This case focuses on the valuing Samsung Electronics, which is a major worldwide manufacturer of consumer electronics, and its ongoing project aimed at capturing 15% of Thailand’s mobile phone market. It will ask students to study a collection of Thailand’s country data, ranging from macroeconomic to cultural, as well as other related materials such as industrial data and the company’s Financials. The selection of the case’s background information was based on several engaging factors involved. First off, Thailand is of a particular interest even among other Southeast Asian emerging markets. As you will see within the case document, Thailand contains several factors that not only magnifies its political/economic risk, but also make its risk profile more difficult to measure. Secondly, Thailand’s mobile phone market is a fairly complicated one when compared with those of its regional neighbors, with an intricate mixture of opportunities and obstacles. The combination of these factors creates a favorable case environment to pursue our main learning objectives for the case, which is as follows.
Learning Objectives of the Case:
1. Retrieval of relevant/significant data-This case will give students some first-hand experience in professional level data screening. They will have to seep through the considerable amount of case documents and exhibits given within the case to retrieve the few relevant data that will be used to assess the project as well as the company. A considerable amount of the information may prove to be redundant, depending on the student’s approach.
2. Multi-tiered measurement of risk-The complexity of Thailand’s risk profile, as well as the special conditions associated with the nation’s mobile phone market, will make risk assessment more complex than the standard text-book case scenarios. Students will have to use their own intuition to yield reliable measurements of risk, such as the country’s beta, and be able to justify them if they are to receive full credit for the subsequent valuation models.
3. Valuation of a specific project-The case asks students to value not only Samsung Electronics, but its ongoing project in the Thai mobile phone market. Students will have to aggregate their results from the preceding two case objectives to value the company and the project. In doing so, the student will also have to make several key judgments. They will have to select the appropriate model that best utilizes the available relevant info, and is most fit to retrieve the required numbers. Also, students will have to make key assumptions to justify the use of the valuation model, as well as the numbers that will be used to complete the calculation, due to the inherent unknowns present in the case background. (For example, the fact that the project is an ongoing one and not a concluded one with complete results)
Note to the Professor
Our goal in writing this case is not just to do a valuation of a firm, but to get across the point that analyzing the business, financial, and country risks involved when dealing with emerging markets is considerably different from what we are accustomed to in valuing U.S. firms. The differences in culture, business practices, and risks among the various countries of the world significantly change the way a firm does business in each country. While writing this case, we tried to keep in mind the risks involved and only accepted realistic data. For emerging markets, the credibility of data is extremely crucial for trying to evaluate whether or not a project is a wise investment. We hope that after reading our Samsung Electronics case, the reader can get a feel of how one should go about considering an international project from beginning to end. This kind of...