Melville Corporate Finance, Inc.

Andrew Ray Lanney, Angeline Pacione and Prescott C. Ensign

Melville Corporate Finance, Inc. (Melville) is approached by a Canadian bottling equipment manufacturer to provide $3.4 million of capital investment foreign buyer financing to their customer, a rapidly expanding Chinese bottling company. The Chinese company needs to purchase the equipment and increase its production capacity to secure long-term, multi-million dollar contracts with Pepsi and Coca-Cola in Thailand. With very short deadlines, Melville’s CEO works with Export Development Canada (EDC) to assess the risks involved in offering full financing and insurance for the Chinese bottler, and must keep in mind that the Canadian manufacturer will lose the sale if the financing does not get approved. The deal presents several challenges to Melville; an unknown foreign buyer with no proven credit history, language and communication barriers, geographic distance, incongruent accounting standards, etc. As the risk variables emerge, both Melville and EDC must decide if the stakes are too high to support the transaction.

Jyothy Stoops to Conquer: The Henkel India Acquisition

Neeraj Dwivedi and P. John Ben

In the year 2011, Jyothy Laboratories (Jyothy), a small domestic player in the Fast Moving Consumer Goods (FMCG) industry in India, acquired Henkel India. Having historically followed a purely organic strategy, Jyothy made a strategic shift, by acquiring Henkel India. The case describes the circumstances leading to this acquisition from the perspective of both Henkel and Jyothy. The case outlines the intricacies involved in the entire acquisition process including the strategic motives, regulatory issues, bargaining between the parties and the postacquisition phase. There were integration issues faced by both companies, specifically since Jyothy was an Indian company and Henkel India was part of a large European multinational. The main protagonist in the case has to address the challenges his company faces after the acquisition of Henkel India.

MCM of Sung Joo Group: An MCM Licensee Wrote a Creation Myth in the Luxury Industry

Eun Jung Choi

In 1994, Sung Joo International was an international distributor of premium and luxury fashion brands in Korea. During that time, Sung Joo International successfully built partnerships with designers such as Gucci, Sonia Rykiel, Yves Saint Laurent (YSL) and Mode Creations Munich (MCM) until 1999. Due to the premillennial global financial crisis, Sung Joo International strategically terminated all their international distribution agreements in 1999 — except their agreement with MCM. The brand gained notoriety among Korean, female college students within the masstige handbag market. Therefore, Sung Joo International acted as the official MCM licensee in Korea, from 2000 to 2004. Based upon a $4 million increase in sales volume, the Sung Joo Group purchased MCM in 2005 with the intent of transforming it into a full-fledged, global luxury brand.

Since 2005, the Sung Joo Group has successfully molded MCM into an emerging, semi-luxury brand of iconic leather goods in China, the United States, Korea and Europe. Several innovative steps, such as new product designs, competitive pricing strategies, remerchandising, retail store expansions and collaborative marketing, preceded their entry into the international market. Such steps have been important for the elevation of MCM’s brand prestige.

The public image of Sung Joo Kim, founder and chairperson of Sung Joo International, has been vital to the rebuilding of MCM’s brand image. Under her leadership, Sung Joo International was officially dubbed the “Sung Joo Group.” Her presence in news media and MCM advertisements has since broadened MCM’s aspirational appeal.

MCM is currently valued at $320 to $400 million, exceeding the $250 million in sales during MCM’s 1993 preacquisition height. Within 5 years, Sung Joo Kim expects MCM to become a luxury brand that will be competitive with more established brands such as Louis Vuitton and Gucci.

Accidental Entrepreneurs: Kwench Library Solutions

MM Monippally

Kwench Library Solutions (Kwench), a Mumbai-based startup that offered library services to corporate clients (B2B2C model), looked anxiously for angel funding to establish itself and expand to other parts of India. The time — the first few months of the 2008–09 global recession — was bad. The angel investors who offered to provide INR 10 million valued the start-up at one-third of what the promoters had confidently expected. The valuation was unacceptable, but spurning the offer was fraught with additional risks. The promoters, who had given up high-paying corporate jobs and invested heavily in the start-up, had to find a way out.

LG Display’s First Module Plant in Europe

Bowon Kim, Hanyoung Kim, Jeong Eun Shim and Chanskil Shin

As of 2012, LG Display was one of the largest LCD manufacturers in the world. Headquartered in Seoul, Korea, LGD had one R&D center, twelve LCD panel plants, and nine LCD module plants in Korea, China, and Poland. As the head of his company’s Strategy and Marketing Center, Senior VP Champ Shin was evaluating one of the most important long-term strategic choices he had helped LGD to undertake in 2004. It was the company’s decision to build its first module plant in Europe. In fact, it was the first plant LGD had ever built outside Korea and China. Now he had to assess the performance of the module plant in Europe for the last 5 years since it had started manufacturing in 2007 and report the overall evaluation result to the company’s executive committee. Mr. Shin was preparing the report in two parts, one about the decision-making processes in 2004 his team had gone through to decide to build the European plant in Poland and the other about the plant’s performance since its construction completed in 2007. In the report, he planned to describe the detailed steps taken by his team when making the decision and the plant’s various performance outcomes. Shin thought he and his team had made a good choice, which was evidenced by the excellent performance observed from the module plant in Poland. Believing that his experience in making LGD’s first European operations successful would be a valuable lesson for the entire company, Shin already started to chart out the company’s next strategy.

Kraft Foods, Inc. in India — The Cadbury Acquisition

V. S. Pai and Ram Subramanian

When the United States-based Kraft Foods, Inc. (KFI) acquired the United Kingdom-based Cadbury plc, KFI got entry into the Indian market. KFI CEO, Irene Rosenfeld had targeted the developing markets as key for the company to achieve a 5% organic growth rate and the strong position of Cadbury India augured well for expanding KFI’s presence in that market. However, after nearly a year since the acquisition, KFI was moving slowly in India and appeared content to consolidate Cadbury’s market presence. Anand Kripalu, President of KFI South Asia and Indo-China and Managing Director of Cadbury India was to meet his superiors to present his strategic plan for the India operations. He had a critical decision to make regarding whether to continue consolidating the Cadbury brand in India or use Cadbury’s strong market presence to launch brands from KFI’s global portfolio.

Going Local or Global: The Case of Online Daily Deal Company TicketMonster

Seongmin Jeon and Byungjoon Yoo

TicketMonster is a deal-of-the-day coupon site which utilizes the Internet and mobile infrastructure to offer deals in Seoul and other cities around Korea on services at restaurants, cafes, spas, and so forth. Following the company’s rapid expansion, management made the decision to expand the scope of TicketMonster beyond Korea’s borders with the aim of taking on other Asian markets. To this end, TicketMonster acquired, the biggest social shopping site in Malaysia. However, it was believed that simply competing in markets across Asia would not enable TicketMonster to claim sufficient market share in light of the international expansion of Groupon and LivingSocial, two online daily deal global giants.

Furthermore, competition in the online daily deal sector in Korea had escalated as local, regional and international players vied for consumer awareness and loyalty. On top of an advertising war, competition grew to the point where several sites began selling coupons while knowingly taking a loss by lowering commissions in order to attract competitive products or services for their respective deals and at times paying for the services themselves. In mid-2011, U.S.-based LivingSocial made an offer to buy TicketMonster in order to strengthen its presence in Asia.

Considering these changes and challenges, what are the strategic issues regarding TicketMonster and how should the company deal with the offer to deploy its transfer of ownership to LivingSocial? This case will help readers form an opinion on the related management issues and analyses.

Hans Sicat and the Transformation at the Philippine Stock Exchange

Manuel C. Dioquino

The Philippine Stock Exchange, Inc. (PSE) was suffering a credibility problem in 2011. Just like the Philippine economy, the PSE was not performing well and the integrity of its leadership and decisions they made was being questioned by the public at large and the business community in particular.

Hans Sicat, a retired investment banker, was invited to join the Board of Directors with a tacit agreement that he would be elected Chairman. Events thereafter led to Mr. Sicat’s appointment as President and Chief Executive Officer of the bourse.

Hans Sicat turns around the stock exchange successfully. How he makes it look seemingly simple is the subject of this case. Hans places all transformative efforts into two “bucket lists”. All of his efforts to increase the volume of trade in the exchange are classified under Liquidity, while all efforts to restore the integrity within the bourse and its listed firms, he refers to as Governance issues. The Philippine Stock Exchange, Inc. transformation does not go unnoticed by domestic and foreign investors, and other stakeholders as well. It breaks the 5,000 point barrier.

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