Search results for: 'Profitability'
The internationalization conundrum of S&H DE1-222-I
Joe and Alex, father and son and president and CEO of a family-owned business called Steel & Heavy (S&H) had to make a key strategic decision. They needed to set up a new manufacturing subsidiary near an efficient port and narrowed their choices down to a port in Spain or one in China. Joe was in favor of China (Shanghai) because of its size, growth and access to the Asian markets. The Shanghai port was also very large and efficient and labor costs were cheaper than in Europe. But, it was quite far from the headquarters. Alex preferred Spain because of the smaller geographical and cultural distances from the headquarters in Italy, the large metal production cluster already present there and the low cost of coordinating with Italy. Plus, the port in Gijón is the sixth largest in Spain and one of the most modern in terms of infrastructure. However, it was still small compared to the port in Shanghai and the final markets were still far from Gijón. Although Joe owned the majority of S&H’s shares, he did not want to impose a decision on his son and family. When pondering the decision, Joe decided to call T+P, S&H’s partner. T+P’s CEO knew that they would also need to create their own new subsidiary because the international venture was a joint decision. The case wraps up with Alex and Joe calling the CEO to tell him their arguments but does not reveal what the final decision was.Academic Area:Strategy
The Terminus Hotel (A) CG1-130-A-I
The “Terminus” Hotel, a 200-room facility, is located within the city walls of one of the most impressive medieval towns in Southern Europe. As consequence of poor management and old-fashioned interior design, the Hotel experienced slumping demand since 2001. In 2004, the Hotel was on the brink of bankruptcy. In a sudden, these dark prospects turned into hopeful ones; the Hotel was located on a historic building and the regional authorities approached Mr. Leo D. Marcial, chair of the Chamber of Commerce, to mobilize local entrepreneurs in order to take over hotel ownership.
This case presents the opportunity to do a profitability analysis of Hotel Terminus, which after a general renovation has once again opened its doors to guests. This analysis is motivated by poor results, that even though they were planned to be in red numbers, the losses are larger than expected. The hotel offers three distinct services: accommodation, restaurant and entertainment (flamenco).
For the writing of this case, several bits of data have been modified to protect the identity of the company.Academic Area:Cost Accounting & Management Control
QE Liquidity in search of profitability: the dilemma … EC1-135-I
This case seeks two purposes. First, illustrating the relevance of the economic environment for determining business profitability. Second, putting in practice students acquired macroeconomic analytical skills by using them to support a real life financial investment decision. The students are asked to endorse one of two options, US or Brazil, for the launching of a new investment fund by FTInvest, a financial investment company. The recommendation is made by students acting as members of the Economic Research Department of the company. Therefore, it should be based on the country identified by them as providing the most favorable economic environment for the profitability of the investment in the medium/long run. The decision takes place in the second half of 2011, at a time when the US economy showed a hesitant recovery after the Great Global Recession of 2008 and when the Brazilian economy was booming after a very short blip. It was also at a time when, due to ultra-loose US monetary policy, interest rates and yields were at historical lows in the US while they were relatively high in Brazil.Academic Area:Economic Environment | Finance
Hotel IPSUM: a marketing and commercial strategy to … MK1-149-I
Faced with the challenge of improving both sales and profitability of Bogota, Colombia’s 5-star Hotel Ipsum, General Manager Rafael Escobedo had to take into consideration the political, social, economic and technological factors working for and against him. A customer base principally traveling for business and higher room occupancy during the week than weekends coupled with a virtually non-existent marketing plan was the primary obstacle standing between Escobedo and achieving higher profitability for Hotel Ipsum. In order to do so, radical changes would have to be made in order to keep the hotel, and his job, from being negatively affected. This case will help students learn the various factors that affect how hotels remain competitive without losing profits in an ever-changing and challenging market.Academic Area:Marketing
enRED@me is a social network designed to meet the needs of more mature Internet users. Users create a profile and participate in conversations in groups, creating community and friendships on a virtual platform. One of the challenges for the creators of this social network platform is how to monetize the process is a sustainable manner, especially as competitors begin to enter the market.
In this case, students are confronted with the challenge of how to structure the pricing and costs of an online platform in a way that produces sustainable profitability.
This case includes practical exercises that require students to link conceptual knowledge of management accounting procedures to real numbers. It challenges them to propose a solution which meets the goals and needs of the company.Academic Area:Cost Accounting & Management Control
Novartis, commercial strategy for success MK1-138-I-M
This interactive case was developed so students learn and put into practice their knowledge of developing a business strategy and sales plan. The case presents two interactive exercises which simulate students’ proposed business strategy for facing the commercial challenges the Spanish company Novartis faced in 2008.
The first exercise corresponds to the launch of Exforge in Spain and the second exercise to the launch of Rasilez, Galvus y Eucreas. In both exercises, the student should plan his/her business strategy for these new products as well as those that already existed on the market. At the end of the exercise, the student will obtain numerical results and graphs of the obtained sales, profitability of the strategy, Share of Voice among others.Academic Area:Strategy | Marketing
Clínica Santa Sofía CG1-125-I
Felipe Izcaray, the new general manager of the Clínica Santa Sofía in Madrid, a hospital specializing in gynecological and pediatric care, was put in charge of improving management and increasing profitability. Although the company was well-managed in terms of processes, it did not have its objectives clearly defined. Although the company has improved in terms of operational efficiency and cost control, their profits had not gone up. Izcaray decided to hold a meeting with the Board of Directors to present his analysis of hospital management. He proposed making changes in the departmental structure and drawing up a new department-by-department organizational chart, providing 24-hour emergency service and treating customers in a way that their stay is a true pleasure. The conclusions from the meeting were that profitability needed to be increased by attracting high-value customers, comprehensive service needed to be provided in order to achieve cross-sales to the customer, they needed to continue arrangements with the public health system, and to improve the clinic’s reputation. The clinic’s new management committee then got together to draw up a strategic control chart. The committee was made up of managers from different departments who did not totally agree on what the clinic’s strategy should be and who all had different concerns. The managing physician emphasized that although the company was seeking profitability and economic results, they could not spare measures or restrict the use of resources. They needed to avoid giving precedence to profitability above patient health. The head of sales and public relations also mentioned that excellent service is important since word of mouth will get them new customers and positive references could create cross-sales. The nurse mentioned that the employees’ level of satisfaction also needed to be taken into account to achieve a low turnover. Someone else mentioned that they could use referrals from renowned physicians or public figures to gain more customers. When the head of management control brought up reducing costs, the managing physician strongly disagreed and said he would not ask professionals to concern themselves with cross-sales, bed turnover, etc. Izcaray knew that the support of the managing physician was essential. He needed to be sensitive to ideas from all the areas and reorient those that did not fall within the objectives of the company in order to prepare and implement a strategic control chart. The case discussion is centered in the difficulties of balancing profitability with excellent healthcare service.Academic Area:Cost Accounting & Management Control
Investment in China DF1-131-I-M
This is an interactive multimedia case that details the acquisition of a Chinese company by a Spanish one. In the analysis certain variables are considered that apply to this international context.
After carrying out the valuation a simulator is presented that uses the Monte Carlo method to define the following variables: exchange rate country risk premium and sales. The value of the company and the profitability of the operation are obtained using a probabilistic method running a thousand iterations in which these three variables change following pre-established patterns.
The results of the equity and the profitability of the operation are presented in accordance with their associated probability through interactive charts and graphs.Academic Area:Finance
The Battle for Cortefiel DF1-107-I-M
This multimedia case presents the leveraged acquisition of the Spanish textile group Cortefiel. This acquisition is made by a capital risk fund that has developed a business plan that will attempt to create value through Cortefiel’s operations and this fund. At one point the operation is blocked due to other capital risk funds which are also interested in the group. Students have to analyze the business plan and decide whether or not to increase the price offered.
The case presents information about the Group and includes interviews with sector experts that participated in the operation. The last part lets students numerically solve the case carrying out all the sections of the business plan and analyzing if the price that they are paying for the stock should be increased or not.
This case study targets postgraduate students who study the subject of Financial Management II, on the subject of leveraged acquisitions. Likewise, the case can be delivered in corporate finance or valuation seminars.Academic Area:Finance