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The Nokia case provides an opportunity to explore financing alternatives in a situation of broad strategic change. The case emphasizes the difficulties of managing the financial resources of technology-based companies when they fall behind in product innovation. Nokia, the world's leading producer of mobile phones, had recently seen its market share and profits eroded by rival products such as Apple's iPhone and phones featuring Google's Android operating system. In February 2011, Nokia CEO Stephen Elop announced a strategic plan and partnership with Microsoft to have Windows serve as its primary OS for smartphones. Since that announcement, Nokia reported a net loss in earnings, followed by a downgrade of its credit rating in the summer of 2012.

Analysts regard the next two years as a period of great uncertainty for the company. In January 2012, the CFO of Nokia estimates that the firm might require up to EUR4.3 billion in funding over the next two years to implement the plan under a representative downside scenario. Students are asked to evaluate the tradeoffs of raising the funds by issuing long-term debt, issuing equity, cutting dividends, or reducing cash. Given the firm's recent competitive struggles, none of the options is particularly appealing, which forces careful consideration of tradeoffs.

The Nokia is appropriate for use in upper-level undergraduate and graduate courses covering topics in capital raising, capital structure, corporate finance, and the costs of financing. A spreadsheet file of case exhibits to facilitate student preparation, teaching note, and instructional spreadsheet file are available for the case.

In January 2012, Ellen Kullman, CEO and chairman of DuPont, must decide whether to retain or sell the company's Performance Coatings (DPC) division. This is an introductory case on valuing a leveraged buyout. The case focuses on a publicly listed corporation's decision to divest a large division and asks students to compare the division's value if it remains under DuPont's control or is sold to an outside party. The transaction size of approximately $4 billion is too large for potential strategic buyers in the industry, making private equity (PE) firms the most likely bidders. The case provides a base-case adjusted present value (APV) model of DPC as a stand-alone company and gives students specific assignments to adjust it to reflect the division's potential value under PE ownership (e.g., EBITDA growth, multiple arbitrage, and increased leverage).

The case is designed to illustrate and discuss the differences between a public company's valuation based on unlevered free cash flows and a PE sponsor's valuation based on residual (levered) cash flows.

This case has been successfully taught in a second-year elective course covering entrepreneurial finance and private equity and in an advanced undergraduate course on corporate finance. It is appropriate for use in classes on private equity, advanced corporate finance, or deal valuation.

In a typical strategy course, growth strategies like mergers and acquisitions (corporate strategy) are introduced in the second half of the course. To analyze the case, students will use strategies such as Porter’s five forces and resource-based view and will discuss why firms pursue mergers as a growth strategy, along with sources of synergies and risks in mergers. Finance theory used includes analyzing a given discounted cash flow analysis and perform a comparable multiples analysis to find the value of a merger target.

The industry and financial information in the case comes from publicly available sources, including company 10K reports, business press reports and publicly available industry reports. The information about Lockheed Martin’s strategy comes from interviews with Peter Clyne, former vice president for Lockheed Martin’s IS&GS division. He then held the same position for Leidos Holding Corp., after the IS&GS division was divested and incorporated into Leidos.

This case is an interdisciplinary case containing aspects of strategy and finance. Lockheed Martin made a strategic move in 2016, to divest its Information Systems & Global Strategies Division (IS&GS), which engaged in government consulting, primarily in the defense and aerospace industries. Lockheed wanted to reassess its decision to divest consulting, given the high growth rates expected in this business, particularly in cybersecurity consulting. On the other hand, if Lockheed decided to maintain its hardware focus, it wanted to expand its offerings. In addition to a strategy analysis, two possible target firms can be analyzed: Fortinet and Maxar.

This case raises a broad set of issues related to the evaluation of M&A transactions across two different industries and corporate strategy, as it relates to strategic fit of the potential targets and LM’s current capabilities. It is appropriate for the core course in strategy at the MBA or senior undergraduate level. It can also be assigned to specialized courses in Mergers and Acquisitions. It is not appropriate for a lower level strategy or finance course, as it requires students to have prior knowledge of basic finance valuation techniques.

International business; business ethics; international trade law; intellectual property

Undergraduate and Master's level courses in Business and Management, particularly with a focus on international trade.

This case covers the issues that surround piracy of intellectual property by highlighting illegal manufacture and distribution of millions of Zippo brand windproof lighters and considers the seriousness of the large-scale theft of intellectual property by civilized nations. The focus of this case is on the additional victimization of the producers of genuine products, mostly European and American, who have the policy of life-time repair-or-replace warrantee, which by extension, although wrongly, becomes applicable to their counterfeits. Some micro and macro aspects are covered in detail, some are alluded to, while others are left out for the teachers of this case to justify considering the local logic and culture.

There are major lessons embedded in this case: first, intellectual piracy is not less than the theft of tangible property. Second, the problem of piracy carried out by large, civilized countries is really serious because of its huge size. Third, if the rights of those developing innovation are not protected and they cut their investments in R&D, the consequence will hurt all people in the world – emerging and developed.

Teaching note.

HP sells configure-to-order products. With millions of part combinations going into an order, the challenge is deciding which parts to keep in the portfolio to balance costs with revenues. The case explains how one would approach this problem before product introduction, but focuses on managing the existing portfolio.

Students will develop a systematic, data-driven approach to decide on the best product portfolio to sell for a configure-to-order business. Which SKUs are candidates for a “global core” product offering? For an extended offering? For elimination?

An estimate of the fair rate of return on capital is a critical input into tariff regulation. A too high estimate will lead to high tariffs for consumers; a too low estimate will not provide adequate incentives for investment. The Airport Economic Regulatory Authority of India has issued a consultation paper for finalizing the norms and procedure for estimating the fair rate of return. It now needs to reconcile the differing view and approaches of different stakeholders.

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.

Anhui Winall Hi-Tech Seed Co., Ltd., a high-tech seed enterprise integrating crop seed research, production, processing and marketing at home and abroad, is the first seed company listed on GEM in China. Its main business is research and development, breeding and marketing of seeds of hybrid rice, edible rape, cotton, melon and vegetable, with hybrid rice as its leading product. In terms of business model, Winall Hi-tech is engaged in procurement, production, sales and promotion of modified varieties and after-sales service. However, Winall Hi-tech also has to face a few potential problems.

In February 2015, Suzlon had just completed its financial and asset restructuring, following financial default after rapid growth through debt financed acquisitions in the financial boom ending in 2008. The restructuring resulted in a significant decrease in the promoter's equity stake. Suzlon now has to decide how to respond to an offer by the DilipSanghvi Group, promoters of Sun Pharma, to acquire a large equity stake in Suzlon for Rs. 1,800 crore. If Suzlon were to accept the offer then both the existing promoters and the DilipSanghvigroup would have the same stake of about 22% each. The case will help students examine the need to align financing and business strategy on the same plane. It will also help them understand details about restructuring of financial and business strategy in the face of financial distress.

The case simulates the experience of a private equity investor evaluating a potential investment, requiring the student to: (1) determine the risks and merits of an investment in Toys “R” Us, (2) evaluate the spectrum of returns using multiple operating model scenarios, and (3) identify strategic actions that might be undertaken to improve the risk/return profile of the investment. The case also discusses trends and participants in the private equity industry.

To understand how private equity firms analyze investment opportunities through application of an LBO model (provided in the case) that summarizes returns and risks. Also, to review private equity participation in club deals, large (and early) dividends, and IPOs.