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Bankinter: Growing Through Small and Medium Enterprises
by F. Asis Martinez-Jerez Joshua BellinSurveys the overall sequence of processes needed for the success of a strategy based on customer analytics. In particular, it charts the formulation and implementation of this strategy by a Spanish bank that decided to expand into the Small and Medium Enterprises (SME) segment. Starting with the creation of information necessary for the bank to compete in this segment, it describes the strategic selection of the target customer group, the definition of the product offering, and the organizational changes needed to implement such a strategy.
TD Canada Trust (A): The Green and the Red
by Brent Kazan Dennis CampbellThe case series illustrates the role of performance measurement and analytics in translating TD-Canada Trust's service model of "comfortable banking" into operational terms. In 2000, in a banking market where consumers and regulators were typically hostile to mergers and acquisitions, Canada's fifth largest commercial bank Toronto-Dominion Bank (TD Bank) undertook a merger with a relatively small trust company, Canada Trust, which was known for exceptional customer service. To assuage the concerns of regulators, consumer groups, and newly acquired customers, TD Bank made several public pronouncements promising to maintain Canada Trust's high customer service standards and to deliver a "comfortable banking" experience. Chris Armstrong, executive vice president and chief marketing officer, was now faced with the task of defining the comfortable banking model and consistently delivering on these promises. Armstrong and his team undertake a systematic analysis of the drivers of customer satisfaction and branch network profitability and, based on the results, must decide how to change TD-Canada Trust's branch compensation and performance reporting systems to consistently, and profitably, deliver a "comfortable banking" experience.
Shangri-La Hotels
by Brent Kazan Dennis CampbellIn November 2006, Symon Bridle, the newly appointed chief operating officer of Shangri-La Hotels and Resorts, was thinking about a number of organizational issues that presented challenges to Shangri-La's rapid expansion strategy. There were three major issues at hand: (1) the company was expanding into high-wage economies in Europe and North America; (2) the company was expanding its presence in China--a country where front-line employees were not used to exercising decision-making authority; and (3) newcomers in the Chinese hotel market were poaching Shangri-La's staff and driving up wages in historically low-waged markets. As a COO, Bridle needed to ensure that Shangri-La's signature standards of "Asian Hospitality" were maintained during this expansion.
Tata Motors: The Tata Ace
by Krishna G. Palepu Vishnu SrinivasanConsiders the strategy and experience of Tata Motors, India's leading commercial truck maker, as it developed a new small commercial vehicle, the Tata Ace. Positioned as a replacement for the three-wheelers that predominated as small commercial vehicles in India, the Ace create a new product category and enabled Tata Motors to access a new market segment. The company adopted tailored approaches to product design, distribution, marketing, service, and sourcing for the vehicle. After successfully targeting the niche, considers how Tata Motors might grow its presence in the segment with new models, enter new regional markets, export to developing or developed countries, and face new competition.
Cintas y Lazos, Inc.
by David F. HawkinsA recent Cuban immigrant establishes a new notions store. The initial 3-month, GAAP-based income statement differs from one prepared by an economist friend. The store owner wants to know why one shows a profit and the other a loss.
Leasing Computers at Persistent Learning
by Devin ShanthikumarNewly public Persistent Learning is acquiring vital computer assets. They need to determine how the lease or purchase decision will impact their financial statements, and how the market will react given previously forecast earnings and competitor's accounting.
Dollar General Going Private
by Sharon KatzThe 'Dollar General Going Private' case is intended to improve students' understanding and encourage their use of financial statement analysis. The context is Dollar General Corporation's acquisition by private equity sponsor KKR, which took the company private in 2007. Although the proposed merger generated a 30% premium over the stock price at the time, and the enterprise value to EBITDA multiple was significantly higher than comparable transaction multiples in the retail industry, some shareholders claimed that the price was "grossly inadequate," making the decision whether to approve the transaction a difficult one for shareholders generally.
Vendor Compliance at Geoffrey Ryans (A)
by Zahra Kanji Susan Kulp Nicole DehoratiusGeoffrey Ryans, a regional department store, faced two major issues relating to its retail furniture line: a large percentage of stock received from East Asian vendors was not in sellable condition, and furniture pieces had high customer return rates. Discusses different options for the Shipment Quality Group, including the use of vendor scorecards and product quality checks in the furniture division. Before agreeing on any particular course of action, the Shipment Quality Group must also consider the implications of any changes on their East Asian vendor core.
Shareholder Activists at Friendly Ice Cream (A)
by Fabrizio Ferri V. G. Narayanan James WeberTwo activist investors, one a founder and one a hedge fund manager, seek to improve board oversight at a chain restaurant company. Prestley Blake founded Friendly Ice Cream in 1935 with his brother, and the two created a chain of full-service restaurants. In 1979 they sold the business and retired. In 2000, Blake became concerned that Friendly's CEO, who owned approximately 10% of Friendly and also owned a larger percentage of another restaurant company, was shifting expenses between the businesses in a way detrimental to Friendly shareholders, but personally advantageous to the CEO. Further, Blake believed that Friendly's board of directors was not meeting their fiduciary obligations to shareholders by properly overseeing the activities of the CEO, and that the directors had conflicts of interest, because they were involved with the CEO's non-Friendly business activities. In 2003, Blake filed a lawsuit against the CEO and the company. In 2006, Sardar Biglari, a hedge fund manager who had invested in Friendly, entered into negotiations with Friendly for him to join the board of directors to help improve the management of the business. When these negotiations failed, Biglari launched a proxy fight against Friendly in 2007. While these two activist investors shared similar objectives, they worked independently and chose different strategies.
Silic (A): Choosing Cost or Fair Value on Adoption of IFRS
by Vincent Dessain Andrew Barron David F. HawkinsA 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.
Silic (B): Choosing Cost or Fair Value on Adoption of IFRS
by Vincent Dessain Andrew Barron David F. HawkinsSupplements the (A) case.
Compass Box Whisky Company
by Romana L. Autrey Devin ShanthikumarCompass Box Whisky Company is facing a changing supply situation and is evaluating switching to a business model with high inventory and long lead times. The company must consider what the change will mean for operations, risk, and measuring profitability.
Wal-Mart's Use of Interest Rate Swaps
by Rachel Gordon Michael D. Kimbrough Michael Faulkender Nicole Thorne Jenkins"Wal-Mart's Use of Interest Rate Swaps" recounts Wal-Mart's use of interest rate swaps to hedge the fair value of its fixed-rate debt against changing interest rates. This case provides students with a foundation for understanding the use of and accounting for more complex derivatives. Specific issues raised include: (1) the financial statement impact of hedge accounting, (2) motivations for using derivatives, including the potential role of accounting standards, and (3) the degree to which financial statement and MD&A disclosures are sufficiently informative about the risks associated with financial instruments.
TD Canada Trust (C): Translating the Service Model to Service Operations
by Brent Kazan Dennis CampbellSupplement
Accounting for Interest Rate Derivatives
by Michael D. Kimbrough Nicole Thorne JenkinsExplains the accounting for interest rate derivatives under Statement of Financial Accounting Standards 133.
Accounting for Business Combinations: Acquisition Method
by F. Asis Martinez-Jerez David F. HawkinsA technical note reviewing business combinations and Goodwill accounting, under the Statement of Financial Accounting Standards, No. 141R.
ATH MicroTechnologies: Making the Numbers
by Robert L. SimonsAn exercise that takes students through five stages of growth in an entrepreneurial start-up in the medical devices industry: 1) founding, 2) growth, 3) push to profitability, 4) relocation process, and 5) takeover by new management. At each stage, students must confront tensions in balancing profit, growth and control. Difficulties encountered in the business are due to management's attempts to design and use formal control systems to achieve profit and performance goals.
ATH MicroTechnologies, Inc. (A): Making the Numbers
by Robert L. SimonsAn exercise that takes students through five stages of growth in an entrepreneurial start-up in the medical devices industry: 1.) founding, 2.) growth, 3.) push to profitability, 4.) refocusing process, and 5.) takeover by new management. At each stage, students must confront tensions in balancing profit, growth and control. Difficulties encountered in the business are due to management's attempts to design and use formal control systems to achieve profit and performance goals.
ATH MicroTechnologies, Inc. (C)
by Robert L. SimonsSupplements the (A) case. Designed as an in-class handout.
ATH MicroTechnologies, Inc. (D)
by Robert L. SimonsSupplements the (A) case. Designed as an on-class handout.
ATH MicroTechnologies, Inc. (E)
by Robert L. SimonsSupplements the (A) case. Designed as an in-class handout.
Enterprise Risk Management at Hydro One (A)
by Anette MikesAn early adopter of Enterprise Risk Management, energy giant Hydro One anticipated new threats and opportunities in an industry that faced climate change and carbon legislation, the deregulation of electricity markets, and the greater adoption of renewable technologies. CEO Laura Formusa felt Hydro One's risk profile had shifted, to the extent that she had to ask herself -- was the strategy tenable? The case provides a rich description of Enterprise Risk Management in action, and shows how Hydro One executives arrive at a shared understanding of the risk profile of the company. In the narrative a diverse group of managers (the chief executive, the chief financial officer, the head of the public relations and the chief regulatory officer) voice their views on the risks, collectively bringing a multiple stakeholder perspective to the risk profile. The case challenges students to define the problems and risks that the company faces, given its strategic objectives, its evolving risk profile, and the changing environment. The case also offers a discussion ground for defining the role of the chief risk officer, and the relationship between risk management, strategic planning and capital budgeting.
The Politics and Economics of Accounting for Goodwill at Cisco Systems (A)
by Karthik RamannaStudies the role of Cisco in setting current US accounting standards for acquisitions and goodwill. Students are asked to analyze an acquisition in the context of an ongoing political debate on mergers accounting.