Case studies

Students act as outside analysts attempting to determine how Alfin will finance its expected growth based on sales of antiwrinkle cream.

The Arbor City Community Foundation (ACCF) was a medium-sized endowment established in Illinois in the late 1970s through the hard work of several local families. The vision of the ACCF was to be a comprehensive center for philanthropy in the greater Arbor City region. ACCF had a fund balance (known collectively as “the fund”) of just under $240 million. The ACCF board of trustees had appointed a committee to oversee investment decisions relating to the foundation assets. The investment committee, under the guidance of the board, pursued an active risk-management policy for the fund. The committee members were primarily concerned with the volatility and distribution of portfolio returns. They relied on the value-at-risk (VaR) methodology as a measurement of the risk of both short- and mid-term investment losses. The questions in Part (A) of the case direct the students to analyze the risk inherent in both one particular asset and the entire ACCF portfolio. For this analysis the students need to calculate daily VaR and monthly VaR values and interpret these figures in the context of ACCF's risk management. In Part (B) the foundation receives a major donation. As a result, the risk inherent in its portfolio changes considerably. The students are asked to evaluate the risk of the fund's new portfolio and to perform a portfolio rebalancing analysis.

Understanding the concept of value at risk (VaR); Calculating daily and monthly VaR by two different methods, the historical and the parametric approach; Interpreting the results of VaR calculations; Understanding the role of diversification for managing risk; Evaluating the impact of portfolio rebalancing on the overall risk of a portfolio.

The Arbor City Community Foundation (ACCF) was a medium-sized endowment established in Illinois in the late 1970s through the hard work of several local families. The vision of the ACCF was to be a comprehensive center for philanthropy in the greater Arbor City region. ACCF had a fund balance (known collectively as “the fund”) of just under $240 million. The ACCF board of trustees had appointed a committee to oversee investment decisions relating to the foundation assets. The investment committee, under the guidance of the board, pursued an active risk-management policy for the fund. The committee members were primarily concerned with the volatility and distribution of portfolio returns. They relied on the value-at-risk (VaR) methodology as a measurement of the risk of both short- and mid-term investment losses. The questions in Part (A) of the case direct the students to analyze the risk inherent in both one particular asset and the entire ACCF portfolio. For this analysis the students need to calculate daily VaR and monthly VaR values and interpret these figures in the context of ACCF's risk management. In Part (B) the foundation receives a major donation. As a result, the risk inherent in its portfolio changes considerably. The students are asked to evaluate the risk of the fund's new portfolio and to perform a portfolio rebalancing analysis.

Understanding the concept of value at risk (VaR); Calculating daily and monthly VaR by two different methods, the historical and the parametric approach; Interpreting the results of VaR calculations; Understanding the role of diversification for managing risk; Evaluating the impact of portfolio rebalancing on the overall risk of a portfolio.

Case (A) starts by reviewing several attempts made by three consecutive Argentine governments between 1973 and 1989 to fight the three-digit inflation rates that had troubled the country since the end of World War II. Next, the implementation of the currency peg under the broad umbrella called the “convertibility plan” is discussed and its rationale is explained in connection with the Central Bank's role in controlling inflation and market expectations. The case then outlines the fiscal reforms introduced in the early 1990s concerning public finance, market regulation, and social security. Finally, the outcomes of these policies are briefly summarized.

Argentina's currency collapse provides a vivid illustration of the perils of government control on exchange rates in an export-dependent economy. Students will learn and understand (1) the role of herding and expectations in currency collapse; (2) the interdependence of fiscal and monetary policies; (3) monetary base management and its effects on inflation; (4) the advantages and drawbacks of currency pegs; (5) the story of the late 1990s financial and currency crises.

The Global Health Initiative (GHI) is a tripartite collaboration among Northwestern University, non-profit donors, and commercial diagnostics companies. GHI attempts to bridge the gap between the market for sophisticated medical diagnostics equipment in wealthy nations and the need for point-of-care diagnostics in resource limited settings. In 2006 GHI narrowed its focus to HIV diagnostics for underserved nations. The case examines the accuracy-access tradeoff related to the roll-out of infant HIV diagnostics in Tanzania. Tanzania has a prevalent HIV/AIDS problem, particularly in children. As of 2007, Tanzania had an estimated 140,000 children infected with HIV. Existing lab-based diagnostic equipment was either inaccurate for use in infants or required highly skilled health workers. Tanzania's limited infrastructure also forced healthcare providers to choose between providing advanced care to a minority of the population and offering minimal care to the majority with poor access. A Kellogg MBA student research team performed more than thirty in-country interviews to collect data on stakeholder perceptions of three infant test concepts: the strip test, the squeeze test, and the filter paper test. Across the three tests, access decreased as accuracy increased---rural labs could not find or afford health workers skilled enough to conduct the test. In general, interviewees closely affiliated with the government preferred accuracy over access. In contrast, private health facilities had to follow fewer regulations and preferred access over accuracy. The case focuses on the decisions facing Kara Palamountain, the executive director of GHI, in her roll-out recommendations for infant HIV tests in Tanzania. It examines key factors of working in a developing country, including the need to operate in the absence of sufficient market research, balance the competing agendas of different stakeholders, and mitigate external risks such as major international funding dry

This case was written to be used as a teaching case for students unfamiliar with how to approach and analyze a typical business school case. Unlike many cases used in specific classroom settings, this case is intended to be broad enough that any single student will not have a significant advantage because of his or her background. Moreover, the case is designed to guide students' thinking in a certain direction, using open-ended and more focused discussion questions provided at the case's end.

A new director of this small brewery must prepare to vote on three issues coming before the board of directors the next day: (1) approval of the financial plan for 1993, (2) quarterly dividend declaration, and (3) incentive-compensation plan for the marketing manager. The tasks for the student are to evaluate the past and prospective financial performance of the company and to assess the extremely liberal credit and inventory terms the company is extending to its distributors. The objective of the case is to introduce and exercise tools and concepts of financial-statement analysis. Perhaps the biggest insight gained by students concerns the link between incentives and financial performance: in this case, the marketing manager is motivated to build sales volume, which he accomplishes by a dramatic buildup in receivables and inventory.

Bed Bath & Beyond (BBBY) had no long-term debt on its balance sheet. Although many analysts considered BBBY's balance sheet a strength that permitted greater flexibility, some commented on the risks of its growing cash balance. These concerns raised questions about BBBY's capital structure. In early 2004, interest rates were at an all-time low, making it an attractive time to consider issuing debt and executing either a share repurchase or a one-time special dividend. Provides a few capital structure proposals for students to analyze.

This case features Bel-Brand's efforts to position its flagship brand The Laughing Cow in the United States. The challenges in this case are twofold. First, choose a viable position for a brand after a period of high growth following the South Beach Craze. The difficulty here is that the initial driver of the brand's position, the South Beach Craze, an environmental factor, is dwindling and is not sustainable. Second, the brand was receiving pressure from global stakeholders to try to unify the positioning in the United States with the global brand positioning. These are both challenges that were faced by the marketing team and raised in the case.

This case can be used to teach the following topics: 1) Developing a sustainable positioning. This case gives students the valuable experience of making a positioning choice and supporting the rationale for the positioning chosen. Furthermore, it demonstrates how a brand maintained a position after the initial support/argument for that position has dwindled or disappeared. 2) Managing global versus local positioning. The case also showcases a real life example of where positioning in the United States was extremely misaligned from the global positioning of the brand, and how the brand responded to this. 3) Write a positioning statement. One important exercise that students could be asked to do is write a positioning statement and become more familiar with concepts such as point-of-parity (POP), point-of-difference (POD), and reason-to-believe (RTB).

A midwest hospital purchases new CT Scanners which are much faster than the existing technology. Processes in the radiology department are optimized to the older, existing scanners and technicians are unable to take full advantage of the new scanner speed. The hospital finds itself working to change the processes to suit the new scanners capabilities and take full advantage of their speed.

This case allows students to analyze process capacity and time performance in different settings and understand how process structure impacts both operational and financial performance.

The director of equipment finance at Burlington Northern Railroad Company must decide if a leveraged-lease proposal is acceptable. The case emphasizes the importance of the lessee's tax status to the value of the lease and how the perception of residual value affects the valuation for both the lessee and lessor. To value the lease properly, the student must identify the relevant cash flows and the appropriate discount rates for those flows.