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Case Studies by Hong Zhang

7 case studies

by Publication Date
published: 23 Jan 2019

  • Topic: Economics & Finance
  • Region: Asia

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Abstract:
The case focuses on blockchain (and distributed ledger technology or DLT) – a ‘hot’ area of fintech – and on R3 as a fintech consortium that includes some of the world’s largest banks, financial institutions and regulators. R3 started out as a family office in 2014 and evolved into a fintech company focused on the application of distributed ledger technology (DLT). Within three short years it had built a global consortium of 80 members from the financial services industry, including Barclays, J.P. Morgan, Commonwealth Bank of Australia and UBS. The consortium’s efforts resulted in an open-source DLT called Corda, geared towards handling increasingly complex transactions and regulatory oversight. Although Corda was inspired by blockchain, R3 did not view it as a blockchain product. In May 2017, R3’s Series A raised US$107 million in funding to continue the development and implementation of Corda and expand its Lab & Research Center. Barely a year later, speculation arose that R3 was exploring an IPO.

Pedagogical Objectives:
The term “fintech”, coined to describe the use of new technology in the financial services sector, initially applied to the back-end of established consumer and trade financial institutions, has been expanded to any technological innovations in the finance sector, be they related to financial literacy, retail banking or crypto-currencies. The case focuses on blockchain (and DLT) – a ‘hot’ area of fintech – and on R3 as a DLT fintech consortium that included over 80 of the world’s largest banks, financial institutions, and regulators. Blockchain is broadly discussed as a technology with huge innovation potential in all areas of financial services – for fraud detection, pricing, and reducing administrative costs – which could be harnessed by financial institutions facing the prospect of limited growth in mature markets and pressure to reduce costs. However, since its implementation depended on network effects, regulatory conditions, and high costs – the benefits and limitations of the technology were not fully understood or immediately realizable. Most blockchain/DLT platforms had not been designed to meet the needs of the finance and banking industries – hence R3 moved to fill the gap and resolve the inconsistency.

Keywords:
Fintech, Blockchain, Distributed Ledger Technology, Banking, Trade Finance, Data Security, Dlt, Financial Regulations, Corda, Emerging Markets, Digital Strategy, Consumer Banking, Bitcoin

published: 27 Feb 2017

  • Topic: Economics & Finance
  • Industry: Education, paper, research
  • Region: Global

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Abstract:
The case focuses on the main issues faced by two US-listed Chinese companies – Orient Paper (NYSE MKT: ONP) and New Oriental Education and Technology Group (NYSE: EDU) – when they were attacked by Muddy Waters, LLC. Interestingly, the seemingly similar responses of the two “Orientals” resulted in widely disparate outcomes, offering lessons to emerging market firms eager to embrace the global capital markets. The case aims to help students understand the mechanism of short selling in the context of “bear” attacks, and expose the problems that attract short sellers’ attention, as well as the actions companies can take to deal with them. It also explains the normative role that short selling plays in the market: to discipline corporate behaviour and improve market efficiency.

Pedagogical Objectives:
The case is suited for any (or all) of the following purposes: 1. To introduce the process of short selling and the parties involved. 2. To identify the common problems that tend to attract “bear” attacks, from the experience of the two Orientals and other examples. Four categories are described in detail. 3. To explore actions that companies can take in dealing with short selling. A bear attack is not necessarily bad for a company; a plunge in the stock price in the short term creates an opportunity for good companies (as well as top management) to legally buy back shares at a lower price. 4. To understand the normative implications of short selling as part of ‘the invisible hand of the market’ to discipline corporate incentives.

Keywords:
Short Selling, ‘bear’ Attacks, Overseas Listing, Global Capital Market, Chinese Companies Overseas Ipo, Corporate Transparency, Invisible Hand, Market Efficiency, Responses to Short Selling, Countering ‘bear’ Attacks

published: 29 Sep 2014

  • Topic: Economics & Finance
  • Industry: Various
  • Region: Global

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Abstract:
One of the biggest challenges for multinational corporations (MNCs) is to determine and consolidate their borders. In order to do so, MNCs increasingly strive to create value innovation, particularly within their internal capital market. Accordingly, their corporate treasury functions have witnessed three stages of major evolution in the 21st century.

Pedagogical Objectives:
This case aims to provide an in-depth analysis of MNCs' treasury evolution based on Blue Ocean Strategy and the Coase theorem. In particular, we discuss how corporate treasury can help MNCs to consolidate their borders and how its different stages of evolution can result in either value creation or value innovation.

Keywords:
Blue Ocean, Corporate Treasury, Coase Theorem, Globalization, In-House Bank, Re-Invoicing, Internal Capital Market, Shadow Banking

published: 23 Jun 2014

  • Topic: Economics & Finance
  • Region: Asia

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Abstract:
China represents a significant share of global foreign direct investment but its currency comprises a mere 1.5% of all global foreign exchange transactions. This case describes the measures introduced by the Chinese government to promote the use of the renminbi (RMB) in cross-border trade, financing and other internationalization initiatives, as well as the associated challenges.

Pedagogical Objectives:
The case introduces and discusses: 1. Countries and currencies 2. China’s economic development and emergence on the global stage 3. Process and policies for the renminbi's internationalization 4. Key stakeholders and implications 5. Potential problems and challenges 6. 3 case scenarios involving the RMB

Keywords:
Renminbi, Currency, Treasury Globalization, Internationalization, Globalization, Monetary Policies, Economic Development, Cross-Border Finance, Corporate Governance, Corporate Governance for Family Firms

published: 25 Jun 2012

  • Topic: Economics & Finance
  • Industry: IT products and services
  • Region: Asia

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Abstract:
This case explains how Lenovo succeeded in achieving its goals of financial globalization. This was largely accomplished through the combination of its corporate treasury centre and a re-invoicing structure. Lenovo’s experience would be of special interest to both emerging market companies pursuing globalization strategies and multinational corporations interested in developing market businesses.

Pedagogical Objectives:
The case aims to help students to: 1. Understand the role of treasury operation in implementing Corporate Strategy 2. Obtain an overview of how financial globalization is necessary to achieve broader global strategies 3. Recognize the properties/challenges of implementing innovative treasury structures 4. Gain insights on types of companies which can benefit from similar financial practices

Keywords:
Liquidity, Corporate Treasury Operations, Cash Concentration Hub, Cash Pooling, Centralized Treasury, Re-Invoicing Center, Stages of Treasury Centralization, Treasury Platforms, Corporate Governance, Value Creation, Strategy and Implementation

published: 25 Jun 2012

  • Topic: Economics & Finance
  • Industry: Pharmaceutical, Diagnostic, Vitamin, Fine Chemical
  • Region: Europe

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Abstract:
Until 2002, Roche’s treasury activities were decentralized. Then a number of external factors resulted in the multinational company recording a loss of CHF5,192 million. Determined to build a more robust centralized treasury system, Roche conceptualized and implemented an in-house bank (IHB) coupled with cash pooling from its affiliates worldwide.

Pedagogical Objectives:
The case aims to help students to: 1. Understand the role of treasury operations in implementing corporate strategy 2. Obtain an overview of Corporate Treasury and the stages of centralization 3. Recognize the properties/limitations of combining outsourcing and centralization through an IHB 4. Understand the benefits of centralized treasury in a financial crisis

Keywords:
Liquidity, Corporate Treasury Operations, In-House Banks, Cash Pooling, Centralized Treasury, Payment Factory, Stages of Treasury Centralization, Treasury Platforms, Corporate Governance, Value Creation, Strategy and Implementation, European Competitiveness, Europe

published: 25 May 2011

  • Topic: Economics & Finance
  • Industry: Diversified
  • Region: Global

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Abstract:
In 2002, Tyco International experienced a corporate crisis which put the conglomerate in danger of bankruptcy. The case follows how the company successfully tackled a short-term liquidity crisis as well as the steps taken to establish a global treasury management structure to position Tyco going forward.

Pedagogical Objectives:
This case allows students to learn and understand (i) the role and practice of corporate treasury (ii) the current trend for corporations to move from decentralised to centralised corporate treasury (iii) the regulatory environment of corporate treasury, and (iv) the importance of debt-maturity profile planning to avert a corporate liquidity crisis.

Keywords:
Tyco Conglomerate, Corporate Treasury, Centalised Corporate Treasury, Liquidity, Debt Maturity Profile, Convertible Debt, Crisis Restructuring, Regulations in Asia, Corporate Governance, Investors, Stakeholders and Accountability

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