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Case Studies by Jean Wee

27 case studies

by Publication Date
published: 27 May 2016

  • Topic: Economics & Finance
  • Industry: Infrastructure
  • Region: North America

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Abstract:
In September 2014, the Indiana Toll Road (ITR) in the US Mid-west, privatized as a 75-year concession at an impressive price of US$3.8 billion only nine years earlier, filed for Chapter 11 bankruptcy , having chalked up US$6.3 billion of debt. In the subsequent sell-off the ITR managed to attract an even bigger bid than before - of US$5.72 billion.

Pedagogical Objectives:
The valuation of infrastructure assets; determining the right discount rate; pros and cons of public-private partnerships; the "winner's curse".

Keywords:
Toll Road, Infrastructure, Public-Private Partnership (ppp), Project Finance, Privatization, Step-Up Swap, Inner's Curse, Corporate Governance, Auditing, Risk Control and Performance

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published: 24 Mar 2016

  • Topic: Operations
  • Industry: Conglomerate
  • Region: Asia

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Abstract:
The case describes the problem faced by Jebsen & Jessen, South East Asia (J&J SEA), when a long-time supplier from Europe decides to take back the distribution rights for the region and distribute their products directly to their customers. J&J therefore needs to look for other suppliers of forklift trucks. It can either revert to potential European clients or move with the times and leverage on cheaper Chinese suppliers coming into the market.

Pedagogical Objectives:
The objective of the case is to help students understand the challenges of a distribution business, particularly in a diverse market like ASEAN, and the lessons learnt about picking the right type of supplier to represent. The case highlights the uneasy balance of having a well-known name to represent that is easier to sell to end-customers, and the lower bargaining power that the distributor has. It points out how an enterprising company can move up the value chain from doing purely distribution alone, to manufacturing and engineering. It also shows how it is possible to turn a problem – like the entry of cheaper Chinese competitors – into an advantage.

Keywords:
Distribution, Family Enterprise, Asean, China, Operations, Material Handling

published: 27 Jul 2015

  • Topic: Responsibility
  • Region: Asia

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Abstract:
It was out of the interest of Ratan Tata, Tata Group chairman, in the problem of water in India that the Swach (meaning “clean” in Hindi) was born. It was Tata’s bet that the private sector could offer a better, consumer-based solution than the state to the provision of safe drinking water in a country where 75% of the rural population lack access to potable water. In December 2009, the Tata Swach was launched by Tata Chemicals Limited as the lowest-cost storage water purifier available that met US Environmental Protection Agency standards, did not require a supply of running water or electricity, and was affordable to the rural masses.

Pedagogical Objectives:
The case highlights the development of the Tata Swach and its commercialization from 2009 to 2013. It lays out the competitive landscape and the challenges it faced from competitors and shifting consumer preferences. Enough data is provided to develop and support alternative viewpoints on how to go forward, highlighting the need to consider the entire business process from product development through commercialization for the success of a new product initiative. A major focus is the coordinated product development process that brings together the capabilities of independent business units within a conglomerate. Designed for MBA and executive audiences focusing on branding, competitive strategy, CSR, or new product development.

Keywords:
Competitive Strategy, New Product Development, Branding, Competitive Positioning, India, Emerging Markets, Social Innovation, Corporate Social Responsibility

published: 29 Jun 2015

  • Topic: Economics & Finance
  • Industry: Transport
  • Region: Asia

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Abstract:
In 2013, the long-delayed IPO of the Bangkok Mass Transit System Public Co. Ltd. (BTSC) took place, but in an unusually complex form. Instead of selling the shares of the company that owned the elevated railway concession, what was offered were investment units in Thailand’s first publicly listed infrastructure mutual fund: the BTS Rail Mass Transit Growth Infrastructure Fund (BTSGIF). Proceeds from the IPO were used to acquire from BTSC the rights to the net farebox revenue generated from the railway. The investment exposed investors not only to the operating risk of the railway but to other types such as political risk.

Pedagogical Objectives:
To discuss the complexity of BTSC’s fund raising via BTSGIF and, more generally, the valuation of projects with political risks. Instead of a simple IPO of BTSC, the case looks at the more complicated contractual relationships between BTSG, BTSC and BTSGIF, why such a method of fund raising was chosen, and the pros and cons for the various parties. It also raises issues about investing in infrastructure trusts, particularly in politically volatile emerging markets.

Keywords:
Ipo, Concession, Infrastructure, Political Risk, Railway, Public-Private Partnership (ppp), Infrastructure Fund

published: 29 Jun 2015

  • Topic: Economics & Finance
  • Industry: Healthcare
  • Region: Other Regions

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Abstract:
The case discusses the public-private partnership to build the New Royal Adelaide Hospital (NRAH) (replacing the outdated Royal Adelaide Hospital) at a cost of A$1.7 billion in 2009. The 35-year concession was eventually awarded to a consortium, the South Australian Health Partnership (SAHP), and the government agreed to make an annual service payment to the consortium of A$397 million a year once the hospital was completed in 2016. Rising state debt in the wake of the global financial crisis led to protests by opposition politicians when the cost of the NRAH was said to have ballooned.

Pedagogical Objectives:
Valuation of social infrastructure project finance.

Keywords:
Public-Private Partnership, Hospital, Ppp, Healthcare, Australia, Social Infrastructure

published: 26 May 2015

  • Topic: Responsibility
  • Region: Asia

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Abstract:
Aarong, the retail arm of BRAC, a non-profit development organization based in Bangladesh, was created in 1978 to provide employment, income generation and social development opportunities for underprivileged women through the revival and promotion of Bangladeshi handicrafts. Profits from Aarong were used to extend such opportunities to more low-income producers and to cross-subsidize BRAC programmes for the poor. In 30 years, from a single shop, Aarong had grown into one of Bangladesh’s biggest retail chains. Its products ranged from clothing, household items, gifts and fashion accessories to children’s toys. The competition, however, was intensifying, both from local retailers in individual categories as well as foreign players, such as from India. How could Aarong compete in a global market? How could it leverage the brand, improve quality to match machine-made consistency, and keep prices competitive, while maintaining its social mission?

Pedagogical Objectives:
The case highlights the challenges of building a social enterprise that harnesses the labor and skills of the poor to provide them with a sustainable livelihood while creating value for consumers and the enterprise. Specifically, how does Aarong reconcile the need to raise wage rates to provide a sustainable livelihood in an ever more expensive world, while changing tastes and mores reduce (or at least flatten) the consumer's willingness to pay.

Keywords:
Retailing, Social Innovation, Social Enterprise, Competitive Positioning, Bangladesh, Emerging Markets, Differentiation, Social Responsibility

published: 26 Mar 2015

  • Topic: Responsibility
  • Region: Asia

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Abstract:
BASIX, headquartered in Hyderabad, was the brand name of a group of entities with 6,000 outlets offering financial and livelihood promotion services throughout rural India. Despite its impressive progress in poverty alleviation, raising funds to continue such work was increasingly challenging, as BASIX found when it sought to raise Rs 2.5 billion in capital from private equity investors in late 2010. Not only did the diffuse nature of its work make valuation complex (the standard method would have been to take the sum of its parts and add a premium for the synergies between the entities using the discounted cash flow method ), but investors preferred simpler business models where the service/goods sold broadly met the same set of needs. One that met such diverse needs and spread across so many sectors was harder to figure out, as well as harder to scale up, making investment less attractive. Without scale it was hard to get capital; without capital it was hard to scale up. The question that BASIX is grappling with is how best to position itself going forward.

Pedagogical Objectives:
The case highlights the challenges of building a social enterprise in the context of microfinance. It makes the point that without a complete solution that deals with all the aspects of poverty, the impact of microfinance is limited. Conversely, providing a complete solution creates organizational complexity, making it hard to assess exposure to risk and potential profitability - and thus more difficult to raise capital.

Keywords:
Microfinance, Social Innovation, Social Enterprise, Competitive Positioning, India, Emerging Markets, Differentiation, Social Responsibility

published: 26 Jan 2015

  • Topic: Marketing
  • Industry: Retailing
  • Region: Asia

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Abstract:
Fabindia, India’s iconic garments and home furnishings company, had come a long way from its humble beginnings as an export shop in 1960, selling handloom fabrics to overseas customers. In 1976, it had started domestic operations in India and over the next 38 years had become synonymous with quality handmade products procured from artisans all over India, with a social conscience. The business combined the twin objectives of making a profit and providing a sustainable livelihood for rural artisans. However, the winds of change were blowing. The next generation of consumers, part of a different economic environment and world order, were less tied to the Fabindia ethos and had widened their consumption habits. Given these changes, was it time to evolve? Should Fabindia broaden its positioning? If it remained niche, could it continue the phenomenal growth it had experienced? If Fabindia chose to broaden its positioning, what should that positioning be?

Pedagogical Objectives:
The case can be used in a broad variety of courses including business strategy, marketing strategy, branding, and social innovation. It documents the dramatic growth of Fabindia from its inception through 2013, and presents research data on consumer’s perception of the brand. Highlighting how profit-making and social responsibility need not be at odds, it makes the case for combining profits with a social conscience. The decision focus of the case stems from the findings of the market research which shows that contrary to management assumptions—that Fabindia is a niche player of ethnic products—today’s Indian consumers perceive it to be a part of the broader retail fabric of India. This raises the question: should Fabindia sharpen its positioning to remain within the niche that management perceives it to occupy or should it broaden its positioning?

Keywords:
Social Innovation, Retailing, Marketing, India, Social Responsibility, Brand Building, Brand Positioning, Brand Extension

published: 27 Oct 2014

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Abstract:
Read a related Knowledge article "From Concept to Sustainable Opportunity at the Base of the Pyramid" by Amitava Chattopadhyay.

With the publication of CK Prahalad’s “The Fortune at the Bottom of the Pyramid” (2005), the poor were suddenly seen as a potential market in the eyes of multinational corporations (MNCs). Although poor, the BOP is a large and growing market. The development community tends to focus on meeting the needs of the poorest of the poor (the 1 billion people who live on less than US$1 a day), but there is a larger segment of the low-income population, comprised of 3.8 billion people with incomes between $2 and $5 a day, that could be the focus of a market-oriented approach. They have no bank accounts, no access to modern financial services, no phones, are dependent on informal or subsistence livelihoods, and lack access to amenities and basic healthcare. Influenced by Prahalad’s work, the top management at Novartis decided that it was time to seriously consider the pursuit of commercial opportunities among the world’s poor. The case offers a description of the first steps to setting up the Arogya Parivar initiative by Novartis in India and raises strategic questions like how to improve its supply chain reliability, how to deal with the fact that many consumers were women and yet there were few female health educators, how to make the treatment affordable, whether to launch new brands of medicines for this segment, how to convince consumers to seek medical treatment and ensure compliance with the treatment protocol, etc., going forward.

Pedagogical Objectives:
This case can be taught in a variety of courses, such as a strategy course discussing business models, social enterprise courses, courses on marketing strategy, emerging markets, or doing business in India. It highlights Novartis’s decision to explore how to do business sustainably among the worlds’ poor, the challenges of and the requirements for developing a business targeted at the poor in general and the poor in India in particular. It raises the strategic question of how to create a scalable business model with specific questions around supply chain reliability, consumer education and compliance, and product decisions. The TN is packaged with two videos, information about what happened, including the programme's extension to Indonesia, Kenya and Vietnam, and a slide deck that pulls the postscript and conceptual and substantive wrap up together.

Keywords:
Strategy, Csr, Social Enterprise, Emerging Markets, Bottom of Pyramid (bop), Marketing, Innovation, India, Pharma

published: 23 Jun 2014

  • Topic: Marketing
  • Industry: Edible Oils
  • Region: Asia

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Abstract:
Healthy Oils, the Indian subsidiary of a Fortune 500 subsidiary, has four offerings in the edible oil market – Alpha, Beta, Gamma and Omega. While these are recognized by consumers of cooking oil, they are not among the top five in terms of brand awareness, nor are they the top choice in the most-often-used category, except for Beta in the groundnut category. Having spent a considerable amount over the past six years to acquire a suite of edible oils from other market players, the multi-brand strategy being to move from a bulk business to a consumer-facing retail business, Healthy Oils’ products remain second-tier offerings (in terms of consumer preferences) compared to Marico’s Saffola brand, Adani-Wilmar’s Fortune brand, and Agro Tech Foods’ Sundrop brand, the market leaders. With an all-important 2012 Executive Committee meeting on the horizon, the chief marketing officer must come up with a new plan of attack.

Pedagogical Objectives:
The teaching objective of this case is to expose participants to the topic of segmentation and targeting. It highlights 1) a best practice example of how to segment the market, 2) the importance of moving beyond demographics to understand customer benefits/needs in developing actionable market segments, 3) the complexity of the Indian marketplace, and 4) how to choose an appropriate segment and brand from the perspective of a multi-brand MNC trying to develop a differentiated offering in the commoditized edible oils category. The case requires participants to a) choose a target segment, b) decide which brand to deploy in that segment, and c) develop a marketing plan for the chosen brand in the desired segment.

Keywords:
Marketing, Segmentation, Targeting, Edible Oils, Branding, Emerging Markets, India, Food

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