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The case presents a financing dilemma at a fast growing, Brazilian construction company. The growing demand for residential and commercial real estate in Brazil, coupled with the capital intensive nature of the industry generates the need for a considerable external financing. The students are invited to take the perspective of the financial manager and evaluate three financing alternatives – an issue of debentures, a seasoned equity offering, and a capital-raising ADR offering. In their evaluation and final recommendation students need to consider the implications of each of the financing alternatives on firm value, equity risk, cost of capital, financial leverage, issuance costs, and ownership structure. The case also presents a valuable opportunity to discuss the interdependence between the institutional development of an economy and the development of its capital markets.

This case consists of conversations with six prominent venture capital investors in the United States. The topics covered include investment strategies and relationships with entrepreneurs in the United States and around the world.

Jim Reynolds Jr. founded Loop Capital in 1997 as an investment bank specializing in bond sales for municipalities. Ten years later, with thirteen offices and almost 100 employees, Loop Capital was a national company and had brokered more than $800 billion of underwritings in equity, tax-exempt, and taxable fixed income markets. In the process of building its municipal finance and equity trading businesses, Loop Capital had developed close relationships with a number of government officials, large institutional money managers, and corporate executives. These customers began asking Loop Capital for help with other financial services, leading the firm to build corporate finance, tax-exempt, and taxable fixed-income platforms so it could offer a wider array of investment services. Municipal and corporate finance as well as equity, taxable, and tax-exempt trading were generating positive cash flow. In a field where failures were frequent, Loop Capital was thriving, and Reynolds saw great but untapped potential in the company's future. Over the past several years, Loop Capital had served as financial advisor to several municipalities that wanted to lease or sell public assets such as airports, toll roads, and seaports. Now he confronted several intriguing questions: Should he launch a $700 million infrastructure fund to invest in the types of deals the firm had helped structure? Did it make sense to invest in order to staff, market, and support the start-up of this new fund? If the fund was launched, should Loop Capital commit to the 1% investment likely to be required as the fund's general partner?

Learn how to start a new financial services firm/investment bank venture Learn how an investment banking firm becomes successful at doing a few things well Assess risks of expanding into a new line of business with a different business model Examine differences between investment banking and fund management, and between high-growth entrepreneurship and lifestyle entrepreneurship Examine the significance, if any, of being a minority entrepreneur

The learning objectives of this case are as follows: identify and understand the major challenges/problems faced by a social enterprise in promoting handicraft business; examine the value chain architecture of handicraft products; assess the role of the protagonist (Sanjay) as a social change agent in shaping a successful social enterprise; assess Sahaj Crafts' initiatives and analyze whether the key intervention/s planned/executed were required for skilling up of rural artisans and upgradation of handicraft business; know the marketing strategies for handicraft products; and understand the “strategies” which need to be applied for uplifting people's lives at the bottom of pyramid in general and for enlivening of artisans’ clusters in particular. The outcomes are as follows: examining the value chain architecture of handicraft product; understanding the difficulties and challenges of structuring a viable social business model; examining the role of Sanjay as a social change agent in shaping a successful social enterprise; and examining the model of Craft Incubation Center and design education proposed by Sahaj Crafts for improving rural artisans’ livelihood and skills upgradation.

Sanjay Joshi – the promoter and CEO of “Sahaj Crafts” (a social enterprise established in Western Rajasthan, India), an initiative to strengthen indigenous skills and mainstream rural craft products and artworks – is faced with the question of how to scale up his organization’s operations. Doing so requires that he address these fundamental challenges in terms of – how to deal with unorganized craft communities; match up product orientation to market demands; integrate modern technology / processes in craft business; combat restricted mobility of women artisans; and make effective interventions so that the artisans learn and enjoy working in the current model and solve the financial issues faced by the social enterprise. Providing effective and implementable answers to those questions is vital to Sahaj Craft’s development in attaining its mission to alleviate poverty in the region. Failing to expand operations above a critical scale may leave Sahaj Crafts vulnerable in meeting sufficient demand for contemporary craft products in the mainstream markets.

This case study is primarily suitable for post-graduate level management students to teach the concepts of designing and operationalizing a “social” business model in a social entrepreneurship module. This case study can also be used for highlighting business model innovations in the social sector of emerging markets. The case could be taught in the following academic domains: social entrepreneurship; bottom of the pyramid; social inclusion; supply chain consolidation (vertical integration in a value chain); marketing strategies for handicraft products; branding; brand positioning; cost and management accounting.

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

CSS 3: Entrepreneurship

Business internationalization into emerging markets.

BA Level.

On March 23, 2014, Yves, Patrick and Pascal were on their flight back from Udaipur, India, to Zurich, Switzerland thinking about all the experiences they had during the last 12 months and especially in the last three weeks when they visited India to do the feasibility study for their water shop concept. They still had many questions that were unanswered before leaving India. Do they have the sufficient Indian contextual knowledge and expertise to run a business? Are they considering all relevant aspects to successfully establish a water shop in rural India? Have they developed the conducive mindset? Are they ready to leave their comfort zone, friends and family behind to embark on an once-in-a-lifetime adventure? Do they have enough social capital to assist them in the process of setting up the water shop? Shortly before landing at Zurich airport, Yves knew that they now either had to become serious and really spend at least a year in India to turn their concept of a water shop into reality or stay back in Europe starting with their masters studies. The case offers a true story about three BSc students that decided to evaluate whether they could implement a business opportunity that they had identified during a “Doing Business in India” course at their university and subsequently developed into a serious business case. Based on this situation, the case study offers the opportunity for students to better understand what it takes to create the right mindset (i.e. “Triple I” mindset) before actually implementing a market entry or expansion project in India.

The case focuses on teaching the “Triple I” mindset to discuss the prerequisites of a successful market entry or expansion in India: investment mindset, intercultural mindset and infrastructure mindset The case study also highlights the importance of networks and networking locally (i.e. building social capital) as a prerequisite for a successful market entry or expansion. This approach including the “Triple I” mindset, the role of social capital as well as the actual market entry or expansion project is summarized in a metaphor that we call the “Archimedes’ Screw of Internationalization”. The case study proposes to work on the following five assignment questions to drive the intended learning objectives by discussing the different prerequisites of a successful market entry or expansion in India.

Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.

CSS: 5: International business.

This case is an abridged version of UVA-F-1115. This version is intended for use with audiences requiring less source documentation than is available in the unabridged version. The teaching note, however, contains all the source documentation in an appendix.

The case chronicles the development of Lumni, Inc., an international start-up offering innovative mechanisms for financing higher education. It focuses on: the details of decision making required to transform an idea into a viable business; building partnerships; the challenge associated with raising venture capital; and the challenges of creating a new market where human capital can be traded to finance higher education.

After studying this case, students must be able to explain the rationale for going public; identify the type of markets available for listing a company on Bursa Malaysia and explain the listing process; and analyse pre-IPO financial performance using trend analysis, comparative analysis and common-size analysis.

Uniutama Education and Consultancy Sdn. Bhd. (UECSB) in Universiti Utara Malaysia (UUM) was a company with strong financial performance and growth opportunities. In 2020, UECSB was planning for an initial public offering (IPO), whereby the company could offer shares to the public. This would allow UECSB to raise capital from public investors, and increase UECSB’s credibility and exposure. Therefore, Halim, who was the General Manager of UECSB, needed to decide whether or not UECSB should go for an IPO.

This case is more appropriate for final-year undergraduate students, particularly those majoring in Finance. This case is also suitable for postgraduate students, especially those enrolling in Master of Business Administration (MBA), Master of Business Management (MBM) and Doctor of Business Administration (DBA) programmes, and Executive Education programmes in Management.

Teaching notes are available for educators only.

CSS 1: Accounting and Finance.

This case serves as a foundation for student discussion of the estimation of required rates of return (ROR) on investments in emerging markets. An associate in J.P. Morgan's Latin America M&A department (mergers and acquisitions) is assigned the task of valuing the telephone directory operations (“paginas amarelas” means “yellow pages”) of a large Brazilian conglomerate. All cash flows have been converted to U.S. dollars, and present values computed for various discount rates. The remaining step is to determine the appropriate target rate of returns for dollar flows originating in Argentina, Brazil, and Chile. The capital asset pricing model (CAPM) is used along with a political risk premium and country beta. The necessary figure work is comparatively light, leaving the student time to reflect on the need for various adjustments in estimating crossborder rates of return.