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The entrepreneurs of the Regical Electronics Company Limited, a financial software and integrated system developer in Guangzhou, have perceived a new e-business opportunity in the sale of an electronic payment system. To implement the Hotye business project, a new company is established, and the immediate task for the chief financial officer is to seek financing sources for the huge investment and to determine the appropriate accounting policies that will help the new company decide on its business and financial strategies. Two significant financial reporting issues are the depreciation of the Hotye electronic payment terminals and the method of revenue recognition, as various approaches of depreciation and revenue recognition can produce different impacts on taxation and on the bottom line.

Blinds To Go is a manufacturer and retailer of customized window coverings. The company has been steadily expanding the number of stores across North America. The vice chairman is concerned with the lack of staff in some of these newly expanded stores. With plans of an initial public offering within the next two years, senior management must determine what changes need to be made to the recruitment strategy and how to develop staff that will help them achieve the company's growth objectives.

NES is one of Germany's largest industrial manufacturing groups. The company wants to set up a holding company to facilitate its manufacturing activities in China. They have authorized representatives in their Beijing office to draw up the holding company application and to negotiate with the Chinese government for terms of this agreement. In order to maximize their chances of having their application accepted, the NES team in Beijing hires a government affairs coordinator who is a native Chinese and whose professional background has familiarized her with Chinese ways of doing business. NES's government affairs coordinator finds herself in a difficult position when she proposes that gifts should be given to government officials in order to establish a working relationship that will better NES's chance of having its application approved. This method of doing business is quite common in China. The other members of the NES team are shocked at what would be considered bribery and a criminal offence in their country. The coordinator must find a practical way to bridge the gap between working within accepted business practices in China and respecting her employers' code of business ethics. The complementary (B) case (9B01C030) gives a brief summary of the eventual solution to this problem.

Glegg Water Company is an international company that specializes in customizing premanufactured components into full industrial water treatment systems. In the early 1990s, the water treatment industry had introduced a process that removes charged particles from water used in industrial applications. This technology was superior to resin technology because it was more environmentally sound and more reliable. However, its applications were limited to low water flows. Glegg, through its development of the E-Cell, refined the technology that made it available to high water flow operations, was expandable and more versatile than previous systems. In spite of the clear technological superiority, Glegg was finding it difficult penetrating the market. The chief executive officer must develop a strategy and marketing plan that will make E-Cell the industry standard.

Shanghai Eurotel Center Co. Ltd. is a joint venture formed by four parties from China, France (2) and Singapore to construct and operate a group of buildings including one five-star hotel, a luxury shopping center, some apartments and office space. After the first seven months of operation, actual profit of the hotel was under budget. The chief accountant, in preparing for a report for the board of directors, must decide how to resolve the problems with ambiguous accountability for operations, lack of appropriate performance measures and must analyze performance using flexible budgets.

eLance.com had just opened its online services to the public. The site was designed as a platform allowing buyers to post projects that freelancers (sellers) could bid on. After three days of operation, three requests for temporary positions appeared. Recruitment was not the intended purpose of the site and the co-founders disagreed on whether these requests should be allowed to stay on the site. Both founders knew that the choices they made now would directly affect future Web site development as features to support a projects-only site would be somewhat different from a combined projects and personnel site. They had to look ahead and consider the strategic and IT implications, and determine the objectives of the site and what products they would launch.

Chauvco quickly became one of the top 30 oil companies in Canada. Rising costs and diminishing oil and gas reserves led Chauvco to consider investing in other countries. In 1992, Chauvco purchased an interest in an Argentine oil and gas block that was being privatized. Chauvco's success in Argentina depended on the country's future political stability and the continuance of government policies. Prior to the 1989 election of Carlos Menem, Argentina experienced decades of political and economic instability, the government nationalized many businesses and imposed detailed regulations throughout the economy - a set of policies that led to low growth, budget and trade deficits, hyperinflation, and currency devaluation. Whether Menem's reforms could achieve long-term success remained to be seen. Chauvco encountered a number of difficulties, as well as some positive aspects of the environment of business. The company initially entered a joint venture partnership and then developed an independent set of operations. By 1995, Chauvco had to decide in what proportions it should divide its future investments between Canada, Argentina and other countries, and what criteria it should use in evaluating investment opportunities. This is an abridged version of 9A95H003.

Kodak's Health Imaging division is the second largest business unit within Kodak, a worldwide provider of consumer, professional and health imaging products. The regional manager of the Health Imaging division is preparing her presentation for the company's senior management retreat. The East Asian Crisis and its impact on the division are on the agenda. The regional manager reflects on the magnitude of the crisis, and she wonders if the company's responses were reactive instead of strategic. There will be some tough questions to rake through at the meeting. Did the Health Imaging department respond effectively to the crisis? Is Kodak better off because of the crisis? What will the short-term and long-term effects be? Will Kodak's response to the East Asian Crisis preserve customer relationships for the years to come? Information pertaining to Health Imaging's strategic view of the region, the company's organizational structure and the levers employed by Kodak in response to the crisis all serve to produce some answers for the division's future consideration. A supplementary (B) case is available, product 9B01M056.

The Percy Group is a diversified real estate development company. The president must decide whether to invest $7.9 million to convert one of the company's apartment buildings into a retirement home. The company had not previously converted or operated a retirement home. He must evaluate industry trends and the expected cash flows necessary to determine whether the investment is expected to earn the company's cost of capital. He must also undertake sensitivity analysis and a qualitative evaluation.

Birch Point Lodge is a small family run resort. The managers of the lodge are trying to incorporate technology into the daily operations of the resort. With little experience, staff that are not very computer savvy and limited resources, using technology effectively have become a real challenge. They have twice tried to purchase a computerized system for handling reservations, billing and other processes. Most recently they spent $9,000 to purchase a system that was never used. They are faced with another option and must decide whether to purchase the new software or not.

Pibrex is one of the world's largest developers of petrochemical-based polymers for the plastics market. The company has purchased a plant in Russia and after three years of serious operating losses has appointed a new general manager of the plant. The plant lacks a strong organizational culture; communications within and between departments are poor; inequity in wages, working conditions, and training exist but motivation and retention problems are prevalent, Pibrex headquarters is losing interest in the Russian operation; and two sub-cultures exist within the Pibrex Russia organization. The general manager must develop an action plan that can turn operations around with minimal expense to Pibrex. A supplement, Managing Pibrex Russia (B): Developing Organizational Strategies to Ensure Sustainable Profitability (product 9B01M021) discusses issues facing the company two years later.

Lucent Technologies is a worldwide provider of telecom network infrastructures. The government of India has deregulated the state-run control of the telecom sector presenting significant opportunities for telecommunication providers. India appeared to be a nation of enormous investment opportunity, with a population of one billion and a relatively high growth rate. Lucent Technologies must evaluate the opportunities in this changing market and decide whether they should invest more resources in this area or withdraw completely.

Huazhang is a joint venture between China Machine Press and Multi-Lingua Publishing International, Inc. of the United States. Since its establishment, Huazhang had developed from a company with three employees to more than 100 employees. The shareholders are interested in determining how well the company has been managed and the board decides the best way to do this would be to value the company. The board also wants to measure the general managers' future performance based on the increased value of the company. The issue for the newly-appointed general manager is to determine which of the many possible methods should be used to value the company, including the discounted cash flow model, and to perform sensitivity tests.

Moonsnail Soapworks is a small manufacturer of natural, handmade soap products. The founder and co-owner of the company wants to address three key issues. First, to decide whether to introduce a new cream and if so, determine the strategy to be used for pricing, distribution and promotion. Second, to determine whether the move to a new location had been beneficial for the company; and third; to decide on the best strategy to improve performance and profitability at one of Canada's largest craft shows. All of these decisions need to consider the company's current financial health and cash position.

Newfoundland-based Fishery Products International (FPI) is one of the largest seafood companies in North America. FPI has experienced its best performance in a decade and has recently survived a hostile takeover bid by three competitors who acted in concert. The chief executive officer (CEO) has just returned from New Zealand where he was visiting a major competitor to see if there was the possibility of a strategic alliance. The CEO knew he had to do something to prevent another hostile takeover and to continue to grow shareholder value while still maintaining the social conscience of FPI. Some of the issues facing FPI were: performance, strategic leadership and corporate governance, and implementing an integrated product differentiation/cost leadership strategy.

In 1998 it appeared that Japanese auto companies could be forced to pay duty on their non-NAFTA imports into Canada. The U.S. Big Three auto makers (GM, Ford and Chrysler), in contrast did not have to pay such a tariff on their offshore imports such as those made by Ford-owned Jaguar (United Kingdom) and GM's Saab (Sweden). The Japanese and U.S. firms were treated differently because of the 1966 Auto Pact that made all Big Three imports duty-free. However, in the early 1980's, in order to encourage auto investment, the Canadian government granted virtual Auto-Pact status to Japanese firms (Toyota and Honda) that located in Ontario. This eliminated tariffs on the Japan-made models they sold in Canada. Public debate arose during the Free Trade Agreement (1989) and North American Free Trade Agreement (1994) trade negotiations. The U.S., under the Big Three influence, pushed Canada to withdraw the Pact-like benefits it used to attract the Japanese factories. Canada eventually complied with the U.S. demands, while leaving the Pact in place for U.S. automakers. This led the Japanese government to challenge the fairness of the proposed tariff at the World Trade Organization (WTO). While waiting for the WTO process to unfold, the Japanese and U.S. automakers were considering how to respond to the forthcoming judgement.

Dunes Inc. is a concept for a tanning salon and healthy lifestyle retail store on a university campus. Two students have developed and refined a business plan, and are about to present their proposal to the manager of the university's community centre. The two partners must thoroughly assess the potential costs of operation, determine whether the profits will justify their equity investment, and decide whether the business will be an attractive investment for future potential buyers.

Dynamic Engine Inc. is one of 12 divisions of the automotive parts maker North American Auto Parts. With guidance from the parent company, Dynamic Engine has well-established human resources policies, training programs and employee assistance programs that are available to all employees. The materials and purchasing manager must deal with the poor attendance of an employee whose performance until recently was considered above average. He discusses the issue with the employee and believes the problem has been resolved. Shortly after this conversation, he discovers that the absenteeism problem with this employee is still occurring, and now must determine what his next step is to resolve this issue.

Polymer Technologies Inc. are specialists in integrating metal and plastic to produce margin switches, relays and electromechanical products for the automotive industry. The program manager must decide whether or not to automate production of a component of power automobile seats called the seat switch substrate, and if the decision is made to automate, whether it should be done in-house or outsourced.

Lucent Technologies is a worldwide company that delivers systems and software for next-generation communication networks. The company is restructuring to try to improve its stock value after significant losses. A key component of the company's restructuring is the retention of their information technology employees. There is an industry wide shortage of IT workers, causing a large number of these workers to job-hop for better pay. The chief executive officer needs to decide what employee compensation programs should be in place, determine if workplace conditions and rules need to be changed and if the company's recruiting program is attracting the best talent.