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This follow-up to Chauvco Resources Ltd.: The Argentina Decisions (A) and (B) encourages students to analyze Argentina’s macroeconomic policies in 2012. Of particular interest are the lessons for Greece if it exits from the Eurozone, with the perhaps inevitable pursuit of the Argentine paradigm.

The case deals with how the investment banker advising the chief financial officer of Melco Crown Entertainment Limited (MCEL), a casino and entertainment company based in Macau, will suggest the company finance two new gaming resorts currently under construction. The development of these properties has stopped because of insufficient funding, and project timelines have started to be questioned. A decision regarding the best means to raise the necessary capital needs to be made quickly or MCEL may not be able to capitalize on the lucrative, growing gaming market in Macau. The advice must consider both the immediate need to raise capital to get the projects back on track as well as the need for long-term financial flexibility to take advantage of future opportunities. The case considers a variety of domestic and international options to determine what best meets MCEL's needs.

This case provides students with an opportunity to evaluate the mechanics and effectiveness of an interest rate swap in an actual situation. Rothmans Inc. entered into an interest rate swap in 2001, and the company’s public financial statements allow readers to follow the swap through several years until the eventual early pay-off in 2005. Students can determine if the decision to exit the interest rate swap early was good or bad. Rothmans has only one five-year bank term loan and one interest rate swap covering half of the value of the loan. This simplicity provides an excellent learning environment using publicly available data.

An investor wishes to make an investment in a software/information technology company. The investor is intrigued by the growth prospects of firms in the cloud computing industry and is deciding on whether to make an investment in the common shares of Salesforce.com. While the industry appears to be very attractive, concerns have been raised in the financial media over the company's accounting policy decisions, particularly the decision to capitalize software development costs (internally developed intangible assets) and sales commissions. Concerns have also been raised over the company's focus on metrics outside generally accepted accounting principles. Students are asked to evaluate the company's accounting policy choices and are provided with relevant information regarding the company's business model, existing and proposed accounting standards (both under U.S. GAAP and IFRS), and the accounting policies of competitors. After evaluating the accounting policies, students may then conclude whether any adjustments should be made to the financial statements and determine how this impacts valuation.

In January 2009, an investor was assessing his investment in Nortel Networks Corporation. Nortel had recently filed for bankruptcy protection in the United States and Canada, meaning his entire original investment was almost certainly lost. Nortel had filed a total of four accounting restatements from 2003 to 2007, leading to class-action lawsuits from investors and investigations by the U.S. Securities and Exchange Commission (SEC) and the Ontario Securities Commission (OSC). Considering his losses, the investor wondered whether there were any signs indicating that Nortel's accounting practices were problematic. He also wanted to understand the accounting issues raised in the SEC and OSC investigations, such as improper recognition of revenue and improper recording of provisions. Overall, the investor wanted to learn from his loss with Nortel to make stronger future investing choices.

Two years after the death of Sony’s visionary founder, Akio Morita, chief executive officer Noboyuki Idei faced a major crisis. Sony had just posted its worst performance in years and had to figure out if its current strategy needed to change. In pursuit of Morita’s vision to bring entertainment to the masses through innovation and applied technology, Sony had grown from a small Japanese company to a US$50-billion-per-year global corporation. As it entered the new millennium without its founder, Idei realized that the success Sony had enjoyed in the 1990s was being challenged in the global marketplace. With increasing global competition and in the midst of a recession, the company’s net income was far below expectations. The situation would probably worsen if Sony failed to make immediate strategic changes, including changes to its international strategy. Idei had experienced firsthand the success Sony enjoyed in the 1990s as it expanded its product lines and international presence. By April 2001, after reviewing the previous year’s financial performance, Idei knew Sony was fighting an uphill battle. All that Morita had worked towards, particularly in the 1990s, was suddenly being threatened. Idei faced a critical decision going forward. Sony was a company that still strove to embody its founders’ vision, but could he dare go against his predecessor’s approach and pursue a new international strategy?

Prada currently requires a significant amount of capital both to re-finance debt that is maturing in the next six to twelve months and to finance its intended growth into the Asian (especially Chinese) markets. Since financial markets are aware of Prada’s pressing need to raise capital, it is important for the board of directors to develop a credible strategy for raising the necessary capital of at least €1 billion. Although the press has been suggesting that Prada will do an initial public offering, the company has tried this several times in the past with no success, mainly because of bad timing (9/11, the SARS outbreak, and the ongoing global financial crisis and European sovereign debt crisis). The board has approached Guido Santini of the investment bank Grupo Capo Milano to come up with a number of credible alternatives and a strategy for raising the needed capital.

American Apparel, a popular clothing manufacturer, has socially progressive labour policies and uses significant environmental advances in its manufacturing process. In addition, it has a well-established philanthropic arm. Set against these socially responsible policies is the highly sexualized nature of the company’s advertising. This element of the marketing mix seems, at least to some consumers, very much at odds with the other aims and policies of the company. The question facing students is whether this disconnect can be maintained or whether the brand’s advertising should change.

In 2011, a fourth-year science student at The University of Western Ontario must provide the manager of Infection and Prevention Control her recommendations to improve staff compliance with the hand hygiene requirements of the medical and support staff at London Health Sciences Centre and the Ministry of Health and Long-Term Care. The Province of Ontario’s Ministry of Health and Long-Term Care had implemented an initiative called Just Clean Your Hands to improve hand-cleaning rates that would directly affect the number of infections acquired by patients while in hospital. The task is complicated by the large number of employees working at LHSC and the many different employee groups, ranging from physicians to cleaning staff. Hand-cleaning procedures must also be followed by the patients' families and friends who visit. In addition, workplace sub-cultures have historically not enforced compliance with discipline. Essentially, the challenge is to change the behaviour of a large group of people in diverse roles. Students should realize that because health care is publicly funded in Ontario, any plan of action to improve hand-cleaning compliance will need to be justified financially and implemented at a reasonable cost.

Green Mountain Coffee Roasters is considered a short sale candidate (a stock sold short makes money if the stock price declines). The business is growing quickly, but there are signs of potential problems. The case provides a realistic illustration of bullish versus bearish investors. Like in a mystery novel, there are spies, possible misrepresentation, and conflicting information here. Decision-making under uncertainty is explored — a factor professional investors must deal with every day.<br><br><br><br>Case discussion topics include risks in short selling, margin loan calculation, investor behaviour, stock valuation analysis, forecasting business growth potential, forecasting earnings reports, management incentives, actions taken by management to increase the stock price, aggressive accounting practices, assessing the business impact of a patent expiration, and the impact of a business growth rate on stock market valuation.

In 2012, Encana is reassessing its choice for functional currency and presentation currency. Historically, Encana has used Canadian dollars for its functional currency and US dollars for its presentation currency, but changes in Encana’s operations over the past several years have caused the company to revisit its choices. For functional currency, Encana must determine whether Canada continues to represent its primary economic environment. Further, Encana must consider whether its reasons for using U.S. dollars as presentation currency remain valid. To make its decisions, Encana must apply the guidance in IAS 21, “The Effects of Changes in Foreign Exchange Rates.” Finally, Encana must determine the impact of its choices on the financial statements.

This case discusses the emergence of low-cost carriers (LCCs) in India in relation to the growth of the Indian aviation industry and the subsequent fall of the LCCs into financial loss. The LCCs became important for value-adding and cost-cutting alternatives in corporate business travel. Before the 2008 global economic crisis, domestic air traffic LCCs recorded a compound annual passenger growth rate of 18 per cent. Among the many low-cost airlines in India, SpiceJet had been one of the most popular, with the lowest airfares and highest customer value. Though SpiceJet had a net profit of INR 1.01 billion (US$20.2 million) in fiscal year 2010-2011, the results following the financial year indicated that the company had also joined the ranks of loss-making airlines in India. A host of issues — such as rising debt, increasing cost to revenue ratios, growing management challenges, complicated flight operations, and rising oil prices — were threatening the survival of airline companies, especially LCCs. SpiceJet was no exception.

The CEO of the Indian animation studio Tulsi Studios Ltd. is considering approaching either Pixar or DreamWorks Animation to partner on future animation projects. The case provides a perspective on the film industry to indicate how it is rapidly changing and expanding globally, and outlines the history and past successes of the studios. The CEO must decide which potential partner to approach.

This case deals with a dilemma faced by the Board of Control for Cricket in India (BCCI) in 2007. Following the elimination of India from the knock-out phase of the World Cup 2007 championship, the BCCI and team sponsors found themselves at a crossroads. Others were vying with cricket for the advertising budgets of companies, and spectator interest for cricket was on the wane. The vice president of the BCCI had to perform a situation analysis after the backlash from fans and assess the way forward for the sport after the team’s poor performance in the World Cup. The case facilitates an analysis of the environment for cricket in India in 2007 and an assessment of the need for next steps for the game to regain its preeminent status among sports fans in the country.

Capitec Bank was a new bank established at the end of apartheid to offer banking services and loans to the large numbers of low-income potential customers newly opened to economic progress and aspiration by the end of the discriminatory system. The banking context was dominated by four major and long-established banks characterized by conservative legacy practices. Capitec planned to create an innovative offering to serve the low-income market and to migrate this offering into higher income groups. At the same time, the competitive context began to change, as other banks sought to attract lower-income clients as well. The case examines Capitec’s strategic options for survival and expansion in this context.

In 2012, the Ontario provincial government announced that after 41 years in operation, the iconic Toronto tourist attraction Ontario Place would be shut down. The immediate closing would save the province and tax payers an estimated $20 million a year and eliminate at least 48 full-time jobs and 600 summer positions in the process. Ontario Place attendance had dropped sharply from an average of three million visitors during the early 1980's, to just over 327,000 in 2010. The Ontario government planned to keep the park closed until 2017 and spend the five years following closure to redevelop the majority of the site. It established an advisory panel empowered with the task of evaluating how to once again make Ontario Place a popular city venue and tourist destination. The advisory panel was expected to submit a full report outlining the best ideas for the Ontario Place revitalization to the provincial government by the end of the summer.

The collapse of Lehman Brothers, a major Wall Street investment bank, sent shockwaves through financial markets as global liquidity dried up and investor confidence reached an all-time low. Banks with exposure to complex financial instruments in high-debt environments were considered particularly vulnerable. ICICI Bank — India’s largest private-sector bank with maximum international exposure among Indian banks — was hit by rumours about its exposure to Lehman assets. Solvency fears drove its depositors to withdraw large sums of money and the bank’s stock value started to erode. ICICI’s management responded to the crisis by initiating an intense public relations effort: the bank released information on its exposure and supported its position through media appearances of its top executives and statements issued by rating agencies, regulators, and the government of India. The bank emphasized the strength of its balance sheet, the limited exposure to risky assets, adequate provisioning, and a healthy cash reserve ratio. It alleged malaise and rumour-mongering by market intermediaries as the reason behind the crisis and denied any threats to its solvency. The public relations effort had barely concluded when another episode of stock collapse and customer withdrawal started. The case gives students an opportunity to evaluate crisis communication efforts in the age of new media and its link with business reputation. The student, in the role of a PR consultant, must decide why the efforts failed. What else could have been done to restore trust?

From 2005-2006, Federated Department Stores converted some 15 regional department store chains into a single national brand, Macy’s, with 810 stores across the United States. In addition, the company repositioned the consolidated Macy’s in the overall retail landscape in an attempt to differentiate the new company from its competitors. These maneuvers were undertaken to counter decreasing sales and profits in the traditional department store industry. Some retail analysts suggested that the consolidation of Macy’s, while interesting, was destined to fail because the traditional department store was an obsolete entity; however, other analysts suggested that Macy’s strategy might hold the key to success in a declining industry. In 2008, the U.S. economy entered a recession, and by 2011 it remained far from booming. Did Macy’s need to change parts of its strategy to remain competitive? What would need to change?

During the night of September 14, 2008, a few hours before Lehman Brothers folded, Merrill Lynch declared defeat: it was acquired by Bank of America (BofA). Unsure of its ability to continue as a standalone entity, Merrill Lynch ended 90 years of independence. Before its buyout by BofA, Merrill Lynch was the world’s largest and most widely recognized stockbroker. It dominated retail stockbroking with its army of 16,000 brokers around the world. At the start of 2008, Merrill Lynch, Goldman Sachs, Morgan Stanley, Lehman Brothers, and Bear Stearns were the five largest standalone investment banks, with a combined total history of 549 years. But within a span of six months, they would all be gone as independent investment banks. Some observers wondered whether any early signs of the financial distress that the investment firm industry experienced in 2008 could be seen in the financial statements published in the years preceding the acquisition of Merrill Lynch. In addition, was there merit in evaluating the performance of the company from an angle other than that of operating results, which is typically used by financial analysts? Specifically, would there be value in an assessment of the company’s performance by scrutinizing the origin and use of its liquid assets for the years 2005, 2006, and 2007? Such an investigation would require focus on the statements of cash flows, including the need to: <ul><li>Evaluate the cash situation at year-end.</li><li>Analyze cash flows provided (used) by operating activities.</li><li>Analyze cash flows provided (used) by investment activities.</li><li>Analyze cash flows provided (used) by financing activities.</li></ul>

Since its inception in 1997, the National Pharmaceutical Pricing Authority (NPPA) had been trying to control drug prices through various supply-side initiatives, which had yielded limited success. This time around, NPPA had announced a new initiative, which was aimed at educating consumers about the inexpensive alternatives for medicines prescribed by doctors. By giving consumers information about various brands and their prices, NPPA hoped to offer customer self-selection of drugs through short message service (SMS, or “texting”). NPPA appeared to be operating on the premise that customer self-selection could result in self-regulation of consumption, thereby giving greater control of health care expenses to customers. Given the huge penetration of mobile phones in India and the gradual reduction of various mobile service charges, text-based service looked feasible. However, the proposed system had met with strong opposition from other stakeholders, such as doctors and chemists. Besides, the large-scale adoption of the proposed service was being questioned as the decision-making process for medicines was very complex.