Pedagogical Objectives:

The case lends itself well to the instruction and application of key strategy concepts and frameworks pertaining to the analysis of both external factors affecting the firm’s strategy and performance (including Porter’s Five Forces and the PESTLE framework) as well as firm-internal drivers (including the resource-based view, generic strategies and strategic positioning, as well as activity systems). As such it offers a good introduction to core strategy tools and frameworks, and a good basis to explore competitive strategy, notably how to expand and grow a business in a challenging industry and highly competitive environment. It also covers aspects of multinational strategy (particularly from the perspective of a firm in a ‘rapidly developing economy’), the decision to adopt an original equipment manufacturing (OEM) business model vs. own brand manufacturing (OBM), and how to transition from a traditional family-run business to professional management.

Keywords:

Strategy, Competitive Strategy, Core Strategy, Competitive Industry, Family-Run Business, Transformation, Oem Vs. Obm, Growth Strategy, Expansion, Malaysia, Manufacturing, Succession, Innovation in Manufacturing, Resource-Based View

Pedagogical Objectives:

The case lends itself well to teaching and applying various dimensions of M&A deal structuring, including methods of payment (stock vs. cash), contingent payments (e.g., earnouts, bonus payment, holdback allowances), the sequential approach (e.g., alliance before acquisition or minority investment before full acquisition), closing conditions, the acquisition process and timing, and post-closing board and management composition. Students also practice M&A valuation based on acquisition multiples and think about the strategic rationale for an acquisition. The exercise highlights the idea that value creation does not equate to value capture for the acquirer, and that appropriate acquisition pricing and deal structuring tools are essential components of acquisition success. The case also enables students to understand the risks involved in acquisitions and how these can undermine acquisition success, and to practice and refine their negotiation skills in an acquisition context. The deal structuring exercise can be played both in person or virtually.

Keywords:

Mergers & Acquisitions (M&A), M&A Deal Structuring, Negotiation, Acquisition Risks, M&A Valuation, Acquisition Strategy, Contingent Payments, Earnouts, Method of Payment, Synergies, Acquisition Financing, Value Capture, Stock vs. Cash, Closing Conditions

Pedagogical Objectives:

The case is versatile and lends itself well to the instruction of various Mergers & Acquisition (M&A) topics. First and foremost, the case is well-suited to teach company valuation in acquisitions, including determining standalone value of acquisition targets, valuing of the potential synergies, determining acquisition premiums, and value creation vs. value capture considerations. A free valuation spreadsheet and full valuations solutions can be requested from the authors via email to this extent. Students can practice different DCF valuation scenarios in-class to practice valuation in M&A situations and to better understand acquisition pricing. Second, the case lends itself well to instruct the strategic rationales of acquisitions, and to teach students how to strategically evaluate acquisitions. Third, the case can be used to evaluate various strategic growth options of companies, including the decision of whether to grow or not, how to grow, and via which corporate development mode to grow. In sum, this case is well suited to both strategy or management courses on corporate strategy, acquisitions or growth, as well as corporate finance courses.

Pedagogical Objectives:

The case can be used as an in-class assignment. It can be used to facilitate discussing concepts or approaches related to problem-solving, critical thinking, stakeholder management or crisis management.

Keywords:

Problem Solving, Critical Thinking, Stakeholder Management, Crisis Management

Case B explores how Goldman Sachs built the capabilities to enter the consumer finance market, a whole new area for the firm. It starts by describing how others entered consumer finance through either acquisitions, alliances, or internal development. Goldman Sachs chose to enter the market by recruiting talent and slowly building its consumer business internally, followed by a combination of bolt-on acquisitions, partnerships, and further internal development initiatives. The case ends in 2022, asking whether Goldman Sachs had chosen the most effective market entry strategy.

Pedagogical Objectives:

This versatile case can be used to explore the following corporate strategy questions and topics:

• What is the corporate strategy of a given firm and is it effective? How can a firm formulate a more effective corporate strategy?
• What should determine a firm’s corporate scope? Should a given firm be diversified or focused?
• Which new markets should a firm enter? Which businesses should a firm divest? How can a firm leverage it core competencies most effectively? How can a firm optimize its portfolio of businesses?
• How can a firm create value thorugh the deliberate planning and management of its corporate portfolio? How can a firm create synergies between its business units?
• How should a firm enter a new market? How should a firm balance its portfolio of corporate development activites?
• How should a firm manage various internal and external stakeholders when making corporate portfolio choices?

Keywords:

Corporate Strategy, Corporate Diversification, Entry Into A New Industry, Mergers & Acquisitions, Corporate Portfolio Choices, Internal Development, Growth Strategy, Corporate Growth, Consumer Banking, Investment Banking, Strategic Alliances, Expansion, Market Entry Capabilities, Corporate Development