Case studies

Arizona Snowbowl, a ski area located in northern Arizona, experienced several years of inadequate snowfall resulting in both operating losses and negative cash flows. The CEO had to decide whether to commit $750,000 for an Environmental Impact Statement (EIS) related to a proposed $19.77 million snowmaking project that uses reclaimed wastewater. U.S. Forest Service approval was required. Data for this case were obtained from the EIS that the Snowbowl submitted to the U.S. Forest Service (USFS). Estimated skier days, revenue levels, capital costs and interest rates are provided to facilitate the decision modeling process. Students are expected to analyze the financial information and decide whether or not undertaking the EIS project is cost effective while taking into account the possibility that the regulatory and legal system might not allow the project to go forward.

The financial statements of public companies located in the United Arab Emirates provide excellent examples of the impact that reporting investments at fair value can have on net income. This is because of the wide fluctuations in securities prices and real estate prices in recent years. Using an actual company, National General Insurance, which is located in Dubai in the United Arab Emirates, this case provides examples of the impact of fair value accounting for investments under International Financial Reporting standards (IFRS), for both securities and property investments. As US financial reporting moves towards harmonization with IFRS, it is critical to understand how reporting for investments under US Generally Accepted Accounting Principles (US GAAP) compares with international reporting standards. Specific learning objectives include gaining an understanding of the reporting requirements for investments under IFRS, understanding the difference between reporting requirements for investments under US GAAP and IFRS, and understanding both the positive and negative impacts on reported net income from using fair values for reporting investments.

Accounting, corporate governance, business ethics.

MBA and EMBA.

China has largely changed its accounting practice in line with international norms. But its corporate governance structure continued to be administratively driven. Many Chinese-listed companies, especially big ones, are transformed from state-owned enterprises, with the government as their largest shareholder. It is no exception to Company C. Then what is the common pattern of accounting behaviour in China? An insight could be drawn by analysing this case.

Highlight two issues in point, namely accounting issue and governance issue. Chinese companies are now allowed to choose their accounting policies, while their top decisions are subject to government policies. Identify Company C's creative accounting by discussing China's accounting reform. In this regard, China has been relatively robust in terms of dropping its own practice and adopting western one. Discuss the corporate governance issues unveiled. What are company's performance criteria? Are they clearly established and enforced? And what about government's decision to change CEO twice in less than one year? What are the impacts on CEO's behaviour?

Teaching note.

Hospitality and tourism management; strategic management; marketing, transportation system management and human resource management.

Undergraduate in business and management and hospitality and tourism management.

This teaching case outlines the historical background, successes and challenges of the national airline of Jamaica. It shows how a national airline, which is a heritage asset and one that has provided nostalgic and sentimental value to the Jamaican people and its passengers, had to be divested. The airline has been faced with several challenges; the major one being high-operating costs, especially in light of the global economic recession. The case also highlights the various procedures carried out by the Government of Jamaica before and after the divestment arrangement and also by the acquirer, Caribbean Airlines.

The student should be able to: first, differentiate among the various strategic management terms and concepts used in the case; second, explain the importance of strategic decisions versus emotional decisions; third, assess the environmental factors that impacted Air Jamaica's operation; fourth, analyse the environmental factors that should have been considered by Caribbean Airlines before making the decision to acquire Air Jamaica; fifth, carry out a comparative analysis of the various corporate-level strategies to identify the best option for the Government of Jamaica; sixth, propose reasons why Caribbean Airlines acquired Air Jamaica.

Teaching note.

Segmentation, business impacts of decision making, hotel management.

Undergraduate Business or Finance.

The sales manager at a Caribbean hotel wonders whether to accept a large block booking at a discount rate from a group participating in an international sporting event. Do the promised publicity benefits justify the risk of turning away guests from higher paying segments?

The case should: highlight the potential for conflicts when customers from different segments with different needs and expectations find themselves in close contact with each other; identify the trade offs that may have to be made when acceptance of a large block booking might displace regular customers; and calculate the incremental financial impact of revenues from new business less revenues forgone when capacity limitations mean that some traditional business will have to be turned away to accommodate the block booking.

Teaching notes.

Strategic market entry; international business; marketing.

MBA/MA in management; international business; postgraduate.

This case is based on a real-life situation of an existing transnational firm contemplating to enter a new market in a developing country. It involves a gamut of issues ranging from firm-strategic market entry, competitive positioning, international marketing strategies (including international market segmentation) and international product lifecycle. These issues revolve on numerous theories namely theories on internationalization (motive, scope, process, scale and timing of entry) and globalization of markets (standardization versus adaptation). In the past, the market was heavily regulated and protected which makes market entry simply impossible. However, a change in government policy is opening up new opportunities for foreign providers to participate in the host country. Although the market potential is enormous, there are various factors that concern the firm in determining its market entry and marketing mix decision.

After carrying out this exercise, students are expected to be able to: evaluate a firm's internal and external position in market expansion decision; assess a country's attractiveness in terms of its potential, competitive intensity and entry barriers; identify and discuss the factors that influence firm's marketing mix decision (standardize/adapt); and determine the firm market entry and the tactical decisions.

Teaching notes.

The application of activity based costing (ABC); calculating the cost of a CNC Process using ABC; designing a pricing strategy.

The case can be used in the following courses: MBA program with specialisation in finance (to teach students the application of costing in services sector); MBA program in general management (to highlight the concept of activity based costing and its application); and under an elective course on management control systems in MBA programs (to highlight the strategy to determine price effectively).

The case highlights the application of activity based costing in arriving at cost and finally leading to development of price to be charged by KK Metals. The company wishes to compute the activity based cost of CNC process and develop the selling price for 194 precision turning services scientifically as opposed to the present strategy of being a price taker, largely on the basis of what essentially is prevalent in the local market within which KK Metals operates. The case gives an insight to numerous control variables that the management can consider while pricing its services.

The case can be used to understand management concepts such as ABC, pricing and the role of efficiency in business processes. It can be used to: teach complexities involved in identifying activity driver(s) in case of ABC as far as application to service sector is concerned; help understand the use of costing as an effective tool in pricing strategy of the company; and help students realize the significance of inputs used for calculating per hour cost.

Teaching notes are available. Consult your librarian for access.

The case covers capital budgeting practice in a real estate company in Vietnam.

The case is ideally suited for participants in MBA, Executive MBA, and Masters in Finance programmes. It can be taught near the end of a course on corporate finance/financial management. It can also be taught as an advanced topic in financial management courses.

A real estate company in Vietnam has prepared a capital budget for, what it claims is, a 600 billion VND project. The weighted average cost of capital used by the company is 10.64 percent. An analyst in a consulting company is asked to thoroughly review the capital budget of what appears to be a project that is too good to be true. Lending rates in Vietnam at this time were around 15 percent.

Participants will learn how to correctly apply the principles of computing: net after tax cash flows from a project; and weighted average cost of capital, particularly in the context of real estate companies.

Teaching notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes.