Case studies

Strategic management/entrepreneurship.

Undergraduate and/or MBA level in either a strategic management and/or entrepreneurship courses.

The dilemma that Zayed, Al–Maha's founder and owner, is facing, is typical for an entrepreneur who has been successful for a number of years (ten, in his case), without a formal strategy. He is now at a cross–road: should he expand in his present location in the Madinat Zayed Shopping Center, in Abu Dhabi, UAE, or open another store in another location? if he grows within its current location, how would that be? Zayed, like many small–store owners in a developing economy, faces fierce competition especially in the mobile phone business. Technology is changing constantly, demand is increasing and he has to address all these issues, among others, before making a decision. Should he create an advisory council so he can be the recipient of feedback from trusted individuals who might serve on this council? Finally, he is seeking his close friend Refaat's opinion, as to what to do next and how.

Students should be able to: analyze the internal and external environments of a small–medium enterprise (SME); understand the importance of a vision/mission and smart objectives; make strategic decisions regarding the future direction of an SME; analyze the financial statements of an SME; draft a strategic plan based on the aforementioned; and understand the pros and cons of an SME in a developing economy such as the UAE.

Teaching notes.

This case may be taught singly or used as a merger-negotiation exercise with “Daimler-Benz A. G.: Negotiations between Daimler and Chrysler” (UVA-F-1241). Set in February 1998, the case places students in the position of negotiators for the company; their task is to value both firms, assess the potential earnings dilution of a combination, and negotiate a detailed agreement with their counterpart. The case can be used to explore such interesting negotiation issues as determination of a share-exchange ratio, treatment of major stockholders, and structuring a deal. Also, the case and exercise can be used to spark a discussion of acquisition in comparison with strategic alliance, or other less formal models of combination.

On March 1, 2001, Jessica Gallinelli, managing director of Bancroft Capital Management, heard surprising and somewhat disturbing news about the proposed bid by General Electric Company (GE) for Honeywell International Inc. Despite recent public assurances about the deal from GE's chairman and chief executive officer (CEO), John F. “Jack” Welch Jr., the antitrust regulatory authority of the European Commission (EC) announced it had initiated a review of the proposed merger. Gallinelli, whose fund owned a large stake in Honeywell, considered this major development and wondered whether Bancroft should alter its investment. Immediately, Gallinelli instructed her associate to provide background material on the merger, an assessment of the probability the merger would be approved by antitrust regulators in the U.S. and Europe, and valuation analyses to assist Gallinelli in assessing Bancroft's investment in Honeywell. She would need to decide quickly whether to hold or sell her fund's 10 million shares in Honeywell and short position of 10 million shares in GE. As a risk arbitrageur, she thought prices would respond rapidly to the EC's announcement. She remembered Jack Welch's confidence of five months earlier that this was the “cleanest deal you'll ever see,” and she wondered whether that was still the case.

This case provides an opportunity for students to (1) understand the calculation of a number of basic financial ratios, (2) analyze a set of common-size balance sheets and several financial ratio metrics, (3) hypothesize how some basic understanding of an industry should be reflected in certain financial indicators, and (4) present to their classmates a rationale for their pairings and to respond to questions from their classmates. If instructors are so inclined, use of this case also provides an opportunity to (1) discuss an organizing framework for the focal ratios, (2) present the concepts of financial leverage and the DuPont ratio model, and (3) introduce students to some of the published sources for industry metrics.

This case provides financial ratios and common-size balance sheets for 13 “mystery” companies. Students are asked to match each mystery company's data to one of the 13 industries provided.

This case provides financial ratios and common-size balance sheets for 13 “mystery” companies. Students are asked to match each mystery company's data to one of the 13 industries provided.

This short case challenges students to review a series of corporate financial metrics and to match them to one of the thirteen industries listed for them.

This short case challenges students to review a series of corporate financial metrics and to match them to 1 of the 13 industries labeled and listed for them. It is suitable for MBA and undergraduate students ready to expand their basic understanding of financial metrics.