Case Studies

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7-Eleven Indonesia Innovating in Emerging Markets

by Assoc Prof Marleen Dieleman, Assoc Prof Ishtiaq Mahmood and Mr Peter Darmawan

Publication Date: 15/09/2015

The global convenience store brand 7-Eleven entered Indonesia in 2009, with local player PT Modern International as the master franchisor. To differentiate the stores from other convenience stores and to cater to emerging market customers in Indonesia, the CEO combined the idea of a restaurant and a convenience store in his new 7-Eleven outlets. The 7-Eleven stores provided an affordable and convenient location for youth to hang out and have a quick bite to eat. They also offered wireless Internet and a range of services and products like fresh food and beverages. The case requires students to outline the innovative elements that explain 7-Eleven’s success in Indonesia, reflect on its scalability and sustainability, and also to advise the CEO on further strategies to strengthen 7-Eleven in Indonesia.

For NUS Business School: (Faculty only)
To obtain a free copy of the case, please contact Ms Kwok Siew Geok (bizksg@nus.edu.sg)


Olam: Accounting for Biological Assets

by Prof Yew Kee Ho, Prof Teo Chee Khiang and Mr Sitoh Kheng Hoe

Publication Date: 25/08/2015

In 2012, an equity research firm based in California accused Singapore-based Olam International Limited (Olam) of engaging in potentially misleading and dangerous accounting practices. The firm — Muddy Waters Research — further stated that Olam was on the verge of bankruptcy. The primary complaint made against Olam by Muddy Waters was that Olam allegedly made aggressive use of “non-cash accounting gains,” particularly when reporting on Olam’s biological assets. Olam’s share price tumbled after the accusations were made public. Olam defended itself by asserting that it had applied Singapore Financial Reporting Standard (FRS) 41 — Agriculture appropriately and that the fair value gains of the biological assets were justifiably derived. FRS 41, equivalent to International Financial Accounting Standards 41 — Agriculture, required Singapore-listed companies to use fair value in the measurement of biological assets. This case examines the complex challenges that valuators face when presented with different valuation models, the application of financial reporting standards and the fine balance between reliability and relevance in the accounting of assets in the real world.


Singapore Airlines: In Talks to Invest in Jeju Air

by Assoc Prof Ruth S. K. Tan, Dr Zsuzsa R. Huszar and Dr Weina Zhang

Publication Date: 26/08/2015

Jeju Air is a market leader in the South Korean low-cost carrier industry, operating more than 20 domestic and international air routes in Asian countries. In the midst of rising economic activity and the opening of more air routes in North Asia, Jeju Air is planning an initial public offering to seek capital to grow its China business.

Meanwhile, Singapore Airlines is in discussions to purchase a 20 per cent equity investment in Jeju Air. Is this investment a wise decision for Singapore Airlines? Additionally, what is Singapore Airlines’ future outlook in terms of its existing underperforming subsidiaries?

For NUS Business School: (Faculty only)
To obtain a free copy of the case, please contact Ms Kwok Siew Geok (bizksg@nus.edu.sg)


OCBC Versus Elliott Management: Acquisition of Wing Hang Bank

by Dr Emir Hrnjić and Mr Han Dong (BBA student)

Publication Date: 15/07/2015

A Singapore-based financial services company, the second largest lender in Southeast Asia, offered to acquire a Hong Kong bank, the eighth largest lender in the country, for a premium price per share. Three months later, a multi-billion hedge fund firm based in the United States had accumulated close to 8 per cent of the Hong Kong bank’s shares. According to Hong Kong’s securities law, the Singapore-based financial institution would have to acquire 90 per cent of the Hong Kong bank’s shares to successfully take the bank private, and there were only 25 days left for the company to meet this requirement. The hedge fund firm’s unspoken message was clear: raise your bid price to buy our shares or we will keep the company public at your expense.

For NUS Business School: (Faculty only)
To obtain a free copy of the case, please contact Ms Kwok Siew Geok (bizksg@nus.edu.sg


NUS Museum: Developing Branding Strategies

by Dr Wu Pei Chuan, Ms Joyce Ka Mun Ho (BBA Hons graduated student), Mr Nicodemus We Ming Ler (BBA Hons graduated student) and Ms Shirlyn Wanxia Tan (BBA Hons graduated student)

Published Date: 14/07/2015

This case addresses the challenges that the NUS Museum faces regarding its awareness amongst the NUS Community. Trina, as the new Outreach Assistant Manager, had to update herself on the NUS Museum’s current situation. Apparently, the NUS Museum’s visitorship has remained stagnant since 2008, despite consistent programming efforts. The NUS Museum is the first university museum in Singapore and was established in 1955. It is located within the main Kent Ridge campus of National University of Singapore in southwest Singapore. The NUS Museum has over 8,000 artifacts and artworks divided across four permanent collections. Donors to the collection include Lee Seng Tee and the late Ng Eng Teng. With such rich and diverse Collections to boast, what could be the factors leading to the lack of awareness amongst the NUS Community? What steps should Trina take to increase awareness amongst the NUS Community?

 


Shanda Games: A Buyout of a Chinese Family Firm

by Dr Emir Hrnjić and Prof David Reeb

Publication Date: 27/04/2015

A controlling shareholder of the NYSE-listed Chinese online gaming company Shanda Games has offered a buyout at USD6.90 per American Depository Share (ADS); each ADS consists of two ordinary shares. The offer provides a premium of 22 per cent to the stock’s Friday close. Throughout the previous year, Shanda Games’ ADS had typically traded in the range of USD3.00 to 4.50.

As Shanda Games’ independent directors attempt to evaluate the offer, they wonder: Should the shareholders accept it as it is? Should they ask for a higher price? Or should they look for the alternatives?

For NUS Business School: (Faculty only)
To obtain a free copy of the case, please contact Ms Kwok Siew Geok (bizksg@nus.edu.sg)


Temasek's Offer to Buy Olam International

by Assoc Prof Ruth S. K. Tan, Dr Zsuzsa R. Huszar and Dr Weina Zhang

Publication Date: 10/04/2015

Olam International, a publicly listed firm, was a leading agri-business with an integrated supply chain. To sustain growth, the company took on large amounts of debt to fund acquisitions and other capital expenditures. A hedge fund issued a Sell recommendation, highlighting the problems facing the company, including several years of negative free cash flows. The heated exchange between Olam and the hedge fund led to a government investment fund, Temasek Holdings, first backing Olam, and then eventually offering to buy out the minority shareholders. This scenario presents an excellent opportunity to apply the discounted cash flow analysis and relative valuation techniques to evaluate Temasek’s offer.

For NUS Business School: (Faculty only)
To obtain a free copy of the case, please contact Ms Kwok Siew Geok (bizksg@nus.edu.sg)


Suit Wars: Men's Wearhouse versus Jos. A. Bank

by Dr Emir Hrnjić, Prof David Reeb and Assoc Prof Wee Yong Yeo

Publication Date: 31/03/2015

On October 9, 2013, Jos. A. Bank Clothiers Inc., a large U.S. retailer of men's tailored and casual clothing, footwear and accessories, made a hostile offer to buy its larger rival Men’s Wearhouse. The latter made a counter-offer on January 6, 2014 in what is known as a Pac-man defence — the prey turned predator. Jos. A. Bank responded by adopting a poison pill, announcing the planned acquisition of Eddie Bauer, an outdoor apparel retailer. What started out as a simple offer had turned into a contest with multiple counter-offers and the deployment of several takeover defences. How should Eminence Capital, a New York-based hedge fund and the largest shareholder in both firms, react? How should each firm respond to the latest offer on their respective tables?

For NUS Business School: (Faculty only)
To obtain a free copy of the case, please contact Ms Kwok Siew Geok (bizksg@nus.edu.sg)


SBS Transit

By Assoc Prof Lau Geok Theng and Mr Ben Sim (NUS student)
Case for NUS International Case Competition

In September 2014, Mr Woon Chio Chong, Executive Vice President, Bus Development of SBS Transit, was wondering what changes to the organisation, strategies and operations of SBS Transit should be made to improve its profitability and pole position in the public bus transportation business in Singapore. This was following the announcement by the Singapore Government in May 2014 that public bus transportation was shifting from a privatised to a government contracting model. The bus service industry was defined by its yearly profits, service standards and safety records. Previously, the concern of profitability by bus operators resulted in neglect of routes and offerings deemed as unprofitable. The privatised model was dominated by two basic bus operators, SBS Transit and SMRT Buses. SBS Transit had a market share of 75% before the change in model and operated 5 different bus services. Formed in 1973, it evolved from a bus company to a multi-modular transport operator, retaining bus operations as a subsidiary.  Both companies kept each other in check by acting as the benchmark for the other’s performance, in the areas of service quality, reliability and punctuality. However, profits had been steadily declining with rising costs of fuel prices and labour expenses.

The government contracting model would see ownership of buses and bus infrastructure being transferred to the government, while operators vie for the rights to ply various bus routes through competitive bidding. This would lower the barrier of entry to the market and attract more bus operators into the market, increasing competition for SBS. While the initial phase of the new model would guarantee the incumbent operators an 80% of bus services, more bus services will be tendered out over time. More stringent bus arrival timings have come in place in recent years, under the Bus Service Reliability Framework, placing pressure on bus services to ensure high service standards. In the face of future competition and increased demands from the government, Mr Woon would thus have to position SBS to best tackle the challenges ahead.


Malaysian Airlines

by Assoc Prof Lau Geok Theng and Ms Wong Wan Ting (NUS student)
Case for NUS International Case Competition

Malaysia Airlines (MAS) is the national airline of Malaysia. It runs both cargo and passenger services. The airline is also a member of the One World Alliance and serves destinations in over 80 countries. In 2014, two Malaysia Airlines (MAS) flights met with mishap, flight MH370 went missing in March 2014 and flight MH017 crashed in July 2014. MAS had been losing money for three years prior to 2014 as a result of high cost and stiff competition. The airline’s largest loss in its history occurred in 2011, to the tune of RM 2.52 billion. Unprofitable routes were cut and cost cutting measures implemented. However, the tragedies of the missing and crash planes led to high number of cancellations and decline of long haul travel on the airline. Mr Ahmad Jauhari Yahya, Group Chief Executive Officer of Malaysian Airlines (MAS) was wondering what strategies MAS should adopt to reverse the impact of both tragedies.

International air travel had been growing steadily between 2009 to 2014. Revenues of the air travel industry have been increasing as well and 2013 saw an estimated $710 billion in revenues. However, higher fuel prices has made the market challenging. With increasing competition between airliners, MAS was able to differentiate itself by being one of just seven airlines nominated by Skytrax as a five-star airline. Its competitors include other five-star airliners, such as Singapore Airlines, All Nippon Airways of Japan and Qatar Airways, among others. However, the twin tragedies of flights MH370 and MH017 quickly overturned any progress MAS was making in bringing back profits. Should MAS shrink its business and eradicate most of the international routes it flies, to focus on the more profitable routes? Should it rebrand itself and if so, how?


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