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Air New Zealand is a national airline faced with a number of important strategic and financial issues. The company's recent acquisition of Ansett Australia had proved to be disastrous and a severe financial drain for Air New Zealand. Key issues facing Air New Zealand include the long-term strategic positioning of the business, and determining anticipated financing needs, the appropriate gearing ratio or capitalization (debt-to-equity) rate, and available sources of financing. A recent research report had summarized two fundamental questions that impacted on the company's stock price and needed to be addressed: Would the New Zealand government relax Air New Zealand's ownership restrictions in order to allow Singapore Airlines to increase its stake from 25 per cent to 49 per cent? If so, would any proposal fix Air New Zealand's balance sheet to allow Air New Zealand and Ansett to once again become viable airline competitors? Supplement to this case is Air New Zealand: The Recapitalization Decision (B), product number 9B02N020.

A scientist at a well-known university has been working for several years on the development of a drug that is a treatment for a particular type of cancer. He has successfully completed all pre-clinical trials and has filed an application for an investigational new drug. Once the application has been accepted by the Food and Drug Administration, the scientist plans to embark on a series of clinical trials. Although his work to this point has been financed by research grants and personal funds, he now needs to obtain more substantial financing from a venture capitalist. However, the scientist does not know what his fledgling company is worth.

JDSU Uniphase Corporation is a high-technology company that designs and manufactures fibre-optic components for the telecommunications and cable television industries. The company announces a record high year-end loss; they contribute the losses primarily to the writedown of goodwill. Using accounting for acquisitions and goodwill, the company must reassess the value of its past acquisitions.

The Alberta government cut its health-care budget and the Edmonton Health Sciences Centre needed to find savings of $15 million. When the recommendation for cuts was announced to the medical staff, it was learned that 18 services would be cut. A group of surgeons attempted to challenge the inaccurate data on which the plan was based, but they were denied a review by the hospital administration. The surgeons had not been included in the consultation because the board decided that the surgeons could not be objective about the viability of their own programs. Convinced that the cuts would compromise the mission of the hospital, the frustrated surgeons decided to send a public statement to the local newspaper, and must decide how to approach the media. The related case, Edmonton Health Sciences Centre, product 9B02C046 looks at the issue from the boards perspective.

AIG is an American insurance company. A trade dispute between the United States and the European Union threatens to block the accession of China to the World Trade Organization, and AIG plays a role - it is the only foreign firm to own fully-controlled subsidiaries in China. The disagreement concerns what will happen to these existing subsidiaries, as well as potential new ones that AIG might seek to establish in China in the future. What are the issues from the perspective of each of the stakeholders and what options are available that will resolve this dispute?

This case is presented as a dialogue between four friends, who examine the economic crisis that has affected Japan since the beginning of the 1990s and focuses on the current situation of recession and deflation. Extensive macroeconomic data is provided, as well as information on the policies implemented by the government since 1992. How did Japan get into the crisis, and why has it not yet recovered?

Fast Learning Inc. was a private firm that developed software and learning materials largely for preschool-aged children. It is considering moving into two new ventures: opening an early childhood education center and purchasing an existing day-care center. Fast Learning has approached a strategy consulting firm for advice on these ventures. One of the team members evaluating the proposals must determine the appropriate costs of capital (or hurdle rates). He considers whether to base the calculations on the cost of new sources of financing or an average of the costs of existing sources, and whether required returns should reflect actual past costs or current market costs.

Two large oil and gas companies agree to merge to form Husky Energy Incorporated. An individual investor has received the information circular with respect to the transaction and has gathered some other information about the merger. She must decide whether the offer is attractive enough for her to vote her proxy in favour of the transaction and tender her shares. The case provides an opportunity for students to evaluate the acquisition from the unique perspective of an individual investor holding shares of the target company. Extensive data is provided on comparable firms and transactions allowing for ratio-based valuation of the transaction. This valuation is complicated by the fact that payment to shareholders consists of both cash and shares. Information is also provided that allows for a general discussion of the takeover process as well as the pros and cons of using a takeover as a means of going public (a reverse takeover).

China's entry into the World Trade Organization at the end of 2001 brought promises that foreign financial institutions would be permitted to operate through China. In 1998, Citicorp and Travelers Group Inc. had merged to create the new Citigroup Inc. Travelers brought a vast array of financial services that added to Citibank's existing portfolio of consumer and commercial lending. Travelers had developed a very extensive business in investment banking, asset management, life insurance, property casualty insurance, as well as consumer lending. Citigroup now had to determine the business prospects for each of its activities in the growing China market. Fears of social and economic dislocation might lead China to impose regulatory restrictions limiting the pace of foreign expansion. Economic growth might be impeded by the existing political structure, and reforms might not occur in the near term. A myriad of other challenges included human resources difficulties, e-commerce limitations and regional disparities. The pace of privatization of state-owned enterprises and the societal preferences in regard to alternative insurance and investment products added to uncertainties. Citibank had a record of success in less developed countries, and had developed certain competitive advantages that might be the basis for success in China, but whether and how these could be extended to other Citigroup financial activities remained an important question.

An investment analyst has been asked to evaluate an investment in the project financing for Ras Laffan, a liquefied natural gas venture in the Middle East between Qatar and Mobil Corp. In order to make a suitable recommendation to the investment board, she must present, the potential returns, the various risks and their possible resolutions. Her analysis must address the political risks amid an atmosphere of instability of the Middle East, commodity price risks in an industry with a history of price volatility, possible foreign exchange risks of dealing in two currencies with historic fluctuations and the commercial risks of the reliance on a single customer who will account for 90 per cent of sales. Medium-term non-recourse financing is one option available for financing the project. She also knows that the quality of her analysis may influence whether or not the investment board will consider her capable of running her own fund in the future.

Stamford Machine Corporation is a market leader in the manufacturing of photocopiers and office equipment. The director of corporate business ethics and compliance has been notified that the company is being served with a discrimination lawsuit. A newspaper announcement was released to the public outlining details of the charges and before the director could leave his office, he receives a call from a journalist asking for the company's comments. He must determine if there has been a breach in the company's policy on discrimination and plan how the company will deal with the media.

The Microsoft Corporation is one of the most successful software developers in the world. The company has been involved in an anti-trust suit with the U.S. Justice Department since the early 1990s and is about to launch the latest version of their combined personal computer operating and Internet browser software. The company, when faced with government intervention, must determine how to effectively rally support to fight the challenge and continue with normal business at the same time.

Procter & Gamble is a major player in the global hair care industry. In a practice common to many companies facing fierce competition in a lucrative market, Procter & Gamble hired a competitive intelligence contractor to monitor the activities of a rival company. As a result, Procter & Gamble acquired valuable information on the competitor. While legal counsel confirmed that the information was not gained through illegal activities, senior executives acknowledge that Procter & Gamble's own core values may have been compromised.

Teck Cominco is an integrated natural resource group with activities in mining, smelting and refining ores. A number of complaints of ill health by contract workers at one of the plants lead to medical tests. The test results revealed elevated levels of thallium. Concerned about employee safety, plant management immediately shut down the operation until it was safe for workers. The operations manager must plan how he will handle the media over the next few weeks.

A financial analyst for Dell Computer Corporation, one of the world's largest computer systems manufacturers, has been asked by the treasurer to develop a report on the company's recent financial performance. Over the last few years, the company has realized it has lost approximately 50 per cent of its stock. Did this decline reflect industry and market wide effects or were there some emerging problems with Dell's operating performance? The financial analyst must analyse the company's financial statements and the cash flows of Dell and its competitors.

The founder of a Canadian publishing company is nearing retirement. His mission has been to promote Canadian authors and he has actively pursued government assistance and policies to protect Canadian cultural industries. However, there are often policies against free trade of cultural products which has hurt exporting. Discussed is how firm value is affected by government policy and the trade-offs of cultural protectionism.

The rent-to-own industry is a four billion-dollar industry that rents appliances, furniture and electronic goods to customers. There is a potential threat to the rent-to-own industry as a result of an article in a national newspaper that accused the industry of taking advantage of poor consumers. Law makers and politicians were becoming active on the issue and the industry must formulate a response. Would the public really care enough about the rent-to-own industry for new laws to be passed that would change their operations? This case deals with the relationship between business, government and society and implications of public perception.

Monsanto, one of the world's largest producers of commodity chemicals, had decided to focus its operations on the biotechnology and pharmaceutical industries. The first shipment of genetically modified soybeans arrived in Europe in November of 1996. Genetic engineering promised to reduce the use of pesticides and curtail world hunger. Therefore, Monsanto was dismayed at the powerful opposition that developed over the next few years. A series of food safety concerns, the foremost being mad cow disease, only added to consumer skepticism. The company must examine its strategy and the relationships with key stakeholders (including governments, farmers, industry groups, environmentalists, grocers and consumers). The (A) case provides background on Monsanto, their corporate strategies and the climate in which they introduced genetically modified products in the United States and Europe. The supplement Monsanto (B), product 9B02A008, focuses on the roles of government and other regulatory bodies in the acceptance of genetically modified products.

Beijing Jeep Corporation Ltd. was one of the first joint ventures between an American company, DaimlerChrysler Corporation and a Chinese enterprise, Beijing Automotive Works. Early in its operations, Beijing Jeep was given preferential treatment on tariffs and foreign exchange, and had spent many years developing relationships with senior government officials that protected them from import competition. After several years of negotiations, there was an agreement of terms for China to enter into the World Trade Organization. Terms of this agreement called for a steep reduction in tariffs for imported automobiles, which would lower entry barriers to the Chinese automotive industry, thus creating more competition for the company. Tariffs on components imported from the United States would also be reduced but this would not be enough to offset the flood of imported vehicles into the market. Entry into the World Trade Organization would mean a lot of changes, and Beijing Jeep must determine whether they should continue focusing on the relationships they have built with the government, or approach their joint venture partner for additional support.

Future Shop is a large retail store chain that specializes in audio, video, computer equipment and software, and appliances. A student group has conducted a research study of Future Shop customers' perception of the strengths and weaknesses of the chain and submitted their findings.