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Finance club Case Study


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Finance club Case Study

  1. 1. Case Study-1  Mr. Toppo had just graduated from Indian Institute of Management (IIM), Ahmadabad, and joined his family's small business, which employs 25 semiskilled workers. After observing Toppo during the first week on the job his father called him in and said, "Toppo, I have had a chance to observe your working with the men and women for the past two days and although I hate to say something but I must.
  2. 2.  You are just too nice to people. I know they taught you human relations stuff at the IIM but it just does not work here. I remember when the Hawthorne Studies were first reported and everybody in the academic field got all excited about them, but believe me, there is more to managing people than just being nice to them".
  3. 3. Questions 1; Do you think Toppo's father understood and interpreted theHawthorne Studies correctly? 2; How would you react to your father's comments if you were Toppo?
  4. 4. Casestudy-2  The case brings to the fore Microsoft's dividend policy. Founded in 1975, the company declared cash dividends for the first time in 2003 and continued its returns to the shareholders both in the form of cash dividends and share repurchases after that. In 2010, the company decided to raise a debt in order to pay the dividends and to repurchase shares while avoiding an adverse impact on its debt rating. The case deals with the dividend behavior of Microsoft Corporation and the fact that that it was not averse to taking a debt in order to pay dividends despite having a huge cash surplus.
  5. 5. Questions  Issues:  dividend and repurchase. Understand the usage of cash after Profit after tax (PAT). Understand the different ways of Repurchase of Shares.  Analyze which is the better way to ensure returns to a shareholder - through cash dividends or repurchase of shares, or both?  Discuss and debate the pros and cons of the dividend policy in comparison to cash
  6. 6. Case Study-3  On August 10, 2011, at the 24th Annual General Meeting (AGM) of Mahindra Satyam, minority shareholders opposed a proposal by Vineet Nayyar, Chief Executive Officer, Mahindra Satyam, and the management team to merge Mahindra Satyam with Tech Mahindra.
  7. 7.  However, Vineet Nayyar's proposal during the AGM earned mixed reactions from many observers. Initially, the minority shareholders of Mahindra Satyam were apprehensive about the timing of the merger with regards to the unattractive valuations and the number of shares they would receive in exchange for one Tech Mahindra share.  Although, both companies had strong presence globally, the companies had to resolve few other problems before going for the merger.
  8. 8. Questions Merger and acquisition and types of synergies. Valuation of company. Exchange ratio of the share
  9. 9. Group-4  This case is about the "Get up to 100% Cash Back" promotional offer announced by ICICI Bank, the largest private sector bank in India, in October 2006. According to this offer, a customer could get back cash ranging from a minimum of 1% to a maximum of 100% of the transaction amount for any purchase transaction of over Rs. 2,000 made on his/her ICICI Bank credit card. This case will enable students to discuss the impact of the "Get up to 100% Cash Back" offer on ICICI Bank's credit card business. Students can also discuss the pros and cons of the scheme from the consumer's perspective
  10. 10. Questions Understand the impact of a cash back promotional offer on the credit card issuer  Discuss the pros and cons of the cash back scheme from the consumer's perspective
  11. 11. Group-5  The case discusses the rise and fall of Lehman Brothers Inc (Lehman Brothers) from a small dry goods store to one of the leading investment banks in the US. It examines in detail the reasons that led to the subprime crisis since the year 2007 in the US and how it led to the collapse of 158 year old Lehman Brothers.
  12. 12.  The case highlights the role of several stake holders in the mortgage business that contributed to the crisis. It examines the various factors that contributed to the fall of Lehman Brothers including leadership issues, excessive leverage, failure of risk measures employed like 'Value at Risk' and poor regulation of the investment banking industry. It also explains the role of certain OTC derivative instruments that led to the collapse of the company.
  13. 13. Questions  Understand the reasons that led to the subprime crisis in the US and its impact on financial institutions.  Analyze the aggressive strategies that Lehman Brothers followed in the mortgage business.  Study the role of leadership at Lehman Brothers behind the company's rise and subsequent collapse.  Appreciate the significance of risk management and the drawbacks of excessive leverage.
  14. 14.  The case study examines the massive 'Ponzi Scheme' run by Allen Stanford (Allen), one time honored with the 'Sir' title by the Antigua government and ranked the 239th richest person in America by Forbes. Stanford was famous for his philanthropy and luxurious life style before he was caught by federal agents in February 2009 just a few weeks after an article published in VenEconomy Monthly written by Alex Dalmady.  This article had raised, for the first time in 13 years (1996-2009), some very basic questions about the financials of Stanford International Bank (SIB), one of the companies run by Stanford
  15. 15.  Later, the Securities and Exchange Commission (SEC) alleged in its complaint to the US District  Court for the Northern District of Texas, Dallas Division that Stanford and his group had sold more than US$ 7.2 billion of self styled very high interest bearing 'Certificate of Deposits' (CDs) by touting that the bank was safe and strong. The bank had continuously earned double digit returns on its investment portfolio since 1992. However, experts raised questions on the functionality of the SEC which had had some suspicions about Stanford but did not take any serious action against him and his companies before the scam broke out in 2009.
  16. 16. QUESTIONS Analyze how the scam was carried out Analyze the impact of fraud on the economy of US  Analyze the need for overhauling SEC functionality Understand the impact of fraud on investors' confidence