Search results

Michaels Craft Stores is the largest arts and crafts retailer in the United States and in the world. Its CEO, Michael Rouleau, wants to expand the chain to 1,000 stores by 2006. The key constraint is the lack of sophistication among Michaels' supplier base, which is made up of over 1,000 suppliers, many of which are small, creative companies with little computer or logistics knowledge. As a result, the cost of running Michaels' supply chain is high. Describes the company's efforts to build the sophistication of its suppliers through educational Vendor Flow Training courses that teach suppliers how to adopt state-of-the-art practices for improved efficiency in supplying their channel.

Takshshila, the owner of Sandwichworkz, a trendy restaurant in Ahmedabad, India, is worried about the diminishing profitability of her restaurant. Recent promotional offers have increased the footfall, but not profitability. To address this issue, she knew she had to optimize and redesign their menu. She also realizes that to properly address this issue, they would beed to take into account factors such as popularity of each menu item and their per unit profitability. She contacts Nick, a restaurant consultant who further dwells into calculating the costs involved in making each item, to determine the per unit profitability. He proposed plotting the popularity vs. popularity graph (as per Kasavana Smith model) and making qyadrant specific re-enginering decisions. Post his analysis using this menu re-engineering tool, he calls Takshshila with his recommendations. During the call, they come across a new costing methodology which may affect his recommendations. Which methodology should Nick use? Should Takshshila invest in capturing data for the new methodology?

In September 1990, the financial controller of this Italian subsidiary of a large pharmaceutical company must analyze the implications of two different strategies for introducing a new product into the Italian market: co-marketing distribution, in which Glaxo would permit another company to market the same product but under a different brand name; and direct sales, under which Glaxo's own sales force would be the sole channel of distribution. The tasks for the student are to scrutinize and correct financial forecasts contained in the case and then value the alternative cash flow streams. The purpose of the case is to exercise students' forecasting and valuation skills and to illustrate the application of discounted cash flow analysis to the choice of marketing policies.

Josh Williams is a Student at the NAU who has driven buses on campus and wants to improve the transportation on campus. He is convinced that purchasing a new type of bus that is more fuel efficient, has larger capacity, better designed for boarding, and has a longer life is worth the higher purchase cost. He sets out to prove it by creating a discounted cash flow (DCF) analysis. Since many of the estimates for the DCF analysis are uncertain, he decides to perform a Monte Carlo simulation (MCS) analysis. Students are asked to step into Josh’s role and perform the analysis.

Josh Williams was a Student in the authors’ MBA program. Both authors teach in this program and one author was the Advisor for Net Impact and worked with Josh to present his idea to the university administration. The authors have changed a name or two but otherwise, the case describes a real situation in a real organization without disguise.

The authors have used this case in a first semester MBA-Applied Management course, Decision Modeling and Simulation. Students already have experience with DCF analysis and have been introduced to MCS. With this case, students apply MCS at the conclusion of a three-week module on predictive analytics. Students have run at least two MCS models and have become comfortable with the software. The case would also be appropriate for a senior-level undergraduate course such as business analytics or management science. It might also be useful for other courses that include the MCS modeling technique learning objectives such as project management.

This case provides an opportunity for students to perform an MCS analysis. MCS is useful when many of the inputs to a DCF analysis (or any model) have been estimated and the modeler is concerned that the estimates are uncertain and could perhaps be a range of values. MCS can be used to understand the effect of this uncertainty on NPV which in turn may affect the decision. The case could also be used without MCS focusing just on the DCF analysis with deterministic sensitivity analysis.

The case is written based on publicly available data from primary sources like the company’s annual reports and presentations and from secondary sources, as indicated in the references.

Barnes & Noble Inc. (B&N), one of the oldest and largest American retail booksellers founded in 1917, was facing a grim business situation underpinned by a fall in demand, a change in consumer preference and stiff competition. After almost a century of being in the business, B&N was experiencing a fall in market share and weak stock market performance. In 2019, the company was sold to Elliot Advisors – a hedge fund – for US$638m. With the appointment of new chief executive officer (CEO) James Daunt in August 2019, a man known for the turnaround of similar businesses, B&N expected its business’s revival and reorganization strategy to turn profitable. Its long-term strategy of beating competitors with its offerings’ sheer volume and low prices was no longer viable. The turmoil was compounded by top management crises with the repeated changes and ousting of several CEOs in a short span, alongside the COVID-19 pandemic and subsequent lockdowns in 2020 and 2021. Daunt was considering how to overcome the crisis and act fast to reposition the company and regain the loyalty of its customers. Was there more that the company could do to improve the company’s position and restore profitability?

The case can be used in strategic management and entrepreneurship classes at undergraduate and postgraduate levels. The case can be used in an investment analysis and management course to teach students the industry analysis technique using Porter’s five forces model.

In mid-June 2000, MicroStrategy CEO Michael Saylor is considering an investment of $125 million of convertible preferred stock in his firm by a group of private investors including Citadel Investment Group LLC. The offer comes at a difficult time for the company, because only three months earlier, its stock had reached a record price of $300 per share. At that point, the company had registered a $1 billion seasoned equity offering. Shortly thereafter, the company was forced to restate its earnings after running afoul of the SEC for its revenue-recognition practices. Although the restatement did not change the company's cash-flow position, it did result in an SEC investigation and the cancellation of the stock offering. In order to meet Saylor's ambitious plans for MicroStrategy, additional funding must be obtained. With public-market funding sources shut off, students must evaluate what the best course of action is for the firm at this moment. Students are asked to evaluate a new form of venture financing called private investments in public enterprises (PIPE). PIPEs differ from conventional floating-rate convertibles in that the conversion price in most cases can only be adjusted downward. The case considers both the pros and cons of these investments.

Set in May 2000, these cases reflect the separate perspectives of the CEOs as they approach the negotiations of TSE International to acquire Yeats Valves. The task for the student is to complete a valuation analysis of the target and buyer, and to negotiate a price and exchange ratio with the counterparty. Each case contains a financial forecast only for that side; therefore, an important element in the negotiation is to obtain the private information of the other side, analyze it, and successfully negotiate terms of acquisition. The cases are relatively simple, and are offered as a first exercise in the valuation of the firm, and negotiation of an acquisition. They may be taught singly in usual case-discussion fashion, or combined into a joint-negotiation exercise where students are assigned parts to play. Used in a bilateral bargaining exercise, two teams of students are designated, each team representing one side of the negotiation and receiving a case designed for that team. The bargaining exercise provides a particular opportunity for joint teaching among instructors in finance, strategy, human behavior, and negotiation.

After completing this case, students should be able to: identify and compute relevant cash flows in relation to a real estate project and compute the net present value (NPV). Determine the target return or cost of capital (by looking at historical economic indicators). Design or formulate a sensitivity analysis to determine the drivers of the project value. Evaluate real estate and other investments taking qualitative and quantitative factors into consideration. Demonstrate the computation of a break-even rate to determine the minimum or maximum revenue or cost required for a project to be viable.

This case study is about the Golden Beak Securities Pension Fund that wanted to invest in a Hostel Project in one of the universities in Ghana. Most universities in Ghana faced an acute shortage of on-campus accommodation. Also, the Government of Ghana, in 2017, implemented a programme to make Senior High School in Ghana free. This was expected to increase the number of students who will enter the existing universities. The project was therefore seen as strategic, as it would help ease the pressure of on-campus accommodation while providing diversification for the pension fund. As part of the investment committee’s (IC) quest to improve the skill set available to it, especially in relation to real estate investments, Esi Abebrese was appointed as one of the members of the IC of GSB. Her main task was to collect information on key macroeconomic variables, as well as granular information on project costs and revenues and conduct investment appraisal. Esi was scheduled to make a presentation to the IC on the 15th of October 2019 following which the Committee will debate and make a decision. The project had an estimated cost of GH¢52m with a total number of 3,424 student beds and ancillary facilities. Undertaking the project required moving funds from investments in money market securities with one of the banks in Ghana. The investments in the money market securities were currently yielding about 16% a year. The determination of the cost of capital was critical and Esi and Nana eventually settled on a long-term weighted average cost of capital of 14%. This was after considering the trend of inflation, monetary policy rates, treasury rates, stock market returns and a report on returns on commercial real estate properties in Ghana. An exit capitalisation rate of 20% was also estimated for the purposes of determining the value of the property at the end of the investment horizon. Esi also obtained estimates of cost and revenue for the project and proceeded to carry out a feasibility analysis on the project. This consisted of an NPV analysis and sensitivity analysis on various factors to determine the drivers of the project value. The IC had to take several factors (both quantitative and qualitative) into consideration before making a decision. Esi believed that these factors included the diversification of the fund’s assets, the return on investment, potential oversupply of hostel accommodation, the social responsibility of providing student accommodation and the impact of any prolonged shutdown of the university.

Masters/advanced undergraduate.

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 1: Accounting and Finance.

In July 2004, J.P. Morgan Partners (JPMP), the private equity arm of JPMorgan Chase & Co., was in the midst of formulating the final terms of a public-to-private buyout proposal for AMC Entertainment Inc. (AMCE), a publicly traded movie theater company.

Set in May 2000, these cases reflect the separate perspectives of the CEOs as they approach the negotiations of TSE International to acquire Yeats Valves. The task for the student is to complete a valuation analysis of the target and buyer, and to negotiate a price and exchange ratio with the counterparty. Each case contains a financial forecast only for that side; therefore an important element in the negotiation is to obtain the private information of the other side, analyze it, and successfully negotiate terms of acquisition. The cases are relatively simple, and are offered as a first exercise in the valuation of the firm and negotiation of an acquisition. The case may be used to pursue some or all of the following teaching objectives: 1) Exercise valuation skills. 2) Exercise bargaining skills. 3) Illustrate practical concerns about mergers and acquisitions.