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In January 2008, in the midst of the subprime-mortgage crisis, Warren Buffett is looking for good investment opportunities for his almost $50 billion in cash. As usual, he has been patient and careful in identifying the right opportunities; however, the amount of cash in his company has grown considerably, and with so much cash sitting idle, returns could suffer. This case can be used to pursue several objectives: (1) to showcase Warren Buffett's leadership in the financial markets; (2) to understand his principles and the principles of value investing more broadly; (3) to understand Warren Buffett as both a thinker and a leader in the world of investing and as an agent of stability in a world of capital markets characterized by continuous change; (4) to discuss Buffett's investment decisions (Swiss Re, Burlington Northern, the funding of his own new bond-insurance business, BHAC) and the timing of those decisions in the midst of the subprime crisis and in an environment of increasing energy demand; (5) to discuss his decision not to invest in banks in the current environment as well as his largest investment, the philanthropic Gates Foundation; and (6) to understand some of the new market forces, such as sovereign funds, as providers of capital.

This case study briefly describes the outcome of the Shareholder Activists at Friendly Ice Cream (A) case.

A newly appointed operations manager was expected to provide his expertise in the planning, launch and ongoing operations for three corporately-owned Part King stores, the first of which was scheduled to open in December 2005. The operations manager wondered if moving to a corporate model made sense at all or whether it was better to retain the franchise structure that was already in place. He was particularly concerned about how best to motivate the managers of a corporate-owned store given that they did not share in its ownership. Were there some components of the control system that was currently in place in the franchise store model that would also be appropriate for the corporate-owned store model that was in the works? Were there some components of the existing control system that needed improvements as well?

Samit Ghosh, the CEO and founder of Ujjivan, a major microfinance provider in Bangalore, wants to grow his business rapidly and become financially sustainable, but he's struggling with staff fraud, high costs, and how to stay true to Ujjivan's mission of poverty alleviation, while simultaneously reaching out to higher-income customers. The case explores how Ujjivan can grow, looking at such issues as new technology, diversifying product offerings, and how to hire the best staff.

Case B of "Ujjivan: A Microfinance Institution at a Crossroads" addresses some of the actions Ujjivan, a microfinance provider in Bangalore, has taken with regard to issues raised in the A case, particularly regarding fraud and establishing financial sustainability. For example, the CEO of Ujjivan, Samit Ghosh, decides to strengthen the Audit Team and implements new loan products.

The case Vanguard Security Corporation, a Portuguese company, explores exchange rate and trade financing decisions for a transaction between a U.S.-based importer and a European exporter. It focuses on transaction and economic exposure identification and risk management. It also explores corporate finance and bid risk management issues. The case involves quantitative and qualitative solution techniques as it requires using four fundamental exchange rate forecasting techniques and selecting between six exchange rate hedging products to find the best solutions based on an assessment of the needs and risk appetite of the VSC corporate treasurer.

Spreadsheet Supplement for case 108067

A technical note reviewing business combinations and Goodwill accounting, under the Statement of Financial Accounting Standards, No. 141R.

The managing director of investment banking for Kaupthing Bank hf (Kaupthing) was considering what he would need to do if he accepted a new appointment as chief executive officer of Kaupthing's latest acquisition, U.K.-based investment bank Singer & Friedlander Group plc (Singer). He would have to deal with the fact that the two merging companies had very different cultures, the possibility that some employees may leave as a result of the change and take their clients with them, the fact that he did not know whether there were good managers at Singer who could be ready to be promoted to top management in upcoming years, and many other issues that would have to be addressed.

Spreadsheet Supplement for case 108061.

A newly appointed operations manager was expected to provide his expertise in the planning, launch and ongoing operations for three corporately-owned Part King stores, the first of which was scheduled to open in December 2005. The operations manager wondered if moving to a corporate model made sense at all or whether it was better to retain the franchise structure that was already in place. He was particularly concerned about how best to motivate the managers of a corporate-owned store given that they did not share in its ownership. Were there some components of the control system that was currently in place in the franchise store model that would also be appropriate for the corporate-owned store model that was in the works? Were there some components of the existing control system that needed improvements as well?

In 2005, Anna Amphlett and Andrew Ferris established Aussie Pies to produce and distribute authentic Australian meat pies after observing the popularity of the pot pies on a visit to Australia. Seattle's Pike Street Market was chosen for the location of the first store because it was a favorite destination for international travelers who were ready consumers of new and exotic products. After initiating an aggressive sales and marketing effort, and the introduction of new products, Aussie Pies grew rapidly from a single store and sales of $6 million in 2006 to 10 stores and sales of $10.35 million by 2009. Yet, the company's rapid growth in revenues was accompanied by declining profits and a substantial increase in receivables, inventories, and capital investments in new stores. The resulting cash outflows were financed by increased borrowing from Bank of America as well as stretching the company's payables, i.e., taking longer to pay suppliers. Bank of America reluctantly increased the maximum amount available to the company under its term loan to $3 million from $2 million. In early January 2010, Jan Muska, the company's chief financial officer, was unsure whether the new credit limit would permit the company to implement its growth strategy of opening five new stores in 2010.

After the merger of two local hospitals, hospital leaders much decide how to reorganize services to take advantage of newly created efficiencies. Focuses on the Orthopedics department at one of the hospitals.

A French real estate firm must choose to report its primary asset (investment property) using either cost or fair-value accounting methods upon adoption of international accounting standards (IAS) in 2005.

Supplements the (A) case.

Spreadsheet Supplement for case 108030

Spreadsheet Supplement for case 108031

The initial public offering (IPO) of Rosneft, Russia's state-owned oil giant, was scheduled for mid-July 2006, in both London and Moscow. It was expected to be one of the largest IPOs in history. However, as of July 1, the Russian government, Rosneft's management, and its financial advisors had yet to decide on the IPO price. Expert valuations varied substantially, ranging between $64 billion and $120 billion. Peter O'Brien, the new CFO of Rosneft (he had been appointed only in April), and his investment advisors had little more than a week to decide the structure and pricing of the Rosneft IPO.

Jan Muska, a financial analyst with Fidelity Investments, must evaluate Statoil ASA for possible inclusion in the company's Energy Fund portfolio. During the period January 1, 2001 - September 15, 2006, Statoil's stock, which was listed as an American Depositary Receipt (ADR) on the NYSE, outperformed the S&P 500 by a wide margin. In August 2006, an ING analyst issued a report changing the firm's rating on Statoil from buy to hold. In October 2006, ValuEngine issued a market "outperform" rating and set a target price of $28.40 per share. With conflicting analyst opinions on Statoil's value, Muska must prepare his own evaluation of Statoil's financial performance and valuation and make a recommendation to the portfolio manage of Fidelity's Energy Fund.