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The essence of discounted cash flow valuation is simple; the asset is worth the expected cash flows it will generate, discounted to the reference date for the valuation exercise (normally, the day of the calculation). A survey article was written in Parker (1968), where it was stated that the earliest interest rate tables (use to discount value to the present) dated back to 1340. Works from Boulding (1935) and Keynes (1936) derived the IRR (Internal Rate of Return) for an investment. Samuelson (1937) compared the IRR and NPV (Net Present Value) approaches, arguing that rational investors should maximize NPV and not IRR. The previously mentioned works and the publication of Joel Dean’s reference book (Dean, 1951) on capital budgeting set the basis for the widespread use of the discounted cash flow approach into all business areas, aided by developments in portfolio theory. Nowadays, probably the model with more widespread use is the FCFE/FCFF (Free Cash Flow to Equity and Free Cash Flow to Firm) model. For simplification purposes, we will focus on the FCFE model, which basically is the FCF model’s version for the potential dividends. The focus is to value the business based on its dividends (potential or real), and thus care must be taken in order not to double count cash flows (this matter was treated in this case) and to assess what use is given to that excess cash flow – if it is invested wisely, what returns will come of them, how it is accounted for, etc. (Damodaran, 2006). The bridge to the FCFF model is straightforward; the FCFF includes FCFE and added cash that is owed to debtholders. References: Parker, R.H. (1968). “Discounted Cash Flow in Historical Perspective”, Journal of Accounting Research, v6, pp58-71. Boulding, K.E. (1935). “The Theory of a Single Investment”, Quarterly Journal of Economics, v49, pp479-494. Keynes, J. M. (1936). “The General Theory of Employment”, Macmillan, London. Samuelson, P. (1937). “Some Aspects of the Pure Theory of Capital”, Quarterly Journal of Economics, v51, pp. 469–496. Dean, Joel. (1951). “Capital Budgeting”, Columbia University Press, New York. Damodaran, A. (2006). “Damodaran on Valuation”, Second Edition, John Wiley and Sons, New York.

All information is taken from public sources and with consented company interviews.

Opportunities for value creation may be found in awkward and difficult circumstances. Good strategic thinking and ability to act swiftly are usually crucial to be able to take advantage of such tough environments. Amidst a country-wide economic crisis and general disbelief, José de Mello Group (JMG) saw one of its main assets’ (Brisa Highways) market value tumble down to unforeseen figures and was forced to act on it. Brisa’s main partners were eager in overpowering JMG’s control of the company, and outside pressure from Deutsche Bank was rising, due to the use of Brisa’s shares as collateral. JMG would have to revise its strategy and see if Brisa was worth fighting for; the market implicit assessment about the company’s prospects was very penalizing, but JMG’s predictions on Brisa’s future performance indicated that this could be an investment opportunity. Would it be wise to bet against the market?

This study is excellent for finance and strategy courses, at both undergraduate and graduate levels. Company valuation and corporate strategy are required.

The learning outcomes of this case study are as follows: It presents an opportunity for the instructors to introduce the concept of decision-making on matters involving risk (like scaling the business) using in-depth market research techniques. The case’s central idea is to make the students understand the growth of the online service delivery model, with a specific example of home-cooked food that also improves social welfare. It is expected to provide the participants with an opportunity to understand the decision-making by the leaders in newly established companies. It enables future managers to analyze a venture’s pros and cons before deciding to expand.

Chef Junction is an online food delivery platform that allows customers to order hygienic home-cooked food prepared by handpicked home chefs in Bhubaneswar. This city in eastern India is one of the fastest-growing metros, is regarded as a study hub, and provides ample employment opportunities making it one of the sought-after destinations for the migrant youth population. The idea behind Chef Junction is to cater to the healthy food needs of the young by utilizing the culinary productivity of the home cooks, empowering the latter by opening up an extra source of income. These chefs prepare delicious healthy food, usually not listed for sale with online food delivery apps. Chef Junction earned revenues by adding an order-dependent commission on the price quoted by chefs and accepting a flat delivery charge from the customers. This offer was very lucrative for home chefs who could join the platform with zero investment and flexible working hours. The customer’s pockets were also handled when several offers and discounts were rolled out through an attractive pricing strategy. Chef Junction expected to improve its patrons’ health quotient by ensuring the nutrition of the home-cooked food, thus contributing to social welfare. With food being delivered from home to home amalgamated with social welfare and empowerment of home chefs, especially women, this case study is an apt example of a sustainable work-from-home model that has proved effective in crisis times. The pertinent question is: “How feasibly can CJ’s business model grow towards an expansion as the demand increases?”

This case study has been prepared keeping in mind the teaching pedagogy for graduate and postgraduate management programs in strategic management, operations research, entrepreneurship and marketing management. It is also expected to be useful for training courses such as management development programs, faculty development programs and executive programs, in discussing service operations in general and online delivery logistics, in particular for working executives and industry practitioners.

Teaching notes are available for educators only.

CSS 3: Entrepreneurship.

The learning outcomes are as follows: to understand and examine the strategies that help platforms fight competition and manage networks; to analyse the role of platform governance in the management of the networks and partners’ trust; and to evaluate the strategic risks of disintermediation and multi-homing firms face while trying to sustain profits and capture value.

The case presents the dilemma faced by Deepinder Goyal, the young founder and CEO of Zomato in formulating the growth strategy for its food delivery platform, struggling to retain its market leadership position amid intensifying competition and other challenges during the COVID-19 pandemic. Zomato has become a public company with an IPO announced in mid of July 2021. Therefore, there is growing expectation for profitability among its shareholders and investors considering tailwinds of COVID-19 crisis, which have given the push towards adoption of food delivery among the customers. This has also resulted in increased competition in the industry. On other hand, there is growing dissatisfaction among its restaurant partners who have been hit hard by COVID-19 and struggling for survival. CEO Deepinder has to find how he will ensure the long-term growth for Zomato to tap the growing food delivery market in India and regain its restaurant partner’s trust.

The case is intended for post-graduate courses (MBA, PGDM) on digital business strategy or strategic management of technology-oriented businesses. The case can be used to understand the nature of competition and different strategies for platform-based businesses in the digital world. The case can also be used to study the role governance can play in efficient value creation and capture on the platform by the partner entities. Finally, the case also highlights how are platform businesses are coping with the Covid challenge. There are no specific prerequisites but knowledge on basic strategy concepts and platform business concepts will be good for better understanding. Level of difficulty is medium.

Teaching notes are available for educators only.

CSS 11: Strategy.

The case introduces students to aspects of operations management (OM) and management theory and provides examples of the real-world challenges facing a practitioner. It requires students to think about the operational manager’s responsibilities and how organisational context influences choices and possibly even fit within an organisation.

In this case, a factory lead protagonist presents her OM challenges and choices within a for-purpose, rather than for-profit, a social enterprise in South Africa. The context presented unusual constraints that required thoughtful adaptation and judicious choices. The case introduces students to aspects of OM and management theory and provides examples of the real-world challenges facing a practitioner. It requires students to think about the operational manager’s responsibilities and how organisational context influences choices and possibly even fit within an organisation.

The case is aimed at postgraduate business students studying OM.

Teaching Notes are available for educators only.

CSS 9: Operations and logistics.

SONY Online Entertainment (SOE) was planning to release a new version, EverQuest II®, of its popular online game, EverQuest®. The first EverQuest® game was very successful financially, generating approximately $5 million/month in 2002 for SOE. However, some issues surrounding addictions and corporate responsibility were interfering with the new product launch. These problems revolved around several deaths in which the EverQuest® game had been implicated. The case focuses on the dilemma faced by the Vice President of Marketing prior to the new product release: How far must a company go to protect possible misuse of a product by consumers?

This case details the history of Southwest Airlines from its inception in 1971 until 2004. The case provides details of Southwest's business model and reasons for its success. It ends with a description of the company's competitive pressures in 2004. The case can be used for a course in service operations or strategy.

The Dudley Beauty case illustrates a contemporary branding, management and marketing challenge facing many companies that are 50 plus years old. Movahhed (2016) highlights the six elements to consider during brand strategy: the target audience, the brand promise, brand perception (past, current and future), brand values, brand voice and brand positioning. The times have changed with changing macroenvironmental factors including political, economic, sociological, technological, legal and other environmental (PESTLE) changes that affect a business but which the business does not directly control.

The case is based upon an interview with Dudley Beauty CEO and President Ursula Dudley Oglesby and secondary sources.

The “A Makeover for Dudley’s Q+” case explores the challenges of a second-generation textured hair care and personal care company in the direct selling channel as it faces an aging market and changing business and economic environment. A Black-owned company, begun in 1967 by her parents, Dudley Beauty is led by the founders’ daughter, Harvard College and Harvard Law School-educated, Ursula Dudley Oglesby. At over 50 years old, the company has continually created new textured hair products and has high brand awareness among older Black consumers but has not adequately addressed changing hair trends and shifting communication preferences of younger consumers. The company is at a critical point needing to reach a younger, larger market to survive. The business situation supports marketing, management, strategy, and/or entrepreneurship undergraduate students in understanding how macroenvironmental forces and internal structures affect businesses.

This case is intended primarily for use by undergraduates in a variety of courses. It is suitable for courses in Principles of Marketing, Entrepreneurial Marketing, general Entrepreneurship and Marketing Strategy courses covering topics such as direct selling, the role of environmental factors in business, rebranding efforts using digital and social media marketing and women/minority business owners.

This case can be used to teach students how to analyze innovative business models, as well as to trace their reasons for success and failure. The following objectives also align with categories in Bloom’s taxonomy (Forehand, 2010), consistent with the keywords underlined. More specifically, this case will enable students to learn the following: First, to analyze the distinctive features of a social commerce business model, and how these differ from a traditional e-commerce model. This objective maps to Discussion Question No. 1. This objective helps students to understand the value proposition of an unfamiliar business model (social commerce platform) and compare it with that of a familiar business model (e-commerce platform). Second, racing the causes for success and failure of a venture, using frameworks from entrepreneurship and strategy. This relates to Discussion Question No. 2. This objective helps students analyze strategic decisions of an entrepreneur in light of available resource constraints and by applying appropriate conceptual frameworks. Third, developing recommendations to help a new venture sustain its business model in the face of severe challenges. Discussion Question No. 3 covers this objective. This objective enables students to debate possible paths that the startup could take. The discussion on possible paths naturally causes students to create sustainable or viable options.

The case describes the challenge facing Vidit Aatrey, the founder and chief executive of Meesho, a social commerce venture headquartered in Bangalore, India, in October of 2022. While Meesho recorded the second-highest sales (by order volume) during India’s festive season, it also recorded layoffs and business closures. While Meesho’s core business of getting resellers to sell through its online platform seemed to be working, its new business ventures, such as expanding into the grocery business and into Indonesia, had failed and resulted in more than 300 layoffs. Meesho was also pressed for funding: valued at US$4.9bn, the global market for venture capital funding had chilled and now demanded profitability, not growth-at-all-costs. Meesho’s cash burn rate was about $40m per month, and Aatrey was hard pressed to come up with options for profitable growth.

This case is intended for students of management at a master’s level in a course on entrepreneurship. At the authors’ institute, this case is used with MBA students in an elective course on entrepreneurship and also in an elective course in general management.

Teaching notes are available for educators only.

CCS 3: Entrepreneurship

Paytm has become a popular method to make cashless payments in India. Be it for transferring funds through mobile numbers, online payment of utility bills, cabs, etc. or payment to offline merchants. This case elaborates on the position Paytm has attained in the market thus far and its ambitious future growth plans. It describes the strategies being adopted by Paytm’s competitors and the new developments in the payments business in India. The case finally narrates the challenges the Fintech firm faces at present and poses a pertinent question: is Paytm on a growth trajectory or committing suicide by leaping so fast?

The case collates secondary data pertaining to Paytm’s current position and recent developments in the Indian mobile wallet industry. It presents the facts and data published on websites, newspapers, and magazines in the form of a case study.

This case can be applied to strategic management at under graduate and introductory level in post-graduate marketing of digital products.

The case is derived from secondary sources, including publicly available reports and information about all companies directly or indirectly engaged in the industry. No primary sources were available.

This teaching case is designed for students to demonstrate their mastery of industry-level analysis in the emerging space tourism industry. It allows students to understand what constitutes the industry within the broader space sector and to apply analytical tools such as PESTEL and Porter’s Five Forces, with the option to discuss strategic groups. Students gain insights into how the industry is evolving within its broader environment and how companies could respond or differentiate themselves. Information is also provided for students to consider the broader social impact of a relatively new industry from the perspective of sustainable development.

The case is written for undergraduate and graduate students enrolled in strategic management courses. The case placement is ideally in conjunction with industry-level analytical frameworks such as Porter’s Five Forces, PESTEL analysis, strategic groups (optional) and industry life cycle. Most strategic management textbooks cover these concepts in the first few chapters. For example, “Strategic Management, 14th edition” by Hill, Schilling and Jones (2023) covers these topics in chapter 2. Given that space tourism is an embryonic industry dependent on technological innovation, instructors might also use this case in innovation or entrepreneurship-related courses. This case could also be used to address critical issues, such as sustainability, in tourism management courses.