Case Studies
Corporate Financial Case
By
M.F Mónica López Aguilera
To
Students Instituto Tecnológico de Querétaro 7º Semestre IGE November 2012
Objective
Through the financial analysis each working team has to pinpoint the Disneyland’s economic problems in order to make the right financial decisions. So, it includes the application of Strategic and Bankruptcy models, financial ratios, the Wacc and assessing investment techniques to get relevant indicators. Since the working team’s identified the problem has to decide about the Working capital, financing resources, structure of Wacc, Internal Rate of Return (TIR) and VaR decisions due a specific market condition. In anyway, each working team has to answer the questions to the end of the case.
2
The case
I only hope that we don't lose sight of one thing - that it was all started by a mouse. -Walt Disney On a beautiful March day in Orlando, Andy Berst strolled down Main Street at the Magic Kingdom contemplating a new project proposal. Andy, the Director of Finance for Hong Kong Disneyland, had spent the last four years developing and preparing for the launch of Disney’s newest park on Lantau Island in 2005. It was now 2003, and as he prepared to move to his new office in Hong Kong, he received a call from CEO Michael Eisner’s office to discuss the possibility of a new venture in Shanghai. Berst, like many higher managers with the company, knew that Disney was interested in breaking into mainland China for several years. On the other hand, he also knew that Disney had never built a park in a communist country, or what could be considered an emerging market. However, with the recent announcement from rival Universal-Vivendi confirming their intentions to build a Universal Shanghai to open approximately the same time as Hong Kong Disneyland, Disney executives were anxious for their own counter-strike in the mainland. As he walked towards Cinderella’s Castle, Andy’s mind began to work out the details of a Shanghai
By
M.F Mónica López Aguilera
To
Students Instituto Tecnológico de Querétaro 7º Semestre IGE November 2012
Objective
Through the financial analysis each working team has to pinpoint the Disneyland’s economic problems in order to make the right financial decisions. So, it includes the application of Strategic and Bankruptcy models, financial ratios, the Wacc and assessing investment techniques to get relevant indicators. Since the working team’s identified the problem has to decide about the Working capital, financing resources, structure of Wacc, Internal Rate of Return (TIR) and VaR decisions due a specific market condition. In anyway, each working team has to answer the questions to the end of the case.
2
The case
I only hope that we don't lose sight of one thing - that it was all started by a mouse. -Walt Disney On a beautiful March day in Orlando, Andy Berst strolled down Main Street at the Magic Kingdom contemplating a new project proposal. Andy, the Director of Finance for Hong Kong Disneyland, had spent the last four years developing and preparing for the launch of Disney’s newest park on Lantau Island in 2005. It was now 2003, and as he prepared to move to his new office in Hong Kong, he received a call from CEO Michael Eisner’s office to discuss the possibility of a new venture in Shanghai. Berst, like many higher managers with the company, knew that Disney was interested in breaking into mainland China for several years. On the other hand, he also knew that Disney had never built a park in a communist country, or what could be considered an emerging market. However, with the recent announcement from rival Universal-Vivendi confirming their intentions to build a Universal Shanghai to open approximately the same time as Hong Kong Disneyland, Disney executives were anxious for their own counter-strike in the mainland. As he walked towards Cinderella’s Castle, Andy’s mind began to work out the details of a Shanghai