Managing in the New Global Economy

Santander Consumer Finance

Harvard Business School Case 9-711-015

Gunnar Trumbull, Elena Corsi, Andrew Barron

A Spanish company has to decide if they should expand into the fragmented European consumer finance market and has to make important organizational strategy decisions in the midst of the world economic downturn that followed the 2007 U.S. credit crunch. Since 2002, the consumer finance branch of the Spanish banking Grupo Santander, Santander Consumer Finance (SCF), had grown into one of the largest European consumer finance companies capturing the recent growth in Europe of the consumer finance market. Against a background of growing concern about the sustainability of household debt levels in Europe and the United States, in 2008 the new CEO, Magda Salarich Fernández de Valderrama, had to decide if this was the right time to expand or, if instead, she should focus on consolidation. She was also facing important organizational strategy decisions. Which functions should be left to national affiliates to decide, and which should be centralized at headquarters? What processes should be standardized, and which left to local initiatives? Purchase this case

Morgan Asset Management

Harvard Business School Case 9-411-058

Boris Groysberg, Paul Healy, Sarah L. Abbott

It is 2010 and Guillermo Araoz, the equity research director at Morgan Asset Management (MAM), is considering his research budget for the year. Due to recent declines in the equity markets and MAM's sale of its mutual funds business, MAM has seen a decline in its assets under management and, consequently, in its research budget. The case describes the investment process at MAM, including how stocks are selected and portfolios are constructed, and discusses the way in which the research budget supports this process. Araoz is faced with the challenge of how best to allocate this smaller research budget without negatively impacting the firm's investment process and investment performance. Purchase this case

Lessons Learned? Brooksley Born & the OTC Derivatives Market (A) and (B)

Harvard Business School Case 9-311-044

Clayton Rose, David Lane

On May 7, 1998, the U.S. Commodity Futures Trading Commission, chaired by Brooksley Born, issued a "Concept Release" inviting public comment on the relevance and appropriateness of existing regulation of the over-the-counter (OTC) derivatives market, a market with a notional value of $29 trillion dollars. The CFTC Concept Release, often a precursor to regulatory proposals, sought analysis of "the benefits and burdens of any potential regulatory modifications in light of current market realities." The Release was not welcomed by other regulators or by the Clinton administration. Just hours after it was published, U.S. Treasury Secretary Robert Rubin, Federal Reserve Board Chairman Alan Greenspan, and Securities and Exchange Commission Chairman Arthur Levitt announced their "grave concerns" about it in an unusual joint press release that minced no words. This case explores the battle between Born, on the one hand, and a large number of policymakers, regulators, legislators, and industry representatives, on the other, over whether and how greater regulatory oversight should be applied to the OTC derivative market. Born was defeated in her efforts; OTC derivatives played a central role in the 2008-09 financial crisis.Purchase this case

Creative Capital: Sustaining the Arts

Harvard Business School Case 9-810-098

G. Felda Hardymon, Ann Leamon

Creative Capital provides grants to individual artists using a venture capital model-the money comes with guidance and governance. Artists receive money as milestones are reached and also receive guidance on managing their lives and business to increase their sustainability. But as Ruby Lerner, CEO of Creative Capital, looks to the organization's next decade, how can she ensure the sustainability of this high-touch, uniquely individual model? Purchase this case

California's Budget Crises, Tax Reform, and Domestic and International Tax Competition

Harvard Business School Case 9-710-038

Matthew Weinzierl, Jacob Kuipers

How do (and how should) governments design fiscal policies to compete in a globalized economy while meeting internal policy priorities including redistribution? In 2009, Governor Arnold Schwarzenegger repeatedly declared fiscal emergencies as California's state budget deficit reached all-time highs. The Governor and legislative leaders established the Commission on the Twenty-first Century Economy to recommend tax reforms that would improve the state's fiscal health and competitiveness. But when the Commission issued its recommendations, many of which were consistent with domestic and international trends in taxation, legislative leaders were highly critical and the prospects for reform dimmed. The case describes the political and economic contributors to California's persistent fiscal deficits and the reforms recommended by the Commission. It summarizes recent trends in taxation by U.S. states and OECD nations, relating the empirical trends to tax theory. Finally, it engages the issue of inter-jurisdictional tax competition from both positive and normative perspectives. Purchase this case

Aaron's: Household Goods for the US Base of the Pyramid

Harvard Business School Case 9-311-047

Michael Chu, Charles Smithgall

With $2.5 billion system-wide revenues, Aaron's, a major rent-to-own supplier to the US base of the pyramid, continues to grow in the recession, but CEO R.C. Loudermilk, Jr. wonders how long the company can sustain the fast growth rate of its past. Founded in 1955, and publicly listed since 1982, Aaron's success has paralleled the emergence of the rent-to-own industry as a major channel for the lower income US population to access durable household goods. In this space, Aaron has only one other large national rival, Rent-A-Center. As he faces Aaron's future growth, Loudermilk must consider continuing with the basic business model, follow his competitor into expanding the product line, or tap into underserved foreign markets. At the same time, the entire rent-to-own industry in the US is coming under attack by consumer advocates and politicians as the nation continues to battle a deep economic crisis.Purchase this case

Crisis and Reform in Japan's Banking System (A)

Harvard Business School Case 9-710-036

Rawi E. Abdelal, Laura Alfaro, Thierry Porte, Jonathan Schlefer

In 1997, amidst Japan's ongoing financial problems, Prime Minister Ryutaro Hashimoto sought to restructure the financial sector to make it more transparent and globally competitive. He hoped that this effort, dubbed the "Big Bang" after the British financial restructuring a decade earlier, would prove as successful. But the financial problems, which seemed to have abated, looked as if they might be worsening. Thus, Hashimoto had to weigh priorities. Should he focus on long-term restructuring, immediate financial rescue, or both? Might an over emphasis on long-term restructuring increase the chances that major banks could collapse? And what were the best economic and political strategies in these arenas? As a major developed economy, Japan offers an analog to the problems that faced the United States in its 2008-2009 financial crisis. Purchase this case

The Random House Response to the Kindle

Harvard Business School Case 9-710-444

Bharat N. Anand, Peter W. Olson

In early 2010, e-readers like Amazon's Kindle, and Apple's impending iPad, threatened to disrupt the book publishing industry. The case provides an overview of the industry, describes the broader trends regarding e-readers, and asks: how should major publishers like Random House respond to these trends?Purchase this case

News in the Digital World: Who Pays?

Harvard Business School Case 9-710-456

Stephen P. Bradley, Nancy Bartlett

Models to monetizing news in the digital landscape, which is real-time, searchable, sharable, multi-sourced, anytime, and any screen, were emerging in 2010. Could content creators get people to pay for what they watched, read, listened to, and shared online? Were news aggregators riding on the backs of the new content generators? Or were they providing a new stream of audience directly to new sites that needed to create innovative models to monetize their content? As more delivery models were on the horizon (location-based breaking headlines via cell phones) and more content production unhinged from a commercial entity (images captured and uploaded from personal cell phone cameras), the news industry landscape became freewheeling and individualistic. The straight-line model of content generator to distributor to reader was gone. Purchase this case

Highland Capital Partners: Investing in Cleantech

Harvard Business School Case 9-811-009

Joseph B. Lassiter, David Kiron

One day during the summer of 2008, Paul Maeder, co-founder and general partner of Highland Capital Partners (HCP), was walking with his wife around Reykjavik, Iceland, marveling at how clean the city felt and at the widespread use of naturally occurring geothermal energy to power everything from trams to buildings. ""They don't treat their air and water like an open sewer,"" Maeder thought. ""This is the way people need to live and this is the way people are going to have to start living in 10 or 20 years."" To his wife, Maeder said aloud: ""I think Highland should revisit the idea of investing in cleantech.Purchase this case

HBS Class of 2009: All Talk As They Prepare to Walk?

Harvard Business School Case 9-411-024

Rakesh Khurana Nitin Nohria, Dalia Rahman

Max Anderson, HBS Class of 2009, founded the MBA Oath Initiative. The oath was a voluntary pledge "to create value responsibly and ethically." Anderson and a team of students and faculty worked to launch the first MBA Oath Ceremony conducted on campus during Harvard graduation week.Purchase this case

Citigroup 2007: Financial Reporting and Regulatory Capital

Harvard Business School Case 9-111-041

Edward J. Riedl, Suraj Srinivasan, Sharon Katz

This case introduces 1) financial statements for banks, 2) basic regulatory capital calculations, and 3) actions Citigroup must consider under a scenario of continued losses/fair value declines in 2008 (leading to potential violation of regulatory capital). Purchase this case

Post-Crisis Compensation at Credit Suisse (A), (B), (C)

Harvard Business School Case 9-311-005

Clayton Rose, Aldo Sesia Jr.

On October 20, 2009, Brady Dougan, the CEO of Credit Suisse Group, announced a new compensation plan for the bank. The announcement had followed quickly on the heels of the G-20 meeting the prior month where, in the wake of the financial crisis, the major governments had laid out a set of guidelines for compensation in the financial industry. Credit Suisse Group was the first firm to adopt the G-20 guidelines and did so a year ahead of the suggested timetable. While responsive to the concerns of regulators and politicians, Credit Suisse's program was more than a knee-jerk reaction; the new compensation plan had been the result of a "10-year journey" to reshape the culture of the firm. After a significant investment of senior leadership time to explain the new program to employees, a significant new challenge arose. On December 9, the U.K. government announced it would impose a one-time 50% tax on bankers' bonuses greater than £25,000. Dougan and the executive team had to decide how best to fund this tax. Was it fair or appropriate to have the shareholders shoulder the burden of the tax? Similarly, was it fair to ask the U.K. employees to suffer relative to their peers in other countries?Purchase this case

JP Morgan Private Bank: Risk Management during the Financial Crisis 2008-2009

Harvard Business School Case 9-311-003

Anette Mikes, Clayton Rose, Aldo Sesia Jr.

Mary Erdoes, the CEO of JP Morgan's Asset Management business, and three colleagues provide insights into risk management issues faced by the firm's Private Bank during the financial crisis in 2008-2009. The case provides perspective on the philosophy with which they approach risk management, issues of greatest concern, tools and processes used in practice, the benefits and limitations of quantitative models and balance between the use of models and exercising judgment, and lessons learned from the crisis about risk management.Purchase this case

Harvard Management Company (2010)

Harvard Business School Case 9-211-004

Andre Perold, Erik Stafford

In February 2010, Jane Mendillo, CEO of Harvard Management Company, was reflecting on the list of issues facing Harvard University's endowment in preparation for the upcoming board meeting. The recent financial crisis had vividly highlighted several key issues including the adequacy of short-term liquidity, the effectiveness of portfolio risk management, and the balance of internal and external managers. Purchase this case

B Lab: Building a New Sector of the Economy

Harvard Business School Note 9-411-047

Christopher Marquis, Andrew Klaber, Bobbi Thomason

The founders of B Lab are on a mission to create a new sector of the economy, and are specifically focused on a three objectives: 1) Building a community of Certified B Corporations (B=Benefit) that legally expand their corporate responsibilities to include consideration of diverse stakeholder interests; 2) Advancing the public policies necessary to create a new corporate form called a Benefit Corporation and 3) Creating an investment rating system to help drive institutional investment to the emerging asset class of ""impact investments."" The case considers the challenges associated with achieving each of these objectives, let alone all three at the same time. Is B Lab's tri-partite strategy its secret sauce or its albatross?

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Driving Sustainability at Bloomberg L.P.

Harvard Business School Note 9-411-025

Christopher Marquis, Daniel Beunza, Fabrizio Ferraro, Bobbi Thomason

Describes the addition of environmental, social, and governance (ESG) performance indicators to the Bloomberg terminal. The initiative grew out of Bloomberg's broader sustainability initiatives and is an example of how committed employees can create positive social change within organizations. Issues highlighted in the case for discussion include the following: How can committed employees implement an innovative sustainability initiative within a large corporation? How can ESG data be more strategic for both Bloomberg and investors? And finally, how should the ESG data industry be structured, and what impact does ESG data have on the future institutionalization of sustainability?

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Freddie Mac: Managing in Conservatorship

Harvard Business School Case 9-411-048

Robert Steven Kaplan, Nitin Nohria, Ben Creo

Ed Haldeman has recently become Chief Executive Officer of Freddie Mac, one of three major government sponsored enterprises (GSEs) charged with supporting U.S. residential mortgage finance. The company was placed into conservatorship by the US treasury on September 7, 2008. Conservatorship places various restrictions on Haldeman and the organization in terms of management. Haldeman's challenge is to lead Freddie Mac, build its culture, upgrade its operations and generally prepare the organization for re-emerging from conservatorship. In the background, housing prices continue to deteriorate and the company continues to lose money. In addition, political views continue to shift regarding the future regulatory and equity ownership frameworks for Freddie Mac as it emerges from this difficult period. Purchase this case

Note: Regulation of Hedge Fund Managers in the U.K. Before and After the Global Financial Crisis

Harvard Business School Note 9-311-014

Robert Pozen, Benjamin Schneider

This note will examine the regulatory framework for hedge funds in the United Kingdom (UK) before and after the financial crisis of 2008. First, it will discuss European Union (EU)-level regulation that applies to the UK as an EU member state. Second, it will discuss UK-specific regulation. Finally, this note will cover anticipated changes to regulation, both at the EU-level and within the UK, resulting from the financial crisis.Purchase this note

Societe Generale (A) and (B): The Jerome Kerviel Affair

Harvard Business School Case 9-110-029

Francois Brochet

This case illustrates the tension/balance that firms with complex and risky business models must consider in designing their internal controls. It describes the environment in which a derivatives trader engaged in massive directional positions on major European stocks and indexes without being detected for over a year. Although the case could be used to teach the basics of internal controls, it is likely to be more effective by eliciting a debate about how predictable the incident was, and whether or not there was anything fundamentally flawed about the company's choices in terms of strategy, control systems and culture. It also provides an opportunity to discuss the challenges of dealing jointly with a market-wide crisis (subprime) and a company-level crisis.Purchase this case

Chrysler Fiat 2009

Harvard Business School Note 9-809-165

J. Bruce Harreld, Paul Marshall, David Lane

In spring 2009, Chrysler entered a prepackaged bankruptcy and exited 40 days later in a deal with Fiat, the U.S. Treasury, and the UAW that kept the automaker alive. Looking forward, what was necessary for Chrysler to move beyond the life support it had received? What was possible? Looking back, how should the company's restructuring be assessed?

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The Southeast Bank of Texas in the Financial Crisis

Harvard Business School Case 9-310-141

Robert Pozen, Benjamin Schneider

The Southeast Bank of Texas, like most other financial institutions in the U.S., has fallen on hard times during the financial crisis of the past year. Now, in March 2009, the bank is faced with several choices as a result of the new reforms spawned from the financial crisis: the FDIC's Temporary Liquidity Guarantee Program and the U.S. Treasury's Capital Purchase Program. Additionally, the implementation of BASEL II has left new regulations in place for capital requirements for banks. Irwin Greff, President and CEO of the Southeast Bank, faces several decisions on how to proceed with these new policies that will surely shape the future of the bank. Purchase this case

ProPublica

Harvard Business School Case 9-410-140

Michel Anteby, Philippe Bertreau, Charlotte Newman

Stephen Engelberg, ProPublica's managing editor, entered the organization's newsroom located in lower Manhattan on September 16, 2008. He knew a historical financial debacle was happening at his doorstep yet that none of his journalists were covering that beat. It would take much efforts to get up to speed on the story. Uncovering what caused the recent turmoil in financial markets and Lehman's failure would require skills, knowledge of financial services, and connections within the industry. ProPublica had been created only a year earlier as an independent, non-profit newsroom focused on investigative journalism. It was now fully staffed with close to 30 members, including journalists who had joined partly because of the promise of editorial latitude they were offered. As Engelberg weighed his various options, he knew all the major U.S. newsrooms were heading full speed to allocate resources covering the developing debacle. ProPublica needed to live up to the public's expectations. Should he assign the story to ones of his journalists and, if so, whom? Alternatively should he hire new talent? In that case who would be a good fit? Moreover, how might this impact ProPublica's model and culture?Purchase this case

Bank of America Acquires Merrill Lynch

Harvard Business School Case 9-310-092

Robert Pozen, Charles E. Beresford

On December 22, 2008, Bank of America (BofA) chairman and CEO Ken Lewis convened a special board of directors meeting to review his company's pending acquisition of investment bank Merrill Lynch. Negotiations for the acquisition had begun a few months earlier, during the disastrous week in September in which Lehman Brothers declared bankruptcy. Initially both Merrill and BofA viewed their agreement favorably, but in the intervening months, as Merrill's anticipated losses ballooned and the government stepped in with such programs as the TARP, BofA found itself tied to a financial anchor with a hard-line from the government that prevented BofA from abandoning ship. This case provides background on the financial crisis and the chain of events between September and December of 2008 in which Merrill, BofA, and the government attempted to negotiate the acquisition. This case focuses class discussion on several decisions-whether BofA should have initially agreed to buy Merrill Lynch, whether it should have accepted capital contributions from the Treasury, and how it should have responded to the deterioration in Merrill Lynch's position in the first quarter. Purchase this case

Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis

Harvard Business School Case 9-710-069

Aldo Musacchio, Andrew Goodman, Claire Qureshi

On November 25, 2009, the city state of Dubai stunned markets by announcing that Dubai World, its flagship state holding company, would seek a six-month "standstill" on at least $4 billion U.S. dollars of its $26 billion in debt obligations. This case describes Dubai's development strategy in detail and narrates how, as part of that strategy, a series of state-owned holding companies accumulated billions of dollars in debt. The (A) case ends as Sheikh Ahmed bin Saeed, chairman of Dubai's Fiscal Committee, has to decide what to do about the financial troubles of Dubai World and other state-owned holding companies. The case presents Sheikh Ahmed bin Saeed having to decide among three options: the Dubai government can guarantee the debt, they can renegotiate the debt, or they can walk away (i.e., default). The (B) case describes the decision and the reactions to this decision around the world and presents a new decision on the part of bond holders of Dubai's state-owned holding companies. The (C) case briefly analyzes the advantages and disadvantages of Dubai's bankruptcy procedures, both for investors and for the holding companies of Dubai. Purchase this case

Live Nation Faces the Music

Harvard Business School Case 9-709-441

Stephen P. Bradley, Frank V. Cespedes, Kerry Herman

In 2008, concert producer and promoter Live Nation, faces a decision about its strategy in light of the tumultuous changes in the music industry and the increasing power of the major artists. As the music business once again recreates itself in response to new technologies and consumer needs, this major player is considering focusing on its principal business of concert booking and related revenue, or moving forward with its efforts to take advantage of new opportunities in the music industry by forging comprehensive, and often expensive, relationships with artists and other clients. Purchase this case

Barclays Wealth: Reignite WAR or Launch AlphaStream?

Harvard Business School Case 9-310-090

Lena G. Goldberg, Elisa Farri

In late January 2009, Thomas Fekete, Managing Director at Barclays Wealth in London, redeemed the most illiquid positions in the so-called Wealth Absolute Return Fund (WAR), one of Barclays Wealth's most promising offshore funds of hedge funds, and halted the Fund's investment activities. For Fekete, the decision to declare the WAR funds a ''failed experiment"" marked a turning-point. In May 2009, money from the redeemed underlying funds would become available, and by that date, he had to develop a new investment strategy. Fekete faced two options. Option one was to revive the WAR Fund. Option two was to shelve the WAR Fund and launch a new fund of UCITS regulated funds domiciled in Europe with UCITS qualification. Which strategy would be the best way to invest during this period of crisis, to the benefit of both Barclays Wealth and its clients??Purchase this case

Lincoln Financial Meets the Financial Crisis

Harvard Business School Case 9-310-137

Robert Pozen, Peter Spring

In March of 2009, Lincoln Financial Group's CEO Dennis Glass was facing a difficult decision as to how he would replenish his company's capital, which could quickly fall to dangerously low levels as a result of the financial crisis. Though the cost of raising capital in the private sector was much higher than a government bailout, the latter also came with strings attached, including restrictions on executive compensation, limitations on dividends and potential damage to the company's brand among its stakeholders. Glass needed to weigh the pros and cons of private capital versus federal assistance, or somehow combine the two. This case reviews the impact of the financial crisis on the life insurance and annuity industry by analyzing the options available to Glass at Lincoln Financial.Purchase this case

Milliway Capital & Martin Smith: November 2008

Harvard Business School Case 9-810-088

G. Felda Hardymon, Matthew Rhodes-Kropf, Ann Leamon

Martin Smith, a recent MBA graduate, has just joined a top-tier venture capital firm in the difficult environment of late 2008. One of his first assignments is to review three companies in a partner's portfolio and recommend strategies for managing them. In addition, the partner also has an opportunity to invest in a long-desired company at a good price. Each company presents different potential risks and rewards, both financial and reputational, for Milliway, the partner, and Martin.Purchase this case

India: The Road to Inclusive Growth

Harvard Business School Case 9-710-046

Lakshmi Iyer, Jonathan Schlefer

In 2010, India faced the challenge of achieving the twin goals of double-digit GOP growth and inclusive development. Would the Congress party, which won a strong electoral mandate in 2009, be able to achieve these goals in a context of rising internal conflict, fiscal constraints, regional instability, and a global economic slowdown?Purchase this case

Breaking the Buck

Harvard Business School Case 9-310-135

Robert Pozen, Elizabeth M. Leonard

This case provides a brief history and explanation of money market funds, the phenomenon known as "breaking the buck," and how the government's assistance changed the landscape of money market funds in the last months of 2008 and into 2009.Purchase this case

From Imitation to Innovation: Zongshen Industrial Group.

Harvard Business School Case 9-610-057

Willy Shih, Nancy Dai

The case traces the development of capabilities in the Zongshen Industrial Group, how it used the early imitation phase to foster rapid technological learning and upgrading, and how it used a unique corporate structure and listing strategy to finance the acquisition of important technologies. Purchase this case

Target: Responding to the Recession

Harvard Business School Case 9-510-016

Ranjay Gulati, Rajiv Lal, Catherine Ross

Within 10 months of Gregg Steinhafel's taking over as CEO at Target, the U.S. was mired in the most significant economic downturn in 50 years. Top competitor Wal-Mart had positioned itself well for the crisis, while Target's same store sales began to slide.

Investment Technology Group

Harvard Business School Case 9-310-064

Clayton Rose, David Lane

Investment Technology Group (ITG) CEO Robert Gasser wondered if the financial crisis had permanently affected the firm's business model. Adjusting its customer portfolio meant that ITG would be pulling back products from some clients while reaching out to others in new ways, and he was unsure how clients would respond.Purchase this case

Friend Bank: The Time for Hope

Harvard Business School Case 9-310-070

Clayton Rose, Aldo Sesia Jr.

In 2010, Friend Bank was entering the fifth year of Harris Johnson's ambitious 20-year growth plan to transform her family's one branch community bank into an institution with a substantial presence in southeastern Alabama. Harris Johnson was pleased, so far, with the results. Strategically they had exceeded expectations in opening a second office and execution of the plan was going well. And while the financial and economic crisis that began in 2008 had affected the financial results, it also presented Friend with competitive opportunities. Nonetheless, realizing her ultimate goals for Friend would not come easily.Purchase this case

The Credit Crisis of 2008: An Overview

Harvard Business School Case 9-110-048

V.G. Narayanan, Fabrizio Ferri, Lisa Brem

This case examines the causes and consequences of the credit crisis of 2008 from a national and global perspective and explores the actions taken and proposed by the U.S. and European governments. Purchase this case

The HLB Turnaround

Harvard Business School Case 9-810-023

Lynda Applegate, Bhaskar Chakravorti, Laura Winig

Ford Pearson has recently taken over as CEO of HLB, a Chicago-based product design and development firm (and once one of the largest in the business), to help turn it around after a series of crises that had seriously threatened its survival. Pearson has personally invested in the firm, re-organized many aspects of its operations and has hired a younger executive and turnaround expert, Andrew Macey, as COO to help him in the effort. Pearson and Macey have several options to consider: Should HLB raise $1 million in debt financing and focus on a turnaround or should it approach a private equity investor and raise an additional $4 million and pursue a more aggressive productivity improvement plus growth strategy? While they consider these options in September 2008, the credit markets are about to clamp shut as a global financial crisis is around the corner.

Goldman Sachs: A Bank for All Seasons (A), (B) and (C)

Harvard Business School Case 9-310-055

Lena G. Goldberg, Tiffany Obenchain

Facing the worldwide financial crisis, Goldman Sachs CEO Lloyd Blankfein considered his options including whether his company could avoid a forced marriage and what steps Goldman Sachs should take to try to restore confidence in financial services companies. Purchase this case

Central Europe after the Crash: Between Europe and the Euro

Harvard Business School Note 9-710-047

Diego Comin, Dante Roscini, Elisa Farri

This note briefly reviews the financial crisis in central Europe in late 2008, and summarizes how four central European countries--Poland, the Czech Republic, Hungary, and Slovakia--have coped with the economic downturn. Purchase this note

The Robin Hood Foundation

Harvard Business School Case 9-910-026

Alnoor S. Ebrahim, Cathy Ross

Created by hedge fund and financial managers, the Robin Hood Foundation fights poverty through grants to nonprofit organizations. As the global financial crisis continues to impact the poor disproportionately, the Foundation needs to ensure that its funds are being spent on the most effective poverty-fighting programs. The organization's senior vice president, Michael Weinstein, has developed a benefit-cost (BC) approach to analyze the performance of program grants. How effective is the method? Is funding programs with the highest BC ratios a good way to fight poverty? In three or five years' time, how will Robin Hood know if it is succeeding?Purchase this case

Dubai in Crisis

Harvard Business School Case 9-710-061

Noel Maurer

On November 25, 2009, the small city-state of Dubai shook financial markets across the world when the Dubai World holding companies announced that it would ask its creditors to standstill its debts. After three decades of phenomenal growth, something had gone off the rails with Dubai's development model. What caused the trouble? Was it simply a temporary setback or a sign that the city-state needed to change its business model? Could Dubai maintain its independence from Abu Dhabi in the wake of the bailout? And if the emirate's current model was not sustainable, then how exactly should it change? This case explores all these issues, in light of the Great Recession, the geopolitical context, and Dubai's history.Purchase this case

Tata Nano-The People's Car

Harvard Business School Case 9-710-420

Krishna G. Palepu, Bharat N. Anand, Rachna Tahilyani

The case explores how Tata Motors, India's largest automobile company, developed the Nano, the world's cheapest car. The case focuses on the translation of Ratan Tata's (chairman of Tata Motors) vision of a safe affordable car for the masses by Ravi Kant, managing director of Tata Motors into the Nano Project. The case raises questions around breaking the price-quality barrier and changing existing internal processes to accommodate revolutionary new ideas. The dilemma of success-Tata Nano was a runaway bestseller-left Tata Motors debating how large a bet they should make on the Nano and what kind of capacity commitment this requires. Purchase this case

Chrysler's Sale to Fiat

Harvard Business School Case 9-210-022

C. Fritz Foley, Lena G. Goldberg, Linnea Meyer

This case provides students with an opportunity to analyze the restructuring of Chrysler in the midst of the financial crisis of 2008-2009. It describes how debtors can use section 363 of the U.S. Bankruptcy Code to sell assets quickly. It allows for discussion of who benefits and who loses in such restructurings, and it also raises a variety of policy issues concerning 363 sales and the appropriate role of government entities in restructurings. Purchase this case

Bank of America-Merrill Lynch

Harvard Business School Case 9-910-026

Guhan Subramanian, Nithyasri Sharma

In September 2008, as Lehman Brothers struggled to survive, John Thain, CEO of Merrill Lynch, realized that his bank was also on the brink of failure. Throughout the weekend of September 13-14, 2008, Thain successfully negotiated a deal with Ken Lewis, CEO of Bank of America, for BofA to acquire Merrill. However, throughout the fourth quarter of 2008, Merrill's financial condition deteriorated at an alarming rate, with expected 4Q08 losses ballooning from $5.3 billion in November to over $12 billion by mid-December. Shareholders of both companies approved the deal on December 5, 2008, but soon after, Lewis telephoned Fed officials and declared he would invoke the MAC clause to exit the deal unless Fed officials provided government financial assistance. Fed officials instructed Lewis to "stand down" and not to invoke the MAC clause. As he convened his Board on December 22, 2008, Lewis had to make a decision. Should he close the deal "for the good of the country?" Or should he declare a MAC and exit the deal, potentially invoking the wrath of the U.S. government. Was there another way?Purchase this case

Global Diversity and Inclusion at Royal Dutch Shell

Harvard Business School Case 9-610-056

Sandra Sucher, Elena Corsi

Royal Dutch Shell has been among the early players to implement diversity and inclusion policies in the 1990s, first in the U.S. and then globally. In May 2009, Peter Voser, CFO and soon-to-be CEO, wants to adjust the company's business, headcount and cost levels to adapt to changing economic conditions after one of the worst economic downturns in decades. His all male Executive Committee has raised eyebrows since it is a step back from that of his predecessor, and he must decide whether to continue to promote the firm's emphasis on global diversity and inclusion while it restructures its business and reduces its managerial workforce. Purchase this case

Social Media

Harvard Business School Case 9-510-095

Sunil Gupta, Kristen Armstrong, Zach Scott Clayton

This note describes the rapidly changing environment of social media and how managers can leverage it. Purchase this note

Apple Inc. in 2010

Harvard Business School Case 9-710-467

David B. Yoffie, Renee Kim

On April 4, 2010, Apple Inc. launched the iPad, the company's third major innovation released over the last decade under its iconic CEO Steve Jobs. Apple's strategy of shifting its business into non-PC products had thrived so far, driven by the smashing success of the iPod and the iPhone. Yet challenges abounded. Macintosh sales in the worldwide PC market still languished below 5%. Growth in iPod sales was slowing down. iPhone faced increasing competition in the smartphone industry. And would Apple's latest creation, the iPad, take the company to the next level?Purchase this case

Greenbriar Growth Partners and Microsurgery Devices

Harvard Business School Case 9-310-060

Nabil N. El-Hage, Kristin Meyer

GGP, a venture capital firm, has been an investor in Microsurgery Devices (MSD) for 4-plus years, and has come into conflict with the company's founder. Should the Board's nominating committee re-nominate the VC investor, and should the board go along with the VC's push for a stock buy-back in the midst of the financial crisis, and so soon after the company's IPO? Purchase this case

Mercadona

Harvard Business School Case 9-610-089

Zeynep Ton, Simon Harrow

This case presents the predicament of a company trying to do right by its customers and its employees as the economic crisis of 2008 hits home. Fifteen years earlier, this Spanish supermarket chain had adopted its own version of total quality management, called the Total Quality Model, switching from the industry's traditional high-low pricing to "always low prices" and continuous improvement. These changes called for a well-trained, empowered, and enthusiastically engaged workforce dedicated to providing the best products and service to their customers, who were always and seriously referred to as "the Bosses." The Total Quality Model had been a success in terms of company growth and profitability, sustained by the success of Mercadona's unusually high investment in employee training and satisfaction. Nevertheless, when sales growth slowed down in 2008, CEO Juan Roig concluded that Mercadona had let its customers down by not keeping prices low enough for such hard times. Mercadona set about lowering its prices, reducing product variety, and lowering its financial targets for 2009. Of the 9,200 SKUs in an average store, the company decided to eliminate 1,000. But Roig still had to decide what to do about employee bonuses. Since Mercadona did not meet its 2008 targets, the company policy was that no one-not even top management-would get a bonus. But Roig knew that his employees worked hard and well in 2008 and could not be held totally responsible for the downturn or for management's failure to react quickly enough. Purchase this case

Lehman Brothers

Harvard Business School Case 9-810-106

Tom Nicholas, David Chen

In 2008, the U.S. financial system was in a state of crisis and Lehman Brothers went from a major Wall Street investment bank to an insolvent institution. It was a swift end for a firm that had its beginnings over 150 years prior. What would be the firm's legacy? And how, if at all, had its activities changed the course of American history? Purchase this case

Lyondell Chemical Company

Harvard Business School Case 9-210-001

Stuart C. Gilson, Sarah L. Abbott

Hit with an industry recession and the global financial crisis of 2008, in January 2009 LyondellBasell Industries AF S.C.A., one of the world's largest internationally diversified chemical companies headquartered in The Netherlands, placed its U.S. operations and a German subsidiary under U.S. Chapter 11 bankruptcy protection. To successfully reorganize as a going concern, the company sought to raise over $8 billion in a super-priority "Debtor-in-Possession (DIP)" loan from a group of 13 financial institutions, including commercial banks, investment banks, hedge funds, and private equity funds. Representing one of the largest DIP loans in history, this financing was considered critical to the company's survival. One unique and controversial feature of the financing was a $3.25 billion "roll-up" facility, under which a number of Lyondell's pre-bankruptcy lenders were allowed to significantly elevate the priority of debts they were already owed (so that they ranked ahead of all other pre-bankruptcy debts owed by the company), provided the lenders advanced new loans to the company to help finance its restructuring. With a costly liquidation as the alternative, various creditor groups objected to the DIP financing package, putting Lyondell's reorganization, and survival as a going concern, at significant risk. Purchase this case

Local Motors: Designed by the Crowd, Built by the Customer

Harvard Business School Case 9-510-062

Michael I. Norton, Jeremy B. Dann

In the wake of the meltdown among US auto manufacturers in 2009, Jay Rogers - CEO of Local Motors - has a new approach for the automotive industry: Decide which models are produced through online design competitions, and then allow customers to ""build their own cars"" from the winning designs. The case focuses on two key issues: Can Local Motors build a thriving online design community at a reasonable cost? And can customers be convinced to add their own sweat and labor to the manufacturing process? The case is written from the perspective of a start-up company seeking funding while trying to implement a novel business concept.Purchase this case

Ebro Puleva

Harvard Business School Case 9-510-026

David E. Bell, Antonio Garcia de Castro, Rocio Reina Paniagua, Mary Shelman

Once Spain's largest sugar company, Ebro Puleva has been transformed through a series of international acquisitions into the world's largest package rice company and second largest pasta company. In 2009, Chairman Antonio Hernandez Callejas must decide how to proceed now that the firm's sugar business has been sold. A specific question is whether the firm should sell its dairy business, which is limited to Spain. The case discusses the firm's branding strategy, approach to integration, and organizational structure used to manage a global business. The case also describes several changes in consumer behavior and the retail food market brought on by the global financial crisis.Purchase this case

The Congressional Oversight Panel's Valuation of the TARP Warrants (A) and (B)

Harvard Business School Case 9-210-035 and 9-210-036

Carliss Y. Baldwin

The Congressional Oversight Panel wants to value the warrants issued to the government in connection with the TARP investments of 2008, in order to increase the transparency of options repurchases. The case describes the methodology used to value the warrants. Students have the opportunity to value warrants issued by ten of the largest banks, and to evaluate whether the Black-Scholes model can be used to value these very long-lived (ten-year) options. Can be used to teach basic option valuation using Black-Scholes, but also raise dynamic hedging issues of interest to advanced students.Purchase this case

Neoprene

Harvard Business School Case 9-810-084

Tom Nicholas and Felipe Tâmega Fernandes

In 1931, during one of the worst economic crises in US history, Du Pont announced the discovery of an innovative rubber synthetic product - neoprene. Yet at the time of the announcement, Du Pont did not have any neoprene to sell. Manufacturing facilities were still being erected and production remained at laboratory scale. Rubber synthetics had been developed in Russia, Germany and even in the United States before, but large scale production had never taken off. Would Du Pont's announcement and public disclosure of the basic science lift the barriers to commercialization? What made Du Pont so confident that it could succeed at this uncertain time? Purchase this case

Google in China

Harvard Business School Case 9-510-071

John A. Quelch

In January 2010, Google threatened in a public statement to stop censoring its search results on its google.cn website, as required by Chinese authorities. Should Google exit China? Or attempt a compromise with the Chinese government? Purchase this case

NovoCure Ltd.

Harvard Business School Case 9-810-045

William A. Sahlman, Sarah Greene Flaherty

Venture capitalist William Doyle must raise $35 million for a portfolio company with a promising, novel cancer therapy, just as global capital markets are imploding in the fall of 2008. NovoCure, Ltd., has developed an electrical-field-based therapy, called Tumor Treating fields, for the treatment of cancerous tumors. The therapy has shown significant efficacy with no side effects after five years of testing in human patients. Doyle believes NovoCure has the potential to become an important company with a major new cancer therapy platform, but must complete pivotal (Phase III) clinical trials and receive FDA approval. Doyle's venture capital firm, WFD Ventures, has invested $25 million in three rounds to fund pilot clinical trials for glioblastoma and other non-small cell lung cancer, and the first pivotal clinical trial for glioblastoma. Additional financing is needed to proceed with the strategically important second pivotal trial. In the fall of 2008 Doyle was negotiating the final terms of an investment by two prominent hedge funds when the liquidity crisis caused the hedge funds to withdraw from the transaction. Dole must now reevaluate his options for securing the needed financing for this promising young company Purchase this case

The University of Notre Dame Endowment

Harvard Business School Case 9-210-007

Andre Perold, Paul Buser

The Endowment Model of Investing, which was based on creating high risk-adjusted performance through diversification, a long time-horizon, top-notch outside managers, and illiquid investments, had served Notre Dame and other large universities well over the past several decades. Scott Malpass, Notre Dame's Chief Investment Officer, was confident that this was a successful way to invest if implemented effectively, but he also saw the top university endowments experience 25% 35% declines in portfolio value during the second half of 2008 that eviscerated the investment gains from the past several years. Notre Dame had weathered the crisis relatively well but there were several key questions Malpass had to address. Should Notre Dame continue to make illiquid investments in the context of rising unfunded commitments relative to liquid funds? Was compensation adequate for the illiquidity of these types of investments? In relation to manager selection, how could the Notre Dame investment team continue to find the best managers to create alpha? To what extent would the performance of managers during the crisis be predictive of future performance in other portions of the economic cycle? How would the long-established industry terms of contract between clients and managers change going forward? Was there an opportunity for clients to negotiate better terms? These issues all needed to be addressed in the context of protecting the University's operating budget and supporting the mission of the institution. Purchase this case

The Investment Fund for Foundations (TIFF) in 2009

Harvard Business School Case 9-210-008

Luis M. Viceira, Brendon C. Parry

The Endowment Model of Investing, which was based on creating high risk-adjusted performance through diversification, a long time-horizon, top-notch outside managers, and illiquid investments, had served Notre Dame and other large universities well over the past several decades. Scott Malpass, Notre Dame's Chief Investment Officer, was confident that this was a successful way to invest if implemented effectively, but he also saw the top university endowments experience 25% 35% declines in portfolio value during the second half of 2008 that eviscerated the investment gains from the past several years. Notre Dame had weathered the crisis relatively well but there were several key questions Malpass had to address. Should Notre Dame continue to make illiquid investments in the context of rising unfunded commitments relative to liquid funds? Was compensation adequate for the illiquidity of these types of investments? In relation to manager selection, how could the Notre Dame investment team continue to find the best managers to create alpha? To what extent would the performance of managers during the crisis be predictive of future performance in other portions of the economic cycle? How would the long-established industry terms of contract between clients and managers change going forward? Was there an opportunity for clients to negotiate better terms? These issues all needed to be addressed in the context of protecting the University's operating budget and supporting the mission of the institution. Purchase this case

BlackRock Money Market Management in September 2008 (A)

Harvard Business School Case 9-209-101

Kenneth A. Froot, David Lane

This case highlights the issues around money market mutual funds in the financial crisis of 2008. Purchase this case

Tengion: Bringing Regenerative Medicine to Life

Harvard Business School Case 9-510-031

Elie Ofek, Polly Ross Ribatt

Tengion is a young biotech company that is at the frontier of regenerative medicine; a nascent field that seeks to promote the creation of new cells and tissue to repair or replace tissue or organ function lost due to age, disease, damage, or congenital defects. In late 2008 Tengion management faces a difficult dilemma. In light of the financial crises, the company needs to manage cash burn by prioritizing its R&D efforts. CEO Nichtberger needs to recommend to the board which of two promising new medical treatments to keep developing while placing the other on hold. In comparing the two options, a host of factors need to be considered-- these range from assessing the regulatory challenges, manufacturing challenges, marketing challenges (in particular pricing), and partnering challenges. Each of the treatments would target a unique patient population, that differ in both size and composition. Tengion must also consider how quickly it might expect to bring each of the two treatments to market. The decision could have significant long-term implications for the company's ultimate survival and success. Purchase this case

Gucci Group: Freedom within the Framework

Harvard Business School Case 9-109-079

F. Asis Martinez-Jerez, Elena Corsi, Vincent Dessain

In September 2008, during the global economic downturn that followed the credit crunch crisis, Robert Polet, the CEO of the Gucci Group, had learned that after four years of growth, the Group's largest business, the fashion brand Gucci, would report a slowdown for the first semester. Polet had joined Gucci in 2004 after 26 years at one of the largest consumer goods companies Since his arrival, the Gucci Group had grown both in revenues and profitability. Part of his secret was his decentralized management style. Polet was worried because the economic crisis was reaching out the luxury world. He knew that he should leave the primary decisions for the Gucci brand to Lee. Yet, given the urgency of the situation, Polet wondered if more involvement from him in the brand's decision making process would not be more effective. Purchase this case

Citigroup-Wachovia-Wells Fargo

Harvard Business School Case 9-910-006

Guhan Subramanian, Nithyasri Sharma

In late September 2008, amidst the spiraling financial crisis, many firms on Wall Street were in a precarious position. One such institution was Wachovia, which entered acquisition talks with Citigroup and Wells Fargo. This case describes the development of these negotiations throughout the week of September 26-October 3, 2008 and explores the role of a company's Board of Directors and the role of government regulators, particularly the FDIC, during times of crisis. Purchase this case

Citigroup's Exchange Offer (A)

Harvard Business School Case 9-210-009

Robin Greenwood, James Quinn

Citigroup faced considerable distress in early 2009. In late 2008, the bank had accepted $45 billion in preferred equity from the United States government via the Troubled Assets Relief Program (TARP). Yet, the stock had continued to slide in early 2009. In late February, the company announced that it would convert as much as $50 billion of preferred stock into common stock, at $3.25 per share. The case asks students to evaluate the pricing of preferred stock relative to common stock at this time. As the case takes place during a period of considerable uncertainty in global capital markets, and conventional sources of arbitrage capital have been depleted, the apparent mispricing may not be as attractive as it initially seems. Purchase this case

Transworld Auto Parts (A)

Harvard Business School Case 9-110-027

V.G. Narayanan, Lisa Brem

Transworld Auto Parts had to implement its new strategy flawlessly to survive the auto industry upheaval. The new CEO asked her leadership team to craft strategy maps and balanced scorecards to help each division implement its strategies. Purchase this case.

The Termination of U.S. Auto Dealerships in 2009

Harvard Business School Case 9-210-017

Das Narayandas, Kerry Herman, Sarah Morton

The case chronicles the sudden termination of many U.S. autodealers in the wake of the economic crisis in the fall of 2008.

Tenova: Mining for Growth in an Economic Crisis

Harvard Business School Case 9-610-021

Gary P. Pisano, Elisa Farri, Elena Corsi

In December 2008, Gianluigi Nova, CEO of Tenova SpA, a technology and equipment supplier to the metals and mining industry, had to choose between two options. The first was to continue growing in the company's core business: equipment for the steel production. The second option offered growth in a related, but nearly new business for Tenova: the equipment for mining, mineral processing, and extractive metallurgy. They only had a small presence in this market. Yet, Nova had to cope with the worldwide economic crisis whose destructive power hit every area of the metals and mining industry. Nova had to decide which option offered the best opportunity to grow in the worst economic crisis since 1929.

Nomura's Global Growth: Picking Up Pieces of Lehman

Harvard Business School Case 9-210-017

C. Fritz Foley, Linnea Meyer

What issues commonly arise in international financial management? Kenichi Watanabe and Takumi Shibata, CEO and COO of Nomura Holdings Inc., one of the leading investment banks in Asia, have the opportunity to expand their firm internationally through the acquisition of various parts of Lehman Brothers, an insolvent global investment bank. In evaluating this opportunity, students must consider the complexities of such expansion, including the challenges posed by a multinational insolvency, the difficulties of post-merger integration in a cross-border acquisition, and more general issues related to currency hedging and international taxation.

Alacra, Inc.

Harvard Business School Case 9-810-012

Lynda Applegate, Aldo Sesia Jr.

In 2009, the CEO of Alacra, a venture-backed information services firm that provides customized data primarily to financial services firms, must decide how to respond to the global economic crisis.

A Note on Cost Reduction in Financially Troubled Organizations

Harvard Business School Note 9-809-161

Paul Marshall

This note discusses methods for reducing costs, particularly labor costs, in a financially distressed organization.

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Spain: Can the House Resist the Storm?

Harvard Business School Case 9-709-021

Diego Comin

On September 16, 2008, President Rodriguez Zapatero recognized the severity of Spain's macroeconomic situation and clearly pointed to the culprit in front of the Spanish Congress: "Let nobody doubt it; there is already a wide consensus about the origin of the crisis: [It is] in the U.S. and its subprime mortgages." During the last eight years, Spain had gone through a phenomenal expansion that has had many important ingredients: immigration, housing boom, banking and financial market regulation, current account deficit and productivity growth. This case analyzes how they interacted during the period 2000-2007 and what drove the Spanish recession in 2008.

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Risk Management at Wellfleet Bank: Abridged

Harvard Business School Case 9-110-011

Anette Mikes

Inspired by one of the few banks that successfully weathered the 2007-2009 credit crisis, the case illustrates risk management in the world of corporate lending. Chief executive Alastair Dowes has to decide if the risk governance process is adequate to uncover mega-risks, based on reflections on the risk assessment and sanctioning of a $1 bn credit proposals. Students will be invited to assess and review the risks in the proposal, and to arrive at a decision (whether Wellfleet should accept it or not). At the same time, students will learn that gray-area risk decisions and, in particular, risk-adjusted performance measurement can rarely be automated. Risk governance requires executives to strike a balance between risk modeling and qualitative business judgment - a holistic (rather than silo-based) view of risks.

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What Happened at Citigroup?

Harvard Business School Case 9-310-004

Clayton Rose, Aldo Sesia Jr.

What went wrong at Citigroup? In 1998, the Travelers Group and Citicorp merged to create Citigroup Inc., considered the first true global "financial supermarket" and a business model to be envied, feared, and emulated. By year-end 2006 the firm had a market capitalization of $274 billion, with $1.9 trillion in assets and $24.6 billion in earnings. But, ten years after the merger, it ended in tears. In July 2009, the firm was effectively nationalized, with billions of dollars in bailout money converted into a 34% ownership stake for the U.S. government. Citigroup was worth less than $16 billion, having lost more than $250 billion in value from its peak. This case examines Citi's business model, the challenges it faced, its leadership, and key decisions to better understand what contributed to the failure of one of the most powerful financial firms in the world. Purchase this case

Executive Pay and the Credit Crisis of 2008 (B)

Harvard Business School Case 9-110-005

V.G. Narayanan, Lisa Brem

As the recession lingered on into 2009, the U.S. government sought to limit executive pay and excessive risk. The debate raged over what constituted excessive risk and how best to mitigate it. This case describes the government restrictions on executive pay for TARP recipients and delves into the debate on executive compensation and incentives that encourage excessive risk. Purchase this case. Also see Executive Pay and the Credit Crisis of 2008 (A)

Note on Capital in the U.S. Financial Industry

Harvard Business School Note 9-310-005

Clayton Rose and Scott Waggoner

This note was created to supplement classroom discussion in the EC course ""Managing the Financial Firm,"" and provides background for exploring issues general managers in financial firms face in considering appropriate capital levels.

Arcor: Global Strategy and Local Turbulence (Abridged)

Harvard Business School Case 9-710-407

Pankaj Ghemawat, Michael G. Rukstad, Jennifer L. Illes

Argentine confectionery manufacturer, Arcor Group, seeks to implement an international strategy but in 2003, while recovering from the Argentine financial crisis, globalization plans are thwarted. Already Latin America's leading candy producer and an exporter to over 100 countries, Arcor analyzes how it can become truly global with production facilities and distribution networks in various regions. First, however, Arcor must stabilize its operations at home, where a devalued peso, economic uncertainty, and political instability still linger from the devastating financial crisis. Purchase this case

Target Corporation: Ackman versus the Board

Harvard Business School Case 9-109-010

Suraj Srinivasan, Krishna G. Palepu, James Weber

After 15 years of great performance, Target's faltering performance during an economic downturn led an activist shareholder to initiate a proxy fight. Target Corporation, the second largest discount store retailer in the U.S., had competed successfully against industry leader Wal-Mart for years by promoting an upscale discount shopping experience in comparison to Wal-Mart's focus on low prices. This strategy worked well for Target in good economic times. The economic crisis of 2008-2009, however, caused shoppers to abandon Target in favor of Wal-Mart. In the spring of 2009, one of Target's largest shareholders initiated a proxy fight to place his five director nominees on the board. Target won the proxy fight, but still faced questions about whether it had a strategy that could work in both good times and bad. Purchase this case

Going to the Oracle: Goldman Sachs, September 2008

Harvard Business School Case 9-309-069

Clayton Rose, David Lane

On September 23, 2008, in the midst of a historic crisis in the U.S. financial markets, Warren Buffet's Berkshire Hathaway invested $5 billion in Goldman Sachs. This case provides an opportunity to evaluate Goldman's decision to raise capital, the cost of the firm of Buffett's investment and the decision by Warren Buffett to make the investment, all in the context of a profound market crisis that may have altered the usual metrics for such decisions. Purchase this case

The First Global Financial Crisis of the 21st Century

Harvard Business School Case 9-709-057

Laura Alfaro, Renee Kim

The global economy was expected to suffer from negative growth for the full year in 2009, a phenomenon not seen since World War II. While the U.S. subprime mortgage disaster was blamed as the original instigator, it was noted that the "global imbalances" of the U.S. current account deficit funded for many years by other nations such as China was also a chief culprit of the crisis as well. Policymakers around the world recognized that the scope and scale of the financial crisis required a coordinated global response. Yet there were conflicting views on what kind of action was needed to address the first global financial crisis of the 21st century. Purchase this case

U.S. Subprime Mortgage Crisis: Policy Reactions (B)

Harvard Business School Case 9-709-045

Laura Alfaro, Renee Kim

In March 2009, the U.S. economy was in a severe recession not seen since the Great Depression after the subprime mortgage crisis had spiraled out of control. The situation had dramatically changed in one year since the Federal Reserve Board had helped to bailout investment bank Bear Stearns. Deflation, not inflation, had become a top concern. Interest rates were near zero percent. Five million jobs had been lost. The new Barack Obama administration had push forward with a $787 billion stimulus package, coupled with various programs to address the frozen credit markets and depressed investors' confidence. Yet the burning question in every policymakers' mind was--how effective would the various plans work to revive the U.S. economy? Purchase this case

Before the Fall: Lehman Brothers 2008

Harvard Business School Case 9-309-093

Clayton Rose, Anand Ahuja

This case examines Lehman Brothers in the months preceding its collapse. Following the announcement of a huge and unexpected second quarter loss, the CFO was removed from her post after only seven months in the job. This case explores the challenges faced by a firm leader as she attempts to manage a situation that threatens the firm's survival. In particular, the case allows for an examination of how changes in a firm's performance and position are communicated to key external stakeholders in an effort to retain their confidence, while market conditions worsen, the balance sheet deteriorates, and the firm's credibility is challenged by a short-selling hedge fund. Purchase this case

Kinyuseisaku: Monetary Policy in Japan (B)

Harvard Business School Supplement 709-056

Laura Alfaro, Renee Kim

Toshihiko Fukui, Government of the Bank of Japan, faced a complex situation in the fall of 2007. An economic recovery had allowed the central bank to abandon its zero interest rate policy, which had been in place for years, and raise rates to 0.5%. The Bank of Japan was eager to increase them to more 'normal' levels to exert effective monetary policy. Yet the appropriate timing and approach was a controversial issue, especially as the government did not want a rate hike that could potentially hinder economic growth and increase its already large fiscal debt burden. Purchase this supplement

Note: The Rejuvenated International Monetary Fund

Harvard Business School Note 709-050

Rawi Abdelal and Jonathan Schlefer

The International Monetary Fund was dismissed as almost irrelevant to the global economy, but during the 2008 financial crisis, it returned to center stage, providing financial rescues for developing countries. Purchase this note

Note: The Newspaper Industry in Crisis

Harvard Business School Note 709-463

David Collis, Peter Olson and Mary Furey

This note is a primer on the newspaper industry, which has been in decline in the U.S. and Western Europe. The 19th century business model whereby news and editorial content was packaged and delivered to homes daily and paid for by national advertisers has been overturned by the internet and the corresponding immediate access to global information. The note covers the history of newspapers, industry economics, current news consumption trends, the response of the newspapers to the threat of the internet, and vignettes highlighting newspaper business models throughout the world. Purchase this note

UBS and Auction Rate Securities (A), (B) and (C)

Harvard Business School Case 9-209-119

Daniel B. Bergstresser, Shawn Cole and Siddharth Shenai

UBS, a global financial services company, must decide whether to continue to support the market for Auction Rate Securities in the face of a growing financial crisis. These instruments, underwritten by UBS, were marketed to clients as highly liquid and safe alternatives to cash. UBS' decision becomes urgent when Citigroup, another leading underwriter of ARS, decides to let their auctions fail, leaving clients with illiquid assets of uncertain value. The case explores theoretical and practical aspects of liquidity risk, and challenges students to evaluate the benefits of honoring implicit commitments to customers against the costs of acquiring billions of dollars in illiquid assets. The (B) and (C) cases consider the implications of UBS decision. Purchase this case

Washington Mutual's Covered Bonds

Harvard Business School Case 9-209-093

Daniel B. Bergstresser, Robin Greenwood, James Quinn

Washington Mutual issued 6 billion Euro of covered bonds in 2006. The objective of the case is to ask whether these bonds are mispriced in late 2008. The case is set in September 2008, and Washington Mutual is facing considerable distress due to mounting losses on its mortgage portfolio. Following investment bank Lehman Brother's Chapter 11 bankruptcy protection filing in mid September, the price of Washington Mutual's covered bonds has fallen to 75 per 100 of face value. As these bonds are overcollateralized, the case asks students to evaluate the underlying collateral portfolio in the event of liquidation, as well as assessing the likelihood of different outcomes. Purchase this case

Chronology of the Asian Financial Crisis (revision)

Harvard Business School Case 9-708-001

Laura Alfaro, Rafael Di Tella, Renee Kim

In July 1997, Thailand became the first Asian ""tiger"" economy to abandon its fixed exchange rate system in response to speculative attacks on its currency. Investors started to flee Asia, and the crisis rapidly spread to other countries. Central banks spent billions of dollars to try and defend their currencies, only to seek emergency bailouts from the International Monetary Fund. This case presents a chronology of events that unraveled during the Asian financial crisis from 1997 to the end of 1998. Purchase this case

State Street Corporation

Harvard Business School Case 9-209-112

William E. Fruhan Jr.

State Street Corporation reports a 13% gain in EPS in 2008 amidst a global financial crisis. The stock price declines 59% on the day of the earnings report. This one-day decline was exceeded in the prior 12-month period by only one non-bankrupt S&P 500 company. That company was AIG, Inc., which declined 61% on the day Lehman Brothers declared bankruptcy. While State Street reported $5 billion in profits over the 4-year period 2005-2008, the company also sustained $10 billion in after tax mark-to-market losses on its "available for sale" investment portfolio and the investment portfolios of its conduits. The question is, how has the firm performed over the past four years? Has it earned $5 billion or lost $5 billion? Fair value accounting plays a key role in the dilemma. How should a financial services firm measure and report income in the face of disorderly and illiquid markets for its principal assets? The case also examines how management at State Street responded to the deterioration in its capital ratios generated by "fair value" accounting. Purchase this case

Barbara Norris: Leading Change in the General Surgery Unit

Harvard Business School Case 9-409-090

Boris Groysberg, Nitin Nohria, Deborah Bell

Barbara Norris struggles to address the many problems facing her as a recently promoted nurse manager in the General Surgery Unit (GSU) at Eastern Massachusetts University Hospital (EMU). She has inherited a unit with the lowest employee satisfaction scores and highest employee turnover rate among all of the departments at EMU. Furthermore, her new unit was infamous for its culture of confrontation, blaming and favoritism. The staff that has remained is dissatisfied, unmotivated and not functioning as a team to deliver patient care. In fact, GSU's patient satisfaction scores, although average, had been declining steadily over the past few years. Barbara has been asked by EMU'S Director of Nursing to turn the unit around in the midst of an economic crisis and deep cost-cutting measures throughout the hospital. Where and how should she begin? Purchase this case

Necessity and Invention: Monetary Policy Innovation and the Subprime Crisis

Harvard Business School Case 9-709-041

Aldo Musacchio, Dante Roscini

This case describes the efforts of Ben Bernanke, Chairman of the Federal Reserve, to improve liquidity in money markets during the subprime crisis. The case explains the four main new tools for monetary policy (or quantitative easing) the Federal Reserve has used between 2007 and 2009: the Term Auction Facility (TAF), the Primary Dealer Credit Facility (PDCF), the Term Securities Lending Facility (TSLF), and the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF). Purchase this case

Barack Obama and the Bush Tax Cuts

Harvard Business School Case 9-709-037

Matthew Weinzierl, Eric Werker

As his inauguration approached, President-Elect Obama faced a financial sector meltdown, a costly bailout, and massive government deficits. With the economy in recession, interest rates near zero, and joblessness on the rise, Obama needed to decide whether, and how much, to use fiscal stimulus to resuscitate the economy. To help students understand Obama's options, the case reviews both the recent tax cuts under President George W. Bush, including the supply-side and demand-management justification given for them, and the broad history of fiscal policy in the United States. Purchase this case

The Tip of the Iceberg: JP Morgan Chase and Bear Stearns

Harvard Business School Supplement 309-091

Clayton Rose, Daniel B. Bergstresser, David Lane

This case examines a seminal event in the financial and economic crisis that began in the summer of 2007, and provides background for better understanding the full scope of the crisis as it was revealed during the summer and fall of 2008. It was written to address two sets of issues. First, it provides the opportunity to understand the corporate finance issues of capital and liquidity, and of firm valuation. Second, the case allows for the exploration of aspects of a firm's internal and external governance, as well as the challenges of navigating through a crisis when faced with compelling pressures from competing stakeholders. Purchase this case

The Financial Crisis of 2008

Harvard Business School Case 9-709-036

Gunnar Trumbull

This case presents excerpts from the speeches of observers to the 2008 financial crisis, including former and current central bankers, a private banker, and a Nobel-prize winning economist. They present different interpretations of the causes of the financial crisis and make proposals about how a similar crisis might be stopped in the future. The goal of the case is to provide students with alternative perspectives and broad historical data so that they can evaluate both causes of and responses to the crisis. Purchase this case

Rosetree Mortgage Opportunity Fund

Harvard Business School Case 9-209-088

Andre F. Perold, Victoria Ivashina

In December 2008, in the midst of the worst financial crisis since the Great Depression, Rosetree Capital Management was evaluating the purchase of a pool of U.S. residential mortgages. The firm had formed an investment vehicle to acquire troubled residential mortgages from banks and other motivated sellers. The idea was to purchase mortgage loans at a discount and to work with individual borrowers to restructure their debts. Performing mortgages could then potentially be resold in the secondary market. The case provides cash flow projections in various economic scenarios that are revealing of the economics of troubled mortgages and home foreclosure. Rosetree needed to decide whether and how much to bid for the loans. Purchase this case

Financial Crisis in Asia: 1997-1998 (Abridged)

Harvard Business School Case 9-709-004

Huw Pill, Rafael Di Tella, and Jonathan Schlefer

What caused the 1997-98 Asia Crisis: Asian nations' poor economic management, international financial contagion, close "crony" relations between local politicians and capitalists? This case examines how the crisis erupted in Thailand and spread in a chain of events that no one-neither Asian financial authorities nor Western economists-had foreseen. Purchase this case

Sub-Prime Crisis and Fair Value Accounting

Harvard Business School Case 9-109-031

Paul Healy, Krishna G. Palepu, George Serafeim

This case examines the challenges in implementing fair value accounting for mortgage instruments, the role of accounting in the sub-prime crisis, and proposals for revising accounting standards given the crisis Purchase this case

Executive Pay and the Credit Crisis of 2008

Harvard Business School Case 9-109-036

V.G. Narayanan, Fabrizio Ferri, Lisa Brem

The credit crisis of 2008 placed compensation practices at publicly traded firms in the United States under scrutiny. This case examines perceived excessive pay and severance packages at several firms implicated in the credit crisis of 2008, the executive compensation provisions in the Emergency Economic Stabilization Act, and discusses the implications for compensation committees at public companies. Purchase this case

Iceland (A) and (B)

Harvard Business School Case 9-709-011

Aldo Musacchio

In May of 2008, a team of sovereign debt analysts at Moody's had to decide whether to downgrade the country's sovereign long-term debt from Aaa to Aa1 or lower. Investor sentiment toward Iceland had changed radically in March, and the Moody's team was fearful that the situation could spiral out of control. The Moody's team knew that carry traders increased Iceland's vulnerability to a confidence crisis because they were quick to liquidate their holdings at the first sign of distress. The plunge in the Icelandic Krona since the beginning of 2008 also forced the Icelandic people to confront a decision: would joining the European Union (EU) protect Iceland from capricious swings in investor sentiment? What, if anything, should Iceland do to avoid a future crisis? Purchase case A and Purchase supplement B

New Century Financial Corporation

Harvard Business School Case 9-109-034

Krishna G. Palepu, Suraj Srinivasan, Aldo Sesia Jr.

New Century Financial Corporation, one of the largest subprime loan originators in the U.S., reported accounting problems in early 2007. The resulting liquidity crisis forced the company to file for Chapter 11 bankruptcy protection. The case study examines New Century's business model and accounting practices and focuses on the role of management, audit committee, and external auditors in the problems at New Century based on the findings of the Bankruptcy Examiner.Purchase this case

Note: Credit Rating Agencies

Harvard Business School Technical Note 9-209-056

William E. Fruhan Jr.

The note examines the role of credit rating agencies in capital markets, with emphasis on the role of these agencies in the recent credit crisis and recommendations for change. Purchase this note

Leveraged Loans 2007

Harvard Business School Case 9-208-145

Andre F. Perold, Erik Stafford

The leveraged loan market was in a crisis during the summer of 2007. A sudden drop in capital market prices for an asset class can be caused by news affecting fundamental values; or by a widespread liquidity shock. The implication of a shock to fundamental value is that the price drop is permanent, whereas if the underlying cause of the price drop is caused by a liquidity event, the situation may represent a profitable investment opportunity. Investors must assess the likely cause of the recent price drops in the leveraged loan market and determine an appropriate investment strategy. Purchase this case

Note: The Hedge Fund Industry

Harvard Business School Technical Note 208-126

William E. Fruhan Jr.

This note describes the state of the hedge fund industry as of the end of the year 2007. Purchase this note

Subprime Meltdown: American Housing and Global Financial Turmoil

Harvard Business School Case 708-042

Julio J. Rotemberg

This case focuses on the financial difficulties faced in the U.S. from August to December 2006 as well as their roots in subprime lending. After briefly discussing how mortgages were structured and traded in the pre-1990 period, it describes subprime mortgage lending, as well as other innovative mortgages issued in the 1990s. It also discusses how these mortgages were packaged into securities, and who ultimately came to own these claims and their attendant risk. The case then describes the pain inflicted by raising foreclosures, as well as the financial market ramifications of the rise in mortgage delinquencies. It also chronicles the response of the U.S. and European central banks to the unfolding financial difficulties. Lastly, the case lays policies that have been proposed to deal with either the consequences or the causes of the crisis. These include policies for reforming the supervision of the financial system, changing bankruptcy rules and regulating mortgage finance. Some attention is paid to the role of credit rating agencies in the crisis, and in the financial system as a whole. Purchase this case

U.S. Subprime Mortgage Crisis: Policy Reactions

Harvard Business School Case 708-036

Laura Alfaro, Renee Kim

By March 2008, the U.S. Government and the U.S. Federal Reserve Board had taken various policy measures over the last few months to tackle the subprime mortgage crisis that threatened to drag the economy into a recession. The Bush administration approved a fiscal stimulus package exceeding $150 billion. Interest rates had been repeatedly cut at the fastest pace in decades, to 2.25% as of March 2008. The Fed, in an unprecedented move, helped JPMorgan Chase to take over Bear Stearns, which was on the brink of collapse. Yet as the global economy faced slower growth stemming from the U.S. mortgage crisis, policy makers were caught in an intense debate over what the 'right' solution would be, and the implication of these policies on global imbalances. Purchase this case

Kinyuseisaku: Monetary Policy in Japan (A)

Harvard Business School Case 9-708-017

Laura Alfaro, Akiko Kanno

Toshihiko Fukui, Governor of the Bank of Japan, faced a complex situation in the fall of 2007. An economic recovery had allowed the central bank to abandon its zero interest rate policy, which had been in place for years, and raise rates to 0.5%. The Bank of Japan was eager to increase them to more 'normal' levels to exert effective monetary policy. Yet the appropriate timing and approach was a controversial issue, especially as the government did not want a rate hike that could potentially hinder economic growth and increase its already large fiscal debt burden. Purchase this case

Korea: After the 1997 Financial Crisis

Harvard Business School Case 9-707-042

Laura Alfaro, Rafael Di Tella , Renee Kim

Examines what happened to Korea after the 1997 financial crisis and the implementation of the IMF-mandated reforms imposed on Korea as conditionalities to the country's emergency loan package. Purchase this case

Finansbank 2006

Harvard Business School Case 9-208-108

C. Fritz Foley, Linnea Meyer

How do financial policy requirements and benefits of ownership concentration affect the need for and process of corporate restructuring? This case provides students with an opportunity to analyze the restructuring of a Turkish multinational business group by way of a merger. Finansbank A is a bank headquartered in Turkey with additional operations in Holland, Switzerland, Russia, Romania, and Ukraine. It was founded by H³sn³ Ízye in in 1987, and in April 2006, the National Bank of Greece (NBG) offered to buy part of the bank. Students can consider which factors contributed to Finansbank's growth and success. In order to then assess the terms of NBG's offer, they can evaluate given valuations of the bank and analyze why the proposed deal is structured so that Ízye in retains a stake and buys back the non-Turkish operations. Students can also consider the offer from the perspective of minority shareholders. Purchase this case

The U.S. Current Account Deficit

Harvard Business School Case 706-002

Laura Alfaro, Rafael Di Tella, Ingrid Vogel

Investors and policymakers throughout the world were confronted with the risk of painful economic consequences arising from the large and growing U.S. current account deficit. In 2005, the U.S. current account deficit was almost $800 billion, equivalent to 6.3% of GDP, and showed no signs of abating. The implications of the widening deficit were debated with intensity. Purchase this case