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Company pursues ways to reduce its debt to equity ratio by resorting to off balance sheet debt transactions.

Company pursues ways to reduce its debt to equity ratio by resorting to off balance sheet debt transactions.

Company pursues ways to reduce its debt to equity ratio by resorting to off balance sheet debt transactions.

Company pursues ways to reduce its debt to equity ratio by resorting to off balance sheet debt transactions.

Hermann Gudmundsson, the CEO of Esso Iceland (provider of fuel and lubricants) was expected to begin merging Esso Iceland with Bilanaust, an Icelandic automotive spare parts retailer with the end result of a unified entity that would be dominant in its respective industries. The Icelandic economy was growing at favourable rates and Esso had enjoyed its position as the leading fuel provider in Iceland for the past 60 years with 40 per cent of the market. Gudmundsson and his partners bought Esso Iceland in 2006 from a private equity firm that had been focused on stripping Esso Iceland down to its core fuel business, using staff reductions as part of a cost-reduction program. Gudmundsson believed that Esso Iceland had untapped wealth that could only be enhanced by the cross-selling synergies formed as a result of a successful integration of over 500 accounts in the two companies. His overriding concern was to lead the combined organization to achieve these goals in the next two years without destroying shareholder value.

Hermann Gudmundsson, the new chief executive officer (CEO) of both Esso Iceland (provider of fuel and lubricants) and Bilanaust (an automotive spare parts retailer) was starting to develop an organizational strategy to carry the two firms forward for the next few years. His overriding concern was to create value for themselves and the customers they served, and Gudmundsson considered several methods to achieve that goal: should each company be led and managed on a stand-alone basis, or would a formal merger bring the hoped-for synergies? He determined that the best approach would be to capture an accurate picture of the talent existing in both organizations but was unsure of the best method to sort, rank and evaluate the talent existing in each of Esso Iceland and Bilanaust. Ultimately, he wanted to create a list of objectives for the evaluation program and methods to implement the findings.

By December 2006, Hermann Gudmundsson (the chief executive officer of both Esso Iceland and Bilanaust) had spent the past 10 months evaluating the strengths and weaknesses of both organizations, and determined that the best approach going forward would be to, "consider creating a new organization with a new structure and a new brand name." He weighed the advantages, disadvantages and costs of either retaining two separate companies and their associated brand-image, or merging into one new organization. Gudmundsson was facing resistance from both the board of directors and three different advertising agencies to forgo the Esso brand; but with an ultimate mandate to increase shareholder value he needed to figure out the best method, from a branding perspective, to achieve that objective.

In December 2006, Hermann Gudmundsson (the chief executive officer of both Esso Iceland and Bilanaust) announced to employees of both companies that a merger was to occur. Various workshops were held to involve employees in the developing structure of the new organization, resulting in a tenable logistics strategy and increased trust between members of the different organizations. By April 2007, Gudmundsson and his team had merged the two organizations, created a new company name and designed a new logo. On the official launch day, over 800 employees were expected to be in attendance as Gudmundsson unveiled the new brand. Gudmundsson wanted to deliver a memorable speech that captured all the excitement and conveyed the right message of the brand going forward - but was unsure of what issues to address in the speech and concepts he should emphasize to create the right first impression.

By the end of 2007, Hermann Gudmundsson (the chief executive officer of N1 - created from the merger between Esso Iceland and Bilanaust) was focused on building trust within his organization. By involving employees in decision-making, N1 had received valuable suggestions on effective business operations. But Gudmundsson had noted a lack of chemistry between employees of the two former firms, and thought that a stumbling block to better relations was the separate clubs or societies for Esso Iceland and Bilanaust employees. After human resources was unable to find a satisfactory resolution, Gudmundsson reluctantly stepped in to render his opinion on how to resolve the issue.

By October 2008, the merger of Esso Iceland and Bilanaust into the new company N1 was considered a success. Earnings before interest, taxes, depreciation and amortization (EBITDA) was on its way to doubling in three years, and cross-selling was gaining traction. But N1's plans were under threat of derailing due to a looming currency crisis. In October 2008, the Icelandic banking sector collapsed. Gudmundsson called upon his team to determine what internal and external changes needed to be made to remain viable and productive now that they were without access to commercial credit.

The vice-president of manufacturing for W.C. Wood Company (Wood) was pleased with the implementation of the new packaging system for the refrigerators and freezers (known as "clear pack"). Despite some initial start-up issues, problems were resolved and customers had even begun complimenting Wood on the change. Therefore, it came as a surprise when Maytag refused to take delivery of the clear pack product and instead notified Wood of an impending warranty claim under their supply agreement for product damages. Wood had filed all the product testing forms and approvals with Maytag prior to implementing the clear pack product; however, the Maytag distribution warehouse had not been made aware of the proper handling requirements. Additionally, Maytag's largest customer had not been made aware of the handling changes and was similarly unprepared. As a result, damage claims had increased more than 300 per cent and were expected to rise if something was not done quickly.

The Dow Board made a bid for Rohm and Haas Company in order to transition its portfolio away from commodity chemicals towards specialty chemicals.

The global economy entered a crippling recession in the fourth quarter of 2008 and Dow lost its primary source of funding for its planned acquisition of Rohm and Haas.

Dow's board and management team worked on arranging appropriate financing to complete the acquisition of Rohm and Haas. Meanwhile, the board of Rohm and Haas filed suit against Dow after it delayed the completion of the acquisition.

Dow completed the acquisition of Rohm and Haas and escaped a battle in a Delaware courtroom

Sam Palmisano became CEO of IBM in 2002. He dramatically energized the organization through portfolio changes and a values driven approach to managing the company.

Second case in the Cosmeticos de Espana case series. What should management's accounting response be to a devaluation of the Bolivar?

The third case in the Cosmeticos de Espana case series. What should management's accounting response be to a further devaluation of the Bolivar?

The fourth case in the Cosmeticos de Espana case series. What should management's accounting response b to the imposition of foreign currency controls?