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Economics & Finance

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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

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: 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

Show details ...

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

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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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published: 20 Dec 2013

  • Topic: Economics & Finance
  • Region: Asia

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Abstract:
The case explores the origins, historical evolution, present structure, current problems and challenges and future prospects of the principal organizations of regional cooperation in Southeast Asia, East Asia, and the Asia-Pacific (ASEAN, ASEAN+3 and APEC).

Pedagogical Objectives:
• to identify the principal variables driving and hindering processes of regional integration in East Asia and the Asia-Pacific, • to assess the likelihood of the emergence and the likely composition and character of a strong inter-state organization in this region, • and to analyse the implications of alternative possible future scenarios of Asian or Asian-Pacific regionalism for the evolution of the international trading system and the international distribution of political power.

Keywords:
Asean, Apec, Integration, Regionalism, Politics, Trade, East Asia

published: 20 Dec 2013

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

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Abstract:
This case describes the challenges encountered by Nathaniel Rothschild after making a US$3 billion investment in 2010 in a family-owned business group in Asia. Scion of the Rothschild banking dynasty and private equity fund manager, Rothschild and his business associates created a LSE-listed shell company, Bumi PLC, which acquired PT Bumi Resources and Berau Coal. These were among Indonesia’s largest coal mines and the largest coal exporters in the world, and were controlled by the Bakries, a powerful Indonesian family whose patriarch was a candidate for the presidency in 2014. After losing at least 70% of his investment in three years, Rothschild eventually requisitioned an extraordinary general meeting in February 2013, attempting to remove the Bakries and their associates from Bumi's management team. Despite western-style corporate governance manoeuvres, the PE investors found it challenging to control the politically connected family in Indonesia.

Pedagogical Objectives:
The case is designed for courses in Corporate Finance on the topic of family business and/or raising funds, or courses in International Finance or Investment in Emerging Markets (particularly Indonesia). Alternatively, it could be used in a course on Corporate Governance on the topic of shareholder activism and board monitoring.

Keywords:
Corporate Governance, Family Business, Asia, Reverse Merger, Board Monitoring, Business Groups, Tunneling, Shareholder Activism, Corporate Governance, Corporate Governance Across the World, Wicfe, Education, Entrepreneurship, Leadership, Governance, Parallel Planning, Strategy, Boards, Family Office, Wealth Management, Legacy, Ownership

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