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Traces the history of IKEA's response to a TV report that its Indian carpet suppliers were using child labor. Describes IKEA's growth, including the importance of a sourcing strategy based on its close relationships with suppliers in developing countries. Details the development of IKEA's strong culture and values that include a commitment "to create a better everyday life for many people." Describes how, in response to regulatory and public pressure, IKEA developed a set of environmental policies that grew to encompass a relationship with Greenpeace and WWF on forest management and conservation. Then, in 1994, Marianne Barner, a newly appointed IKEA product manager, is surprised by a Swedish television documentary on the use of child labor by Indian carpet suppliers, including some that supply IKEA's rugs. She immediately implements a strict policy that provides for contract cancellation if any IKEA supplier uses child labor. Then Barner is confronted by a German TV producer who advises her that he is about to broadcast an investigative program documenting the use of child labor in one of the company's major suppliers. How should she react to the crisis? How should the company deal with the ongoing issue of child labor in the supply chain?

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Spreadsheet supplement for case 906-414.

Provides an example of a so-called "whole business" securitization. In early 2004, Fraikin, France's leading industrial vehicle rental company, compares several alternatives for refinancing a large bridge loan within a year. Presents three primary options: a classic leveraged buyout, an asset-backed loan, and a loan based on securitizing Fraikin's truck rental contracts. Asks students to evaluate the advantages and disadvantages of each option, particularly the securitization. Elicits discussion about why securitization appears to be the least cost financing alternative and whether it is worth the high transaction costs involved.

In October 2005, Urs Riedener, head of marketing at Swiss retailer Migros, is contemplating the company's competitive position. Primarily a retailer for foods and near-foods products, the cooperative Migros, with close to 600 retail outlets in Switzerland (but only four outside its domestic market), is facing stiffer competition, both from existing competitors (such as Coop) and new arrivals (such as hard discounters Lidi and Aldi). Riedener and Migros management have so far always had faith in Migros' position in the marketplace, built around its governance structure (the customers were also the owners, creating a close link between the retailer and the market) and its emphasis on never selling harmful products. Socially, ecologically, and ethically produced products were key aspects of Migros' product offering. Riedener knows that Migros benefited from a unique position--and he wants to make sure that Migros defends it from both new and old competitors.

The Dutch "Verenigde Bloemenveiling Aalsmeer Cooperative" (VBA) was on of the world's largest flower exchanges. Around 6,300 flower growers, one half of them located in the Netherlands, used the auction to sell cut flowers and plants to more than 1,000 wholesalers. In 2004, the value of the flowers and plants traded at Aalsmeer exceeded 1.6 billion euros, representing 36% of the world's trade in cut flowers. Every morning, VBA held 55,000 Dutch auctions to match buyers and suppliers. While formidable in size, VBA management worried about the future of the exchange because direct sales between growers and buyers had started to bypass the auction. Kenyan growers, for instance, often shipped roses directly to wholesalers. VBA's management considered a number of strategic initiatives and tactical moves in response to the growth in direct sales. Should the exchange allow non-Dutch growers to become members? Would it make sense to have the wholesalers bear a larger fraction of the trading cost? Philip Smits, CEO of VBA, knew that expanding VBA membership and adjusting trading commissions were guaranteed to be hotly contested topics at the upcoming general meeting.

Examines investor relations and financial communications in a large company with a diverse group of financial stakeholders. Total is an "energy major" based in Paris, France. The importance of its product and its impact on economies and environments combine with the size of the company to make Total highly visible to investors, governments, environmental groups, and other shareholders. The highly technical nature of Total's many internal activities and the breadth of its complex operations further impacts communication efforts. In addition, as a Continental European firm (in particular, French), Total has strong societal expectations regarding its interactions with employees/citizens vs. shareholders. Examines how Total creates a consistent and clear financial communication that provides information to these diverse stakeholder bases and their different desires for the company. Also asks students to consider how this communication strategy will need adjustment due to a period of high oil prices and a resulting windfall profit during 2005.

Spreadsheet Supplement for case 106023

Introduces radio frequency identification (RFID) as the next generation of automatic identification technologies that is expected to improve the performance of retail supply chains through reduced shrink, increased product availability, and improved labor productivity. Showcases the implementation of the technology by the METRO Group, the world's third-largest retailer. Places students in the position of Dr. Gerd Wolfram, managing director of METRO's internal IT service group, and Zygmunt Mierdorf, the company's chief information officer, who, in mid-2005, evaluate the results of the RFID rollout and decide on the next stage in the implementation.

Spreadsheet supplement for case 606-053.

Introduces students to a group of investors and stakeholders who evaluate firms at least partially on factors other than eventual investment payoff. Focuses on investors who evaluate and attempt to impact firms' ethical, corporate governance, or other "societal" practices. Such investors vary from large institutions that use this as one component of investing to "ethical" funds that invest solely on these criteria to individual gadfly's who use this forum for their personal initiatives. These nontraditional investors are becoming an increasingly important portion of the financial markets. Thus, managers and investor relations experts must consider their alternative desires when designing disclosure/communication strategies. Considers noninvestor groups that use a firm's financial market information and connections as a lever to impact the firm's behavior.

Tells the story of Agora, the largest media company in Poland, describing its corporate strategy of diversification since its founding in 1989 by entrepreneurial journalists closely linked to the anti-communist movement Solidarity. Describes in detail Gazeta Wyborcza, the country's best-selling daily newspaper and Agora's main revenue contributor. In late 2003, Fakt, the new daily owned by a German publishing house, took the lead on the Polish newspaper market, harming Gazeta Wyborcza's sales and advertising revenues. Places students in the position of Wanda Rapaczynski, Agora's CEO, who, in mid-2005, explores ways to improve Agora's position in an increasingly competitive environment.

In March 2005, Mark Schneider, CEO of Fresenius, is considering the group's strategic and organizational future. The highly decentralized 7 billion euro German health care group is active in three different business units, with the largest, FMC AG, listed separately from the parent Fresenius AG and representing the lion's share of the company's revenue and profit. A decentralized approach had let the group units grow independently over the years, and Fresenius took pride in its adaptive, entrepreneurial spirit. Schneider, however, wonders whether the decentralized approach will allow the group to continue to grow in a coordinated and cost-conscious fashion. How should he combine the company's entrepreneurial and profit-oriented culture with any latent synergies in the existing organization? Although Fresenius looks healthy at the moment, Schneider knows that the company's future is tied to improved sales and profitability.

Introduces forward contracts and derives graphically through basic arbitrage principles the spot-forward parity. Introduces swap contracts as simply a portfolio of forward contracts. Also covers briefly the mathematics behind swaps as an extension of spot-forward parity calculations.

Ticonderoga is a small hedge fund that trades in mortgage-backed securities--securities created from pooled mortgage loans. They often appear as straightforward so-called "pass-throughs," but can also be pooled again to create collateral for a mortgage security known as a collateralized mortgage obligation (CMO). CMOs allow cash flows from the underlying pass-throughs to be directed, allowing the creation of different classes of securities--tranches--with different maturities, coupons, and risk profiles. In April 2005, the general managers of Ticonderoga are looking at the market data, trying to construct a trade given their view on the prepayment speed of mortgages vs. the implied prepayment speed they derive from CMOs in the market.

Spreadsheet Supplement for case 205118

Spreadsheet Supplement for case 205122

A client asks Luc Giraud, CEO of the structured finance solutions provider Nexgen Financial Solutions, to put together a solution that allows the client to add AAA-rated bonds to its portfolio. The client cannot find suitably priced top-rated bonds in the market and wonders whether Nexgen can use lower grade bonds to create AAA-equivalent instruments. The process of securitization packages together securities to create new securities with different risk and return profiles.