Chunghwa Telecom (CHT) Privatization - National Interest vs. Market Sentiments: Between a Rock and a hard Place

Hank Han-Chao Wang, Sebastian Keitel and Oliver Roche

This case study is about the privatization of Chunghwa Telecom. During the privatization process, the governance structure of an organization changes rapidly. This case underlines the importance of the interactions between multiple stakeholders (i.e., government officials, the senior management team, the global coordinator, the financial advisors, etc.) involved in a high profile transaction and looks at how these interactions ultimately shape the pricing strategy of the proposed IPO. Pricing strategy for an IPO is based on objective financial and operational data. However, the interpretation of these data is subjective and biased by the risk/return profile of each stakeholder involved in the transaction. This study provides a unique perspective of the IPO process. First, it explores the human side of a transaction in which the stakes are high for all parties involved, an issue not often discussed in other cases. Other questions raised include: On what basis does a company select its financial advisors and its global coordinator? What are the ultimate, and sometimes contradictory, objectives of the parties with regard to the pricing strategy? Regarding this topic, based on the same financial data, various stakeholders with different objectives ultimately reach a different price range for the shares of this formerly state-owned enterprise.


Wrigley India Pvt Limited: Leveraging Trade Promotions for Competitive Advantage

Sajjan Raj Singhvi and Rajat Gera

The Indian confectionary market consisted of sugar and non-sugar confectionary items. The confectionary market was highly fragmented with several local players. The confectionary market had been growing at over 6% but the gum-based confectionary segment was growing faster at over 10% in last few years. The principal players in this segment were Perfetti, Wrigley, Lotte, Candico and a few local players.

Wrigley acquired Joyco group from Spanish food conglomerate Agrolimen in 2004 in India. The deal further added to a long list of various brands available to Wrigley. Recently the company had been acquired by Mars. The acquired brand from Joyco, Boomer had been the undisputed leader in the bubble gum market in India since 1995. Orbit from Mars-Wrigley was also not only India’s but the world’s no. 1 sugar free chewing gum.

Mars-Wrigley India distributed its product both through organized retailers and traditional CFA-distributor-wholesaler-retailer route. 85% of food and beverage sales to consumers in India took place through traditional retail outlets such as Pan and Beedi shops, Kiryana merchants etc. Wrigley had an elaborate system of market coverage and distributors, salespeople and merchandisers performed an important role in the total system.  Wrigley India spent heavily on marketing communication. Trade promotions played an important role in increasing the sales and market share and the company’s sales force need to possess adequate skills in carrying out trade promotions and making it a success.


Musalmah Sauce: Opt for the Best

Rozhan Abu Dardak and Farzana Quoquab

This case illustrates how a processed food firm can strategize its business to increase its product sales in a competitive domestic market. Musalmah Food Industries Sdn Bhd (MFI), the manufacturer of Musalmah, a premium quality ready-to-eat sauce, had been facing fierce competition from other manufacturers of domestic and imported products in Malaysia. The intense competition led to a lower domestic sales growth. Musalmah had been retailed mostly at the supermarkets, hypermarkets and big grocery shops with the target to serve mainly the ethnic Malay consumers who traveled overseas and the outdoor types for camping or fishing activities. The sales performance for the past five years (2003 to 2008) showed a continuous increase but on a diminishing growth. Datuk Ibrahim Mohammad, the company’s CEO directed his management team to prepare a business proposal to understand how they could increase their domestic sales based on the year 2008 performance. He wanted the business proposal to be ready by 30 April as he had to present it to the company’s shareholders during the Musalmah Holding Berhad annual general meeting which had been scheduled for 25 May 2009.


Hindalco: The Novelis Acquisition

S. R. Vishwanath

The case documents a high profile cross border acquisition by an Indian company. In 2007, Hindalco, an Indian metals company, announced the acquisition of Novelis, a global leader in the production of Aluminum rolled products with operations in four continents comprising 34 operating facilities in 11 countries. The key issue in the case is how to value a loss making enterprise with messy operations. Students are required to assess the strategic motives of the firms and perform a valuation analysis. Students learn the application of alternate valuation models.


Beijing Tianyu Communications: Wining in the 3G Era  

Terence Tsai, Shaohua Lu, Gary Liu and Shubo Liu

As emerging markets such as mainland China grew to be vital for the global commercial players, leading mobile telecommunication giants increasingly turned to China for opportunities. China’s fast-expanding mobile telecommunication market became a throat-cutting battlefield for both international and local players. Among these competitors, Rong Xiuli’s Tianyu had the local advantages. In order to sustain Tianyu’s hard-earned success, Rong decided to upgrade Tianyu brand and firmly secure a foothold in the 3G era.
 
In 2002, Rong Xiuli closed Beijing Benephon, the then largest distributor of Samsung Mobile Phone in the Chinese market, and established Beijing Tianyu Communication Equipment Co. Ltd (hereinafter referred to as “Tianyu”) entering the handset manufacturing industry. Despite the growing pains in the beginning, Tianyu eventually went ahead of other domestic mobile phone manufactures. In 2008, Tianyu reached a sales volume of 24 million mobile phones and a market share of more than 6%, ranking after Nokia, Samsung, and Motorola in the Chinese mobile phone market.
 
A transition from the second generation (2G) communication technologies to the third generation (3G), however, was initiated at the end of 2008. Mobile phone manufacturers responded by investing heavily on technology upgrades. 3G also elevated the position of telecommunication operators in the industry value chain. As such, Tianyu’s advantage in the 2G market could not necessarily guarantee its success in the 3G market. Adding to the uncertainties, demands for 2G mobile phone dropped sharply due to the 2007–2008 global financial crisis.
 
Despite the oppositions from many colleagues, Rong Xiuli launched a campaign to win the 3G market, reconfiguring almost all the resources to the new business.  The case describes Tianyu’s success in the 2G mobile phone market and its entry into the 3G market.


Hynix Semiconductor: Global Pioneer

Hannah Jun, Wonseok Woo and Hyoung-goo Kang

This case reviews Korean memory manufacturer Hynix Semiconductor, Inc. within the context of the global semiconductor memory industry between 1999 and 2006. Against many odds, Hynix recovered from near-collapse in the early 2000s to become the global number two memory manufacturer by 2005. Of the reasons behind the company’s success, this case examines the internal and external factors which led to the pioneering of overseas partnerships by Hynix in the early 2000s, as well as the mechanisms with which the company used such partnerships to manage crisis.


Hospice Care Association: Turnaround of a Healthcare Nonprofit Organization

Adel Dimian and Anne-Valerie Ohlsson

This is the case of a Singapore-based nonprofit organization in need of strategic turnaround.  Funding changes from the Singapore government were the primary cause of Hospice Care Association’s (HCA) critical financial situation.  Additionally, staffing response to changes in operations was severe and negative.  Dr Akhileswaran is thrust into a position of leadership that initially overwhelms and surprises him, given that his expected role – and the role he had agreed to take on – was that of Medical Director.  The urgent need for the organization was strategic leadership, without which it is very likely that HCA would not be able to sustain its mission, and would have to close its doors.  That outcome would result in patients not being treated in their final year of life; something Dr. Akhileswaran was not able to accept as Medical Director.  The relevance and difficulty of achieving a non-profit mission, and the need for strategy and strategic leadership were key elements in this situation.


BRIDGE: The Missing Link

Sanjay Mohapatra, Lokesh Sabharwal and Ankita Sood Sabharwal

This case illustrates how a social entrepreneur can come up with innovative and creative ideas which can benefit all stakeholders. It focuses on the education sector, its problems and the lacuna where the BRIDGE has tried to fit in. The case emphasises on the decisions which the founding members had to make when it comes to the mode of delivering their idea which finally took the shape of an Education Megafest. It also underscores the decisions that were taken by these people in the course of organizing the Education Megafest of a large scale. Everything from idea conceptualization to branding of the event was done in a matter of six months and saw a turnover of around 6000 students. The case can be taught in social entrepreneurship courses to illustrate social entrepreneur chain management with community participation.


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