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Economics & Finance

by Publication Date
published: 28 Apr 2014

  • Topic: Economics & Finance
  • Industry: Securities, banking
  • Region: Global

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Abstract:
This case traces the history of Goldman Sachs from its origins as it grows from a partnership to one of the most valuable franchises in the global securities industry and ultimately a listed corporation, and its transformation into a bank holding company under the regulatory oversight of the Federal Reserve. Even by the standards of the financial services sector - significantly restructured in recent decades - Goldman Sachs has undergone transformative configurations while straining to hold on to the attributes that made it an industry leader. There are successes and failures, and the case focuses on the future direction of the firm in a market and regulatory environment very different from the past.

Pedagogical Objectives:
The objective is to apply tools of industrial organization and competitive analysis to an extraordinary firm in the financial services sector which, for internal and external reasons, has become a much more ordinary firm. The role of strategic positioning and execution are emphasized, as are the problems of institutional complexity, compliance and ethics, and corporate culture.

Keywords:
Investment Banking, Bank Strategy, Securities, Bank Culture, Regulation, Financial Ethics

Hermès Paris Award winner Prize Winner
published: 28 Apr 2014

  • Topic: Economics & Finance

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Abstract:
This case is about options for ownership design in family businesses. The Hermès family takes the firm public in 1993 with the dual aim of enabling individual members to exit via selling shares on the market and generating funds to finance the company's growth. Fifteen years later, as LVMH prepares a hostile takeover bid for control of Hermès, the family fights to protect its ownership by creating a family trust to keep minority ownership interests in check.

Pedagogical Objectives:
1) To explain the prevalence of family firms in the luxury industry. 2) To apply the 'Family Business Map' to design family-assets-based business strategies and governance to avoid roadblocks. 3) Why family firms go public and in what way being a public firm is different from a private firm. 4) To understand that the way a family firm lists its shares can have long-term consequences for ownership and governance. 5) To show how family firms can be protected from hostile takeovers by creating a family trust. 6) To underline the legal limitations on the defensive strategies that family firms can deploy against hostile takeover bids, which vary from one country to another.

Keywords:
Luxury Industry, Ownership Design, Hostile Takeover Attempt, Family Ownership, Family Assets, Family Roadblocks, Family Trusts, Corporate Governance, Corporate Governance for Family Firms, Wicfe, Fair Process, Communication, Psychology, Gender, Governance, Parallel Planning, Strategy, Boards

Prizes won:
- Highly Commended at 2013 EFMD Case Writing Competition, Family Business Category

published: 24 Mar 2014

  • Topic: Economics & Finance
  • Industry: Banking and Finance
  • Region: Global

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Abstract:
In the spring of 2011, JPMorgan Chase realised that their synthetic credit portfolio (SCP), which represented less than 1% of the bank’s total assets, had grown to become more than half of the bank’s total risk. An article in the WSJ would soon make it public knowledge that the bank was in a difficult situation. How could an institution known for its diligence, which had survived the global financial crisis, and was led by a highly respected CEO (Jamie Dimon), end up in such dire straits?

Pedagogical Objectives:
Having cultivated a reputation for sound risk management and business decision making, the 'London Whale' episode raises the following question around JP Morgan's internal controls: Why did standard market risk management practices for financial institutions, such as Value-at-Risk (VaR), not prevent such an extraordinary loss, and where did the process fail? In addition, the soon-to-be published Case (B) will explore the effectiveness of the indictments and penalties handed out by the US courts by the summer of 2013. Will they have any impact on risk-taking by financial institutions? The case offers a backdrop for a discussion on the effectiveness of regulations.

Keywords:
Risk Management, Market Risk, Portfolio Management, Chief Investment Officer (cio), Business Decision Making, Value-At-Risk (var), Credit Risk, Financial Regulation, Corporate Governance, Case Studies: Value Creation, Strategy and Implementation

published: 24 Feb 2014

  • Topic: Economics & Finance
  • Industry: Fast-moving consumer goods
  • Region: Global

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Abstract:
This case is a multi-party M&A negotiation between companies in the liquor business. The target company National Distilleries Corporation (NDC) is the target of two competitors, namely Liquor America (LA) and International Liquor (IL).

Pedagogical Objectives:
• M&A and financial negotiations • Increasing the number of parties increases complexity, bringing more opportunities but also more risks • The importance of negotiating the process • Don´t assume it is a competition before you consider all interests • Negotiate based on expectation of value (rewards & risks), not of luck • Legitimacy is what makes sense for the parties • Avoid irrational or unethical decisions under pressure: lying, use of bargaining tactics, treating others as enemies, agent-principal conflicts of interest, parasitic value creation

Keywords:
Financial Negotiation, M&a Negotiation, Fmcg, Cross-Border Transaction, Competitive Bidding, Managing Process from Position of Low Power, Managing Complexity, Negotiating Value, Not Numbers, Win-Win Vs. Win-Lose, Legitimacy, Ethics and Negotiation, , Corporate Governance, Value Creation, Strategy and Implementation

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published: 24 Feb 2014

  • Topic: Economics & Finance
  • Industry: Fast-moving consumer goods
  • Region: Global

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Abstract:
This case is a multi-party M&A negotiation between companies in the liquor business. The target company National Distilleries Corporation (NDC) is the target of two competitors, namely Liquor America (LA) and International Liquor (IL).

Pedagogical Objectives:
• M&A and financial negotiations • Increasing the number of parties increases complexity, bringing more opportunities but also more risks • The importance of negotiating the process • Don´t assume it is a competition before you consider all interests • Negotiate based on expectation of value (rewards & risks), not of luck • Legitimacy is what makes sense for the parties • Avoid irrational or unethical decisions under pressure: lying, use of bargaining tactics, treating others as enemies, agent-principal conflicts of interest, parasitic value creation

Keywords:
Financial Negotiation, M&a Negotiation, Fmcg, Cross-Border Transaction, Competitive Bidding, Managing Process from Position of Low Power, Managing Complexity, Negotiating Value, Not Numbers, Win-Win Vs. Win-Lose, Legitimacy, Ethics and Negotiation, Corporate Governance, Value Creation, Strategy and Implementation

Related:

published: 24 Feb 2014

  • Topic: Economics & Finance
  • Industry: Fast-moving consumer goods
  • Region: Global

Show details ...

Abstract:
This case is a multi-party M&A negotiation between companies in the liquor business. The target company National Distilleries Corporation (NDC) is the target of two competitors, namely Liquor America (LA) and International Liquor (IL).

Pedagogical Objectives:
• M&A and financial negotiations • Increasing the number of parties increases complexity, bringing more opportunities but also more risks • The importance of negotiating the process • Don´t assume it is a competition before you consider all interests • Negotiate based on expectation of value (rewards & risks), not of luck • Legitimacy is what makes sense for the parties • Avoid irrational or unethical decisions under pressure: lying, use of bargaining tactics, treating others as enemies, agent-principal conflicts of interest, parasitic value creation

Keywords:
Financial Negotiation, M&a Negotiation, Fmcg, Cross-Border Transaction, Competitive Bidding, Managing Process from Position of Low Power, Managing Complexity, Negotiating Value, Not Numbers, Win-Win Vs. Win-Lose, Legitimacy, Ethics and Negotiation, Corporate Governance, Value Creation, Strategy and Implementation

Related:

published: 24 Feb 2014

  • Topic: Economics & Finance
  • Industry: Fast-moving consumer goods
  • Region: Global

Show details ...

Abstract:
This case is a multi-party M&A negotiation between companies in the liquor business. The target company National Distilleries Corporation (NDC) is the target of two competitors, namely Liquor America (LA) and International Liquor (IL).

Pedagogical Objectives:
• M&A and financial negotiations • Increasing the number of parties increases complexity, bringing more opportunities but also more risks • The importance of negotiating the process • Don´t assume it is a competition before you consider all interests • Negotiate based on expectation of value (rewards & risks), not of luck • Legitimacy is what makes sense for the parties • Avoid irrational or unethical decisions under pressure: lying, use of bargaining tactics, treating others as enemies, agent-principal conflicts of interest, parasitic value creation

Keywords:
Financial Negotiation, M&a Negotiation, Fmcg, Cross-Border Transaction, Competitive Bidding, Managing Process from Position of Low Power, Managing Complexity, Negotiating Value, Not Numbers, Win-Win Vs. Win-Lose, Legitimacy, Ethics and Negotiation, Corporate Governance, Value Creation, Strategy and Implementation

Related:

published: 27 Jan 2014

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

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Abstract:
This is a two-party negotiation between a pharmaceutical company and a government agency to decide if a new medication will be put on the reimbursement list. The pharmaceutical company has a valuable new product, the government has semi-monopolistic power over whether (or not) drugs are listed. The role-play allows participants to negotiate given the inherent value-creation limitations of the setting.

Pedagogical Objectives:
1. Partisan perceptions 2. From interests to options to legitimacy 3. Limitations to value creation in government negotiations (Do no harm/ Their gain is our loss/ Competition is always good/ Support our group/ Live for the moment/ No pain for us, no gain for them)

Keywords:
Reimbursement of Medicines, Listing of Medicines, Negotiation with Governments, Negotiation with Monopolies, Negotiation of a New Product, Price Negotiation with Governments, Price Negotiation of a New Product, Limitations to Value Creation in Government Negotiations, Using Legitimacy When Pushed to a Bargaining Process, Partisan Perceptions, Hmi, Pharmaceutical and Medical Device Sectors

Related:

published: 27 Jan 2014

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

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Abstract:
This is a two-party negotiation between a pharmaceutical company and a government agency to decide if a new medication will be put on the reimbursement list. The pharmaceutical company has a valuable new product, the government has semi-monopolistic power over whether (or not) drugs are listed. The role-play allows participants to negotiate given the inherent value-creation limitations of the setting.

Pedagogical Objectives:
1. Partisan perceptions 2. From interests to options to legitimacy 3. Limitations to value creation in government negotiations (Do no harm/ Their gain is our loss/ Competition is always good/ Support our group/ Live for the moment/ No pain for us, no gain for them)

Keywords:
Reimbursement of Medicines, Listing of Medicines, Negotiation with Governments, Negotiation with Monopolies, Negotiation of a New Product, Price Negotiation with Governments, Price Negotiation of a New Product, Limitations to Value Creation in Government Negotiations, Using Legitimacy When Pushed to a Bargaining Process, Partisan Perceptions, Hmi, Pharmaceutical and Medical Device Sectors

Related:

published: 20 Dec 2013

  • Topic: Economics & Finance
  • Industry: Electronics
  • Region: Europe

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Abstract:
Daewoo Group companies run a distant third or fourth in their respective industries in Korea, but they are rapidly expanding their presence, mainly through acquisitions, in foreign markets. In this context, Daewoo Electronics makes a bid in 1996 for the heavily indebted French electronics manufacturer Thomson Multimedia, which is being privatised. The French government's October announcement of its preference for Daewoo's bid unleashes a storm of criticism in France, and the French Privatisation Commission's subsequent refusal to endorse the government's decision creates a major diplomatic incident between France and Korea.

Pedagogical Objectives:
To introduce one of the most aggressive Korean chaebol and its extraordinary growth plans. To expose the complexity of the issues, which can surround cross-border, cross-cultural acquisitions. T o contrast Korean and French industrial policies.

Keywords:
Internationalisation, Globalisation, Korean Mncs, Government Policy, Privatisation, Acquisition, State-Owned Enterprise, France, European Competitiveness Initiative, European Competitiveness, Europe, Government and Policy

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