Case studies

This case was designed to facilitate discussion of how a cyberattack was remediated by a major public university. Students are challenged to think through how to best manage the remediation project, including the application of best practices such as risk management, stakeholder management, communication plans, outsourcing/procurement management, and cyberattack remediation. The Phoenix Project was a success from multiple perspectives, and as such provides a useful example of how to manage an unplanned, mission-critical project well.

Faced with declining market share and sales, Natura, Brazil’s second-largest brand in the cosmetics, fragrances, and toiletries market, expanded its customer reach by moving from a direct-sales company to a multichannel company. In 2014, Natura added online catalogs, physical stores, and drugstores to its well-established direct-selling model, but the results were disappointing. Between 2014 and 2016, three different Natura CEOs attempted to lead the company in the strategic transition to focus less on the direct sales consultants and more on reaching the end consumers directly with multiple channels and touchpoints. In October 2016, the company’s board appointed its former commercial vice president, João Paulo Ferreira, as the most recent CEO. Ferreira’s challenge was to find the right balance between the direct-selling and other channel formats to market Natura, thus enabling it to thrive in the face of intense competition in the beauty and personal care market in Brazil.

At three o'clock in the morning on September 10, 2001, Thierry Hautillac, a risk arbitrageur, learns of the final agreement between Pinault-Printemps-Redoute SA (“PPR”) and LVMH Moët Hennessy Louis Vuitton SA (“LVMH”). After a contest for control of Gucci lasting over two years, PPR has emerged as the winner. PPR and LVMH have agreed for PPR to buy about half of LVMH's stock in Gucci for $94 per share, for Gucci to pay an extraordinary dividend of $7 per share, and for PPR to give a two and a half year put option with a strike price of $101.50 to the public shareholders in Gucci. The primary task for the student in this case is to recommend a course of action for Hautillac: should he sell his 2% holding of Gucci shares when the market opens, continue to hold his shares, or buy more shares? The student must estimate the risky arbitrage returns from each of these choices. As a basis for this decision, the student must value the terms of payment and consider what the Gucci stock price will do upon the market's open. The student must determine the intrinsic value of Gucci using a DCF model as well as information on peer firms and transactions. The student must consider potential synergies between Gucci and PPR and between Gucci and LVMH. The student must assess the likelihood of a higher bid, using analysis of price changes at earlier events in the contest for clues.

This case present the dilemma of an employee who, having been terminated in a manner he deems is unfair, has to decide whether to cash or return a $2,500 check wrongfully sent him by his former employer.

In early 2012, an equity analyst, was examining the jet fuel hedging strategy of JetBlue Airways for the coming year. Because airlines cross-hedged their jet fuel price risk using derivatives contracts on other oil products such as WTI and Brent crude oil, they were exposed to basis risk. In 2011, dislocations in the oil market led to a Brent-WTI premium wherein jet fuel started to move with Brent instead of WTI, as it traditionally did. Faced with hedging losses, several U.S. airlines started to change their hedging strategies, moving away from WTI. But others worried that the Brent-WTI premium might be a temporary phenomenon. For 2012, would JetBlue continue using WTI for its hedges, or would it switch to an alternative such as Brent?

This case could be used in entrepreneurship, strategy, and small-business courses. It presents classic issues regarding successful start-ups such as how to choose from a multitude of growth opportunities; how to pace growth so as not to dilute quality control and financial risk tolerance; and how to choose a strategic focus.

ESPE, the market leader, is a medium-sized German manufacturer of precision dental impression materials competing in a shrinking market. To grow the business, ESPE invests substantial resources in innovative impression materials and associated distribution mechanisms. Squeezed by the shrinking market, the competition is increasingly using the proprietary channels (dispensing mechanisms) and brand equity (trademark) of ESPE to maintain their market share. There is a potential infringement. Explores how ESPE is organized to execute on the options imbedded in its IP rights.

To provide students with an understanding of how to use brands and trademarks in conjunction with trade secrets, patents, and other forms of IP in mature markets to build and maintain innovation-based competitive advantage.

This case describes the creation and performance of the America's Cup team and the leadership of Dennis Conner.

Hedge fund Magnetar Capital had returned 25 percent in 2007 with a strategy that posed significantly lower risk to investors than the S&P 500. Magnetar had made more than $1 billion in profit by noticing that the equity tranche of CDOs and CDO-derivative instruments were relatively mispriced. It took advantage of this anomaly by purchasing CDO equity and buying credit default swap (CDS) protection on tranches that were considered less risky. Now it was the job of Alec Litowitz, chairman and chief investment officer, to provide guidance to his team as they planned next year's strategy, evaluate and prioritize their ideas, and generate new ideas of his own. An ocean away, Ron Beller was contemplating some very different issues. Beller's firm, Peloton Partners LLP, had been one of the top-performing hedge funds in 2007, returning in excess of 80 percent. In late January 2008 Beller accepted two prestigious awards at a black-tie EuroHedge ceremony. A month later, his firm was bankrupt. Beller shorted the U.S. housing market before the subprime crisis hit, and was paid handsomely for his bet. After the crisis began, however, he believed that prices for highly rated mortgage securities were being unfairly punished, so he decided to go long AAA-rated securities backed by Alt-A mortgage loans (between prime and subprime), levered 9x. The trade moved against Peloton in a big way on February 14, 2008, causing $17 billion in losses and closure of the firm.

This case analyzes the strategies of the two hedge funds, focusing on how money can be made and lost during a financial crisis. The role of investment banks as lenders to hedge funds such as Peloton is explored, as well as characteristics of the CDO market and an array of both mortgage-related and credit protection-related instruments that were actively used (for better or worse) by hedge funds during the credit crisis of 2007 and 2008.

Chuck Smith, senior brand manager of A.1. Steak Sauce, learns that Lawry's will soon be launching a steak sauce product. He has to determine whether A.1. should defend its business and, if so, what A.1. should do. In formulating the recommendation, he has to consider competitive dynamics and work through the financial implications.