Search results

At three o'clock in the morning on September 10, 2001, Thierry Hautillac, a risk arbitrageur, learns of the final agreement between Pinault-Printemps-Redoute SA (“PPR”) and LVMH Moët Hennessy Louis Vuitton SA (“LVMH”). After a contest for control of Gucci lasting over two years, PPR has emerged as the winner. PPR and LVMH have agreed for PPR to buy about half of LVMH's stock in Gucci for $94 per share, for Gucci to pay an extraordinary dividend of $7 per share, and for PPR to give a two and a half year put option with a strike price of $101.50 to the public shareholders in Gucci. The primary task for the student in this case is to recommend a course of action for Hautillac: should he sell his 2% holding of Gucci shares when the market opens, continue to hold his shares, or buy more shares? The student must estimate the risky arbitrage returns from each of these choices. As a basis for this decision, the student must value the terms of payment and consider what the Gucci stock price will do upon the market's open. The student must determine the intrinsic value of Gucci using a DCF model as well as information on peer firms and transactions. The student must consider potential synergies between Gucci and PPR and between Gucci and LVMH. The student must assess the likelihood of a higher bid, using analysis of price changes at earlier events in the contest for clues.

Business-to-business (B2B) marketing, microeconomics and strategic management.

Target audience can be MBA students who are taking B2B marketing, microeconomics and strategic management courses.

On 1 January 2015, Hamza joined Hisham Packaging, Dubai, United Arab Emirates (UAE) as the CEO. Hisham Packaging specialises in production of corrugated boxes of various sizes, both in plain and printed forms. Most of Hamza’s experiences have been in the automobile industry, where his focus was on Lean operations rather than marketing. After joining Hisham Packaging, he learnt that in service industry like printing and packaging, the business focus is more customer-oriented than process-orientated. In the packaging industry, each customer’s requirement is unique and customised with variety and small volumes. What was shocking to him was that there is an informal cartel arrangement among major corrugated box suppliers in the country and without the consent of the cartel members, he cannot take any major decision like expanding the business or accepting or dropping a customer. Hamza discussed the scenario with his sales manager Ahmad to see what strategy to adopt for the growth of the company. He was trying to figure out what next? Like any other newly joined CEO, Hamza also had plans to increase the market share and make the operations Lean. He quickly found that it would be difficult for him to make any major impact on the existing business due to the constraints and he needed a different strategic move to grow the company.

The outcomes include understanding of market dynamics, cartelization of companies based on market structure and strategy building. Students learn that an organization’s performance is just not dependent on how the managers plan, organize and control but it also depends on the competitors and customer’s strategies. Students learn how to apply strengths, weaknesses, opportunities, and threats (SWOT) analysis, Porter’s Five Forces analysis and PESTEL analysis in developing business strategy.

Teaching note is attached.

CSS 8: Marketing

Josh Brochhausen and Adam Podrat, as partners in The Resource, wrote commercial music for the ads of several companies. They were innovators in the recording studio, and their music appealed to young consumers.

Josh and Adam also had become involved in producing records for hip hop artists. They undertook a project called Deaf in the Family, which was a full length album featuring artists from the hip hop underground. The record was well received among music critics from the underground press, but the project made no money because Josh and Adam did not have the financing to secure the appropriate clearances for the right to use samples from existing songs.

Their problem centered on the uncertainty of financial success in producing hip hop records, which was their passion, and deciding whether to devote energy and resources toward it, and away from making commercial music, which was their livelihood.