Conglomerate diversification through cross-continent acquisition: Vedanta weds Cairn India

2011 ◽  
Vol 1 (1) ◽  
pp. 1-15 ◽  
Author(s):  
V.K. Nangia ◽  
Rajat Agarawal ◽  
Vinay Sharma ◽  
K. Srinivasa Reddy
Keyword(s):  
Mergers And Acquisitions ◽  
Balance Sheet ◽  
Business Environment ◽  
Subject Area ◽  
Research Field ◽  
Content Type ◽  
Cross Border ◽  
Policy And Strategy ◽  
Income Statement ◽  
The Impact

Subject area corporate policy and strategy – mergers and acquisitions. Study level/applicability Post graduation (MBA and other management degrees). It includes courses on Strategic Management, Business Environment and International Business. Case overview Markets are becoming highly connective, accessible and communicative and reaching maturity at a very high phase. Acquisition is a choice to enhance the emerging and diversified markets. This case paper presents insights on Vedanta – Cairn India cross-border acquisition deal in Indian oil and exploration industry. This case synchronizes the gap between strategic planning and outcome of actions. The study exclusively evidences the reaction of stocks of all attached parties against acquisition announcement and compares with market performance. Expected learning outcomes Strategic mapping of business negotiations, while in-organic choices, further the impact of economic, political, legal and regulatory factors on cross-border mergers and acquisitions (M&A), deliberate deal financing mechanism and leadership diplomacy. It proposes from the viewpoint of corporate in-organic alternatives and to strengthen the upcoming research field of strategy & policy. Supplementary materials Global M&A market, shareholding pattern, income statement and balance sheet of Cairn India Ltd, financial figures of Vedanta Resources, tabular data on stock and index performance, deal structure and teaching note.

Does the origin matter? The effects of cross-border mergers and acquisitions in France

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Federico Carril-Caccia
Keyword(s):  
Foreign Direct Investment ◽  
Mergers And Acquisitions ◽  
Direct Investment ◽  
Developed Countries ◽  
Emerging Countries ◽  
Intangible Asset ◽  
Data Set ◽  
Content Type ◽  
Cross Border ◽  
The Impact

PurposeThe present article analyses the effects of cross-border mergers and acquisitions (CBM&As) on targets' total factor productivity (TFP), employment, wages and intangible-asset investment. The author investigates whether the impact of CBM&As differs depending on the origin of the investing multinational (MNE). The author distinguishes between CBM&As from European countries, other developed countries and emerging countries.Design/methodology/approachThe author makes use of a unique firm-level data set of foreign direct investment in the French manufacturing sector. The authors applies propensity score matching and difference in differences to estimate the effect of CBM&As.FindingsThe results show that the consequences of CBM&As differ strongly depending on the origin. CBM&As from European MNEs have a positive impact on TFP, wages and intangible-asset investment, and those from emerging countries seem to increase wages and intangible-asset investments. In contrast, CBM&As that originate from MNEs from other developed countries do not have a significant effect.Originality/valueThis article contributes to the growing literature on the effects of foreign direct investment that highlights the relevance of accounting for the MNEs' origin. In particular, it is the first to address the impact of emerging-country MNEs' CBM&As in Europe.

Behind the veil

2011 ◽  
Vol 1 (2) ◽  
pp. 1-5
Author(s):  
Alexandra Snelgrove ◽  
Ariane Ryan
Keyword(s):  
Value Chain ◽  
Rural Women ◽  
Business Environment ◽  
Subject Area ◽  
Cultural Issues ◽  
Content Type ◽  
Development Tool ◽  
A Value ◽  
The Veil ◽  
The Impact

Subject area The case addresses issues related to value chains, sustainable businesses, business environment in emerging economies and cross-cultural issues. applicability/applicability This case would be best addressed by students in upper years of their undergraduate degree or at a Master's level. Case overview The case addresses a project conducted by MEDA in Pakistan which focused on developing a value chain in the embroidery sector with the end goal of improving the livelihood of homebound rural women. The case walks the students through the local cultural constraints, the project design the development of the various value chain actors and the most significant outcomes. The primary issue requires the students to evaluate the most appropriate exit strategy for MEDA which would not harm the existing networks and allow the whole value chain to continue sustainably. Expected learning outcomes To appreciate the complexity of value chain development while understanding the benefits and opportunities they offer. To understand the importance of sustainability and how this can be achieved using market tools. To grasp the concept of exit strategies in the context of development projects and explore various ways these can be structured. To identify the impact of culture on business environment. Integrating the poor into thriving markets. Business as a development tool. Supplementary materials Teaching notes

Uncertainties in business environment – political exigencies versus economic realities: the saga of Zimbabwe Iron & Steel Company (ZISCO)

2012 ◽  
Vol 2 (8) ◽  
pp. 1-6
Author(s):  
Gaurav Tripathi ◽  
M. Durgamohan
Keyword(s):  
Learning Outcomes ◽  
International Business ◽  
Business Environment ◽  
Subject Area ◽  
Steel Company ◽  
Political Factors ◽  
Content Type ◽  
Cross Border ◽  
Sub Saharan

Subject area The political and economic environment of business. Study level/applicability The case is suitable for students of MBA and equivalent courses; courses on the international business environment, international marketing and related subjects. Case overview The case focuses on cross border acquisitions in the sub-Saharan economy of Zimbabwe. It discusses Essar Steel's attempt to acquire a stake in Zimbabwe Iron & Steel Company (ZISCO) with long term goals. However, recent political developments have led to the situation hanging by a thread. The case attempts to provide an overview of the complex business environment in Zimbabwe. Expected learning outcomes Students are expected to highlight the economic and political factors during the analysis of any country's business environment. Supplementary materials Teaching notes are available; please contact your librarian for access.

An investment decision dilemma

2016 ◽  
Vol 6 (1) ◽  
pp. 1-25
Author(s):  
Sulagna Mukherjee ◽  
M. Durga Prasad ◽  
Sudeep S. Kumar
Keyword(s):  
Investment Decision ◽  
Balance Sheet ◽  
Cash Flows ◽  
Subject Area ◽  
Content Type ◽  
Public Transport System ◽  
Income Statement ◽  
Viable Solution ◽  
Bus Operator ◽  
Breakeven Analysis

Subject area Financial Accounting and Corporate Finance. Study level/applicability Undergraduate, Post Graduate and Executive Education. Case overview T.A. Pai Management Institute (TAPMI), a leading B School in South India had established its new campus in Badagabettu village, about 5 km away from Manipal, Udupi District, Karnataka. Though the campus housed about a thousand inmates, comprising students, staff and faculty members, a proper public transport system did not develop commensurate with other facilities. The TAPMI administration was flooded with requests from various stakeholders to find a solution to this vexed problem. The Dean Administration had three options before him namely convincing the existing private bus operator to run a new bus en route TAPMI, TAPMI purchases the bus by either paying cash or availing loan from a bank or TAPMI can take a bus on lease. The predicament before Dean was to find out the most economically viable solution. Expected learning outcomes At the end of this case discussion, the participants will be able to: understand the application of breakeven analysis; prepare income statement, balance sheet, cash flow statement and forecast of cash flows; evaluate financing and investing decisions by using various techniques; discuss and debate the different alternatives available to the organization. Supplementary materials Teaching notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS 1: Accounting and Finance.

The changing landscape for Chinese small business: the case of “Bags of Luck”

2011 ◽  
Vol 1 (1) ◽  
pp. 1-12
Author(s):  
Lee Zhuang
Keyword(s):  
Environmental Changes ◽  
Business Management ◽  
Real Life ◽  
Business Environment ◽  
Subject Area ◽  
Chinese Economy ◽  
Production Volume ◽  
Content Type ◽  
Business Organisation ◽  
The Impact

Subject area Business management, entrepreneurship, strategic management and business environment. Study level/applicability Undergraduate and Masters level business and management programmes. Case overview This case features a small labour intensive Chinese company, Bags of Luck (BoL), located in the south-eastern Fujian province. BoL makes ladies fashion handbags, unisex fashion backpacks and trendy lightweight cases for laptop and netbook computers for export to the US market. BoL have done very well over the years as a small private enterprise focusing on low-tech manufacturing and have managed to stay afloat through the most difficult period of the recent world recession. Currently troubled by fast changing market trends, rising material and employment costs, continuing appreciation of the Chinese currency, severe labour shortage, declining production volume and profitability, dated machinery, passive and reactive nature of business model, ineffective management structure and a complete lack of strategic vision, BoL is in deep crisis with its fate now hanging on the balance. Expected learning outcomes The case provides encourages students to: research into a range of current business management issues; analyse the impact of environmental changes on the survival and growth of a business organisation; develop their strategic thinking informed by real life and real-time research and assess the impact of exchange rate changes on the Chinese economy and the sustainability of Chinese model of economic growth. Supplementary materials Teaching note.

Whose international experience matters more? Decision-makers with international experience in Chinese family firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jie Hao ◽  
Zhenzhen Xie ◽  
Kunpeng Sun
Keyword(s):  
Mergers And Acquisitions ◽  
Family Business ◽  
Family Firms ◽  
Second Generation ◽  
International Experience ◽  
Chinese Family ◽  
Content Type ◽  
Upper Echelons Theory ◽  
Cross Border ◽  
The Impact

Purpose The purpose of this study is to examine if the international experience of a family firm’s chairman, second-generation managers and other top managers all have impacts of different strengths using information about Chinese family firms’ international expansion. Design/methodology/approach Matching tactics and dynamic Heckman 2-stage analysis were applied to data on 766 publicly-listed Chinese family businesses covering 2008–2014. Findings The international experience of the chairman, second-generation family managers and other senior managers all were found to correlate with the proportion of a firm’s revenue earned abroad, as well as with the number of its cross-border mergers and acquisitions. The impact of a chairman’s international experience is stronger than the impact of the other two groups when internationalization is measured in terms of the proportion of revenue earned overseas. The second-generation managers’ international experience is the most influential when internationalization is measured in terms of the number of cross-border mergers and acquisitions. Originality/value This paper bridges agency theory with upper echelons theory in the context of the family business. The findings contribute to the scholarly understanding of family business by illuminating the mechanisms through which second-generation managers may influence family firms’ internationalization. They also enrich the knowledge of family firms in China.

scholarly journals Corporate financial structure and firm’s decision to export

2018 ◽  
Vol 56 (7) ◽  
pp. 1526-1540 ◽  
Author(s):  
Paloma Miravitlles ◽  
Toni Mora ◽  
Fariza Achcaoucaou
Keyword(s):  
Firm Size ◽  
Balance Sheet ◽  
Probit Model ◽  
Financial Structure ◽  
Business Environment ◽  
Ownership Concentration ◽  
Global Business ◽  
Content Type ◽  
Analysis System ◽  
The Impact

Purpose The purpose of this paper is to analyse the decision to export in relation to financial issues, specifically the impact of corporate financial structure on a firm’s export propensity (the likelihood of a firm becoming an exporter) by firm size. Design/methodology/approach A multivariate probit model is applied to a sample of 8,019 Spanish manufacturing firms drawn from the Iberian Balance Sheet Analysis System (SABI). The analysis is performed separately for small, medium and large firms. Findings The paper evidences, by firm size, a positive link between ownership concentration and export propensity, although for SMEs if shareholder concentration is very high it can be counterproductive. In addition, a high degree of liquidity influences the probability of entering export markets, while those firms that face high costs as result of their export activity may need to become indebted in order to secure the necessary financial resources. However, the strength of these latter effects differs in SMEs. Originality/value This paper broadens the understanding of the relationship between firms’ export propensity and their financial health and ownership concentration, an internal factor not previously considered in the international business literature despite its relevance for firm’s decision to export. The paper highlights that their influence is not uniform but affects firms of different sizes in different ways. This is of interest and value to scholars, investors and policy makers worldwide, since handling corporate financial structure and international strategies needs to be addressed in today’s global business environment.

Network position of independent director in cross-border mergers and acquisitions

2018 ◽  
Vol 13 (1) ◽  
pp. 118-135 ◽  
Author(s):  
Chenxi Guo ◽  
Ping Lv
Keyword(s):  
Decision Making ◽  
Mergers And Acquisitions ◽  
Generalized Linear Model ◽  
Independent Directors ◽  
Content Type ◽  
Network Position ◽  
Cross Border ◽  
Transaction Value ◽  
The Impact ◽  
Board Networks

Purpose The purpose of this paper is to consider the impact of network position of independent directors on the decision-making process of cross-border mergers and acquisitions (CBMAs). Design/methodology/approach With 912 CBMAs constructed by 431 Chinese-listed corporations from 2006 to 2015, the authors provide graph-theoretical methods to quantify directors’ networks and build logistics models of CBMA success and generalized linear model for transaction value. Findings The authors find that independent directors in central positions of board networks of CBMA significantly strengthen the possibility of success of CBMA and react more positively to large CBMA. The results reveal that state-owned enterprises reduce the importance of independent directors in central positions in assisting successful CBMA, but strengthen the importance in promoting large CBMA. Specifically, majority shareholders counteract the importance of independent directors in central positions in assisting successful CBMA, but improve the importance in promoting large CBMA. Originality/value The findings suggest that independent directors in central positions, which are embedded in sets of board relationships and interactions, lead to efficient external corporate governance as a mechanism to facilitate a Chinese-listed firm’s CBMA decision making.

Taj hotels, palaces and resorts: the road ahead

2018 ◽  
Vol 8 (3) ◽  
pp. 1-21
Author(s):  
Anuj Sharma ◽  
Parul Kochher
Keyword(s):  
Learning Outcomes ◽  
Hospitality Industry ◽  
Brand Management ◽  
Hotel Industry ◽  
Business Environment ◽  
Subject Area ◽  
Bottom Line ◽  
Content Type ◽  
General Management ◽  
The Impact

Subject Area General Management, International Strategic Management, International Marketing and Brand Management. Study level/applicability MBA (General Management), MBA (Marketing), Management and executive development programme. Case overview The Indian Hotels Corporation limited known as the Taj Group was set up by JRD Tata in 1903. The company has undertaken a long journey since then. It is one of the most recognized hotel brands in luxury market segment of the hotel industry. Off late some micro- and macro-level changes in the business environment have not been in favor of the group. The strategy of international expansion in acquiring and refurbishing of assets has mounted the debt and the growing losses. What has compounded the growing troubles is the entry of aggressive multinational brands in the luxury segment of the hospitality industry. The group prioritizes to get its financials in order. It thereafter needs to rework on its competitive strategy and take advantage of the booming domestic hotel industry for profitable future growth. Expected learning outcomes Expected learning outcomes are as follows: to understand the impact of expansions on the top line and the bottom line on the hospitality industry; to understand the impact of expansion on brand image for the legacy brand; to understand and develop strategies for a company which make it profitable in the hotel industry; and to formulate entry and exit strategies for companies dealing in the hospitality industry. Supplementary materials Teaching Notes are available for educators only. Please contact your library to gain login details or email [email protected] to request teaching notes. Subject code CSS: 11: Strategy.

The Relation between Accounting Information in Debt Covenants and Operating Leases

2015 ◽  
Vol 29 (4) ◽  
pp. 969-996 ◽  
Author(s):  
Daniel Gyung H. Paik ◽  
Joyce A. van der Laan Smith ◽  
Brandon Byunghwan Lee ◽  
Sung Wook Yoon
Keyword(s):  
Balance Sheet ◽  
Accounting Information ◽  
Debt Covenants ◽  
Debt Contracts ◽  
Debt Contracting ◽  
Income Statement ◽  
Operating Leases ◽  
The Impact ◽  
Accounting Ratios ◽  
Lease Accounting

SYNOPSIS Proposed changes by the FASB and the IASB to lease accounting standards will substantially change the accounting for operating leases by requiring the capitalization of future lease payments. We consider the impact of these changes on firms' debt covenants by examining the frequency of income-statement- versus balance-sheet-based accounting ratios in debt covenants of firms in high and low Off Balance Sheet (OBS) lease industries. Based on debt contracts from the 1996–2009 period, our results provide evidence that lenders focus on balance sheet (income statement) ratios in designing debt covenants for borrowers in low (high) OBS lease industries. Further, the use of balance-sheet- (income-statement-) based covenants falls (rises) faster in high OBS lease industries than in low OBS lease industries as the use of OBS leasing increases. This evidence indicates that OBS operating leases influence lenders' use of accounting information in covenants, suggesting that creditors consider the impact of OBS leases when structuring debt agreements. These results also suggest that the proposed capitalization of OBS leases may not result in firms violating loan covenants but will make the balance sheet a more complete source of information for debt contracting by removing the need for constructive capitalization of OBS leases.

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