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1 – 10 of 435This case covers the scandal that occurred in 2008 at Société Générale when one trader, Jérôme Kerviel, lost the prominent French bank nearly €5 billion through his unauthorized…
Abstract
This case covers the scandal that occurred in 2008 at Société Générale when one trader, Jérôme Kerviel, lost the prominent French bank nearly €5 billion through his unauthorized trading. The case describes Kerviel’s schemes as well as SocGen’s internal monitoring and reporting processes, organizational structures, and culture so that students reading the case can identify and discuss the shortcomings of the firm’s risk management practices. The case and epilogue also describe the French government’s and Finance Minister Christine Lagarde’s reactions to the scandal (e.g., imposition of a €4 million fine and increased regulations), prompting students to consider the role of government in overseeing that healthy risk management practices are followed in key industries (such as banking) that are highly entwined with entire economies. Finally, the case encourages students—during class discussion—to critically consider whether it is truly possible for one rogue trader to act alone, which elements in a work environment enable or even encourage risky behavior, and who should be held accountable when such scandals occur. Interestingly, this case highlights a story that is not unique. Prior to Kerviel’s transgressions were the similar scandals of Nick Leeson at Barings Bank and Toshihide Iguchi at Daiwa Bank, yet history has repeated itself. This case gives students a vivid example of the dangers of internal, self-inflicted risk on organizations, and it opens a discussion on how to avoid it.
After completing this case, students will be able to:
Identify shortcomings in a firm’s risk management practices (i.e., processes, systems, structures)
Evaluate the role and interests of governments as well as peer firms in overseeing healthy risk management practices in an industry
Understand the dangers of self-inflicted risk and consider the elements in an organization (e.g., leadership, compensation structure, incentives, recruiting) that impact its risk environment
Identify shortcomings in a firm’s risk management practices (i.e., processes, systems, structures)
Evaluate the role and interests of governments as well as peer firms in overseeing healthy risk management practices in an industry
Understand the dangers of self-inflicted risk and consider the elements in an organization (e.g., leadership, compensation structure, incentives, recruiting) that impact its risk environment
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Deborah M. Mullen, Kathleen Wheatley and Nai Lamb
This case investigation used firsthand statements, reports, testimony and regulatory records. While widely publicized in the popular press, this case is based on primary…
Abstract
Research methodology
This case investigation used firsthand statements, reports, testimony and regulatory records. While widely publicized in the popular press, this case is based on primary documents. On their website, many documents were obtained from Wells Fargo’s Corporate newsroom, such as the internal audit report shared with shareholders and press releases. Most other sources were from US regulatory websites (.gov) or congressional testimony. In a few places, quotes and comments came from reliable journalistic sites that cite their sources and follow a journalist’s code of ethics and conduct, ensuring that the reported remarks and data were verified.
Case overview/synopsis
Since 2016, Wells Fargo Bank has faced multiple customer mistreatment investigations and resultant fines. Public outcry and distrust resulted from Wells Fargo employees creating hidden accounts and enrolling people in bank services without their knowledge to meet desired levels of sustained shareholder growth. Over the past five years, Wells Fargo has been fined and returned to customers and stockholders over $3bn. Wells Fargo executives spent the first year of the scandal citing improper behavior by employees. Leadership did not take responsibility for setting the organizational goals, which led to employee misbehavior. Even after admitting some culpability in creating the extreme sales culture, executives and the Board of Directors tried to distance themselves from blame for the unethical behavior. They cited the organizations’ decentralized structure as a reason the board was not quicker in seeing and correcting the negative behaviors of these ‘bad apple’ employees. Wells Fargo faced multiple concurrent scandals, such as upselling services to retirees, inappropriately repossessing service members’ vehicles, adding insurance and extra fees to mortgages and other accounts and engaging in securities fraud. As time has passed, the early versions of a handful of “bad apples” seem to be only a part of the overall “poison tree.”The dilemma, in this case, is who is responsible for the misbehavior and the inappropriate sales of products and services (often without the customer’s knowledge)? Is strategic growth year-over-year with no allowances for environmental and economic factors a realistic and reasonable goal for corporations? This case is appropriate for undergraduates and graduate students in finance, human resources, management, accounting and investments.
Complexity academic level
An active case-based learning pedagogical approach is suggested. The materials include a short podcast, video and other materials to allow the faculty to assign pre-class work or to use in the classroom before a case discussion.
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Stephanie Giamporcaro and Matthew Marrian
The case on ABIL deals with the important issue of corporate governance, and particularly the crucial role that the board of directors plays. It highlights the complex issue…
Abstract
Subject area
The case on ABIL deals with the important issue of corporate governance, and particularly the crucial role that the board of directors plays. It highlights the complex issue institutional investors face when trying to assess the strength of a board and the quality of information and disclosure. The case is set in South Africa which is an emerging market.
Study level/applicability
The case targets MBA students and can be taught as part of a corporate governance or sustainable and responsible investment module or course. The case is aimed at both local and international students as the case deals with corporate governance principles that are applicable to both audiences. Where necessary, the case provides information to guide international audiences.
Case overview
The teaching case is set on 6 August 2014 when Ian Matthews, the Head of Equities at a South African Asset Manager, BG Wealth, gets a call while on leave. The call is from his boss, chief investment officer, Deryck Medley, informing him of the negative trading update and asking him to come back to prepare for an emergency investment committee that afternoon. The case traces Matthews’ day as he reviews the research reports BG Wealth had put together on ABIL over the previous 15 months. Matthews also recalls the process the investment team went through internally before finally deciding to invest in the company. The case highlights not only the corporate governance failures of ABIL but also the lack of consideration given to ESG factors by BG Wealth.
Expected learning outcomes
The case’s primary teaching objective is to highlight the importance of corporate governance. The case provides detailed insights into the area of corporate governance through the analysis of a corporate failure. Through this teaching case, the students will follow the real-life events that led to the collapse of ABIL. It is intended that the students will be forced to deal with a complex situation and will be required to develop specific solutions to the issues raised.
Supplementary materials
Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 1: Accounting and Finance.
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General management/Strategy: Problems with debt recovery industry in India Strategic positioning and core competencies: expansion plans.
Abstract
Subject area
General management/Strategy: Problems with debt recovery industry in India Strategic positioning and core competencies: expansion plans.
Study level/applicability
The case can be used on an MBA program for a course in strategic management. It can be used to understand the concept of strategic positioning. It will give the students an opportunity to critically evaluate a firm’s strategic positioning in the competitive environment, enable them to understand how to create and capture superior value by differentiating as compared with other players in an industry and address expansion and growth strategies.
Case overview
The case represents the success story of “Adhikrut Jabti evam vasuli”, a debt recovery agency that dared to use the unconventional strategy of employing women as recovery agents, against the stereotyped muscle-flexing male agents. Continuous focus on improving the processes and systems backed by an authoritative yet tactful approach of persuasion and patience has brought this recovery agency accolades and growth. But now Parag Shah the Managing Director is planning to expand its horizons and wonders whether he should go ahead opening up more branch offices across the country or whether he should convert his recovery firm into an Asset reconstruction company.
Expected learning outcomes
The case reinforces the importance of “Strategic positioning” of a firm due to well-planned differentiation in services. The case also addresses concepts of leadership, standardization, people skills and relationship management.
Supplementary materials
Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 11: Strategy.
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The case focuses on the diamond retailing industry toward the end of 2008, with the United States in an economic downturn. All diamond retailers are hit by the downturn and are…
Abstract
The case focuses on the diamond retailing industry toward the end of 2008, with the United States in an economic downturn. All diamond retailers are hit by the downturn and are facing a critical look at their strategies. Given the basic performance information on Blue Nile, Zales, and Tiffany, students are asked to consider the strengths and weaknesses of each business model with the goal of understanding business models that are better suited to handling a downturn.
The learning objectives of the case are to (1) understand the link between supply chain structure and financial performance, (2) identify key drivers of supply chain performance and how they affect a firm's ability to respond during periods of strong or weak demand, and (3) develop the alignment between supply chain structure and strategic position for a firm.
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Marketing, strategy.
Abstract
Subject area
Marketing, strategy.
Study level/applicability
This case is suitable for post graduate and executive development students.
Case overview
The case provides perspectives of customer centric practices of Yes Bank which has the objective of becoming the best quality bank of the world in India. The case study outlines how Yes Bank has become the fastest growing bank by its strong focus on customers through its committed and innovative employees. The customer centricity develops strong existing relationships and focuses on providing exceptional customer service, leading to better financial performance.
Expected learning outcomes
These include: highlighting the characteristics of customer centric organizations; discussing how Yes Bank practised customer centricity despite the limitation of being a new bank with no experience; describing the key differentiators and comparing with those of other banks; and establishing the relationship between customer centric practices with financial performance.
Supplementary materials
Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
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Sunil Kumar Maheshwari and Ramesh Bhat
There have been plans to merge UCO Bank with larger banks owing to its poor performance for many years. There were leaders in the history who had not been committed. The…
Abstract
There have been plans to merge UCO Bank with larger banks owing to its poor performance for many years. There were leaders in the history who had not been committed. The inadequate governance of the bank has been responsible for some of the major lapses. Mr. Arun Kaul took strategic initiatives and systematically strengthened the functioning of the board. It enabled the bank to turnaround and report profits in challenging economic conditions. The Bank is not yet completely safe and probably need strengthening of its competencies to emerging challenges.
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Amber Gul Rashid, Obaid Usmani, Lalarukh Ejaz and Hasan Faraz
Islamic Banking has been in the limelight since the recession of 2008. Although around for a long time, it is enjoying a renaissance of sorts. This case provides an introduction.
Abstract
Subject area
Islamic Banking has been in the limelight since the recession of 2008. Although around for a long time, it is enjoying a renaissance of sorts. This case provides an introduction.
Study level/applicability
EMBA and/or MBA introduction to banking, senior semester undergraduate, specialization in Islamic Banking.
Case overview
This case is written in the form of an interview with Meezan Bank, one of the leading financial institutions in the Islamic banking sector. It is based on primary as well as secondary data obtained via interviews and documentary analysis.
Expected learning outcomes
This is an analytical case and not a decision-making one. The main theme of the case revolves around analysing what Islamic banking is, the challenges that Meezan has faced, the pros and cons of doing business this way and the future issues it can face.
Supplementary materials
Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 7: Management Science.
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Francis E. Warnock and Peter Debaere
A hedge-fund strategist had two decisions to make. First, what was the path of core euro zone long-term interest rates likely to be over the next year? Was the dramatic decline in…
Abstract
A hedge-fund strategist had two decisions to make. First, what was the path of core euro zone long-term interest rates likely to be over the next year? Was the dramatic decline in German long rates over the past few years an aberration that would soon be reversed, or was it part of the “new normal” that would persist for some time? Second, how would periphery long rates evolve relative to core rates? That is—the spread between long rates in the likes of Greece, Spain, and Ireland and those in Germany—how would they evolve over the next year? Was the dramatic divergence in euro zone long rates likely to persist, or would the coming year see a continuation of the modest reconvergence that has occurred since mid–2012? He knew many factors influenced long-term interest rates; he would have to use his entire toolkit to address this issue. The evidence was in no way clear-cut. Some factors pointed toward lower German rates, some toward higher, some toward a widening of euro zone spreads (even a dissolution of the euro zone as we know it?), and some toward reconvergence.
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The purpose of this paper is to illustrate how a well-performing company can turn into a loss-making company on account of adverse industry cycle and poor management of risks in…
Abstract
Learning outcomes
The purpose of this paper is to illustrate how a well-performing company can turn into a loss-making company on account of adverse industry cycle and poor management of risks in the business. The importance of factors like optimal level of leveraging, the ability of the management to deal with external and internal risks, and importance of corporate governance in the process of credit appraisal is understood from this case.
Case overview/synopsis
The case relates to the credit appraisal by the banks of a prominent steel company in India. The company, Bhushan Steel Limited, was doing very well. The banks lent aggressively to the company, based on their credit appraisal. However, the company soon turned insolvent on account of poor assessment of risks and deteriorating external factors. While this case may be analysed and studied through the eyes of both the Management and the lenders, the focus is currently on the latter. In a real-world scenario, the challenge for the lender is to sieve through the financial as well as non-financial data and make a valid conclusion on the level of credit worthiness of the borrowing company. This includes the topics of operational efficiency and synergies, commodity price cycles, external credit ratings, operating and financial leverage, regulatory risks and corporate governance.
Complexity academic level
Post graduate business management programmes – Finance specialisation.
Supplementary materials
Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.
Subject code
CSS 1: Accounting and Finance
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