets (especially the U.S.) and concern about a more diversified investor base had led Hutchison to explore other financing options. In particular, the company was debating the benefits of a Yankee Bond Offering. At the time, Hutchison had already approached Moody's and Standard & Poor's for a bond rating.
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.
Two managers attending a financial management course are attempting to compute the cost of capital for Sun Hung Kai Properties Limited, a well-known local Hong Kong firm. The two managers are somewhat confused about the costs of various sources of capital, the calculation of the overall corporate cost of capital, and the appropriate use of the hurdle rate.
Shanghai Jahwa is the largest domestically owned Chinese manufacturer of cosmetics and personal care products. In recent years, it has been part of a booming market with growth rates of 35 per cent per year. This spectacular growth rate has attracted and been fuelled by the entry of major multinationals, including Unilever, Procter & Gamble, Shiseido, Kao, and others. The marketing challenge for Shanghai Jahwa is to carve out viable and defensible positions in the marketplace, in the face of competition from some of the most powerful global players in the industry. This case illustrates management issues relating to a successful brand of cream. The two main flagship products, the Maxam Tremella Pearl Cream and the Maxam Hand Cream, have evolved in very different directions. The Tremella Pearl Cream is still popular in rural areas and is considered a mainstay of rural cosmetic use. The Maxam Hand Cream, on the other hand, is primarily an urban brand which meets the need of urban women looking to soften their hands after they have been exposed to the cold and to detergents. However, in urban areas the brand is losing its appeal, as foreign competitors roll out their international brands and products. The challenge is to renew the Maxam brand without losing the loyal customers of Tremella Pearl Cream.
Shanghai Jahwa is the largest domestically-owned Chinese manufacturer of cosmetics and personal care products. The (A) case, 9A98A023, illustrates management issues with respect to extending a very successful brand of Chinese eau-de-toilette named into the shower cream product category. This case provides an update of the market; specifically, the new competitive situation faced by Jahwa in the shower cream market in 1996.
Shanghai Jahwa is the largest domestically owned Chinese manufacturer of cosmetics and personal care products. In recent years, it has been part of a booming market with growth rates of 35 per cent per year. This spectacular growth rate has attracted and been fuelled by the entry of major multinationals, including Unilever, Procter & Gamble, Shiseido, Kao, and others. The marketing challenge for Shanghai Jahwa is to carve out viable and defensible positions in the marketplace, in the face of competition from some of the most powerful global players in the industry. The case illustrates management issues with respect to extending a very successful brand of Chinese eau-de-toilette named into the shower cream product category. Unilever already has a strong and established shower cream on the market under its well-known Lux brand. In addition, other international players are entering in the market. The case calls for the development of a brand strategy, taking into consideration market position, brand extension, and competitive issues. A follow-up case (9A98A024) is available.