Course Syllabus
FINA 5300: Case Studies in Finance
Fall 1999
Professor:
Dr. John Kensinger
CBA 168G
940-565-2511 (office)
940-566-2713 (home)
940-566-4234 (fax)
email: kensinge@cobaf.coba.unt.edu
Office hours: Tues & Thurs 3:30-5:00PM, Tues 9:30-10:00PM (in classroom)
Classroom:
210 Curry
6:30-9:30PM Tuesdays
Texts and Readings:
1. Kester, et.al., Case Problems in Finance (11th Edition), McGraw-Hill (1997) ISBN 0256-0042-11.
2. Michael Porter, Competitive Advantage, Free Press (1985, new introduction 1998)
ISBN 0-684-84146-0.
3. Donald H. Chew (editor), The New Corporate Finance Where Theory Meets Practice,
2nd Edition, McGraw-Hill (1999) ISBN 0-07-011675-X Pbk.
4. Readings packages will be handed out in advance of class discussions.
5. Additional reference readings are indicated in the course schedule, and are available in
Brealey & Myers, Principles of Corporate Finance (5th Edition), McGraw-Hill (1996)
ISBN 0-07-007417-8. These reference readings are provided as an aid for students
desiring additional help, and are highly recommended.
Disability Accommodation
The College of Business Administration complies with the Americans with Disabilities
Act in making reasonable accommodation for qualified students with disability. If you have
an established disability as defined in the Americans with Disabilities Act and would like to
request accommodation, please see me as soon as possible (by the third class meeting,
please). My office hours and office number are shown on this syllabus.
Brief Description of the Course
The course consists of group discussions of seventeen cases and two sets of readings,
as well as three lecture sessions. Most of the problems raised in the cases are strategic in
nature rather than tactical. In addition to the lectures and case discussions, we will be using
several articles from the business press to focus on controversial issues and discrepancies
between theory and practice.
Purpose of the Course
The overall purpose is for you to apply what you have learned in earlier courses to the
solution of realistic business problems, from the perspective of a global financier. All of the
concepts and tools of finance will be integrated around five key paradigms and three
separation principles, and these will be related to the concepts of business strategy. For
their solution, the cases require not only an orderly use of the paradigms and principles of
finance, but also an innovative application of the principles of business strategy.
Course Syllabus
FINA 5300: Case Studies in Finance
Fall 1999
Grading
Course grades will be calculated using the following weights:
Course Grade
20% Class participation
40% Midterm Examination
40% Final Examination
In addition to the midterm and final examinations, participation in class discussions will
be evaluated. All requirements, including class participation, must be met satisfactorily in
order to complete the course. During discussions, students may be called on at random to
answer short questions, or give an extemporaneous oral presentation (5 minutes or less).
The examination questions will be essays that are extemporaneous analyses of short
cases. The goal will be to apply the major concepts of finance to specific situations and
draw valid conclusions. The point is not to show everything you know, but to use what is
relevant for the case at hand. A very common error is to write things which don’t bear on
the case.
Makeup or re-scheduled exams will be allowed only with valid medical justification,
because of some other documented personal emergency, or by prior arrangement to
accommodate some other unavoidable conflict.
Class Schedule
Aug 31: Introductory Lecture: The touchstones of finance
Chew: pp. xv-xxiv
Reference: Brealey & Myers: Chapters 1, 2, 13, & 36
Sept 7:
Lecture: Financial theory and corporate strategy
Case Problems in Finance: Introduction
Chew: pp. 1-72
Porter: Study Chapters 1&2 carefully and critically. Read the remainder of
Part I the way you would a magazine article. Skim Parts II, III, and IV
in order to become familiar with the applications available in the
book—then later you will be able to find the parts that are relevant to
specific cases under discussion.
Articles (handouts):
Michael E. Porter, “From Competitive Advantage to Corporate
Strategy,” Harvard Business Review (May-June 1987) pp. 43-59.
Alfred Rappaport, “CFOs and Strategists: Forging a Common
Framework,” Harvard Business Review (May-June 1992) pp. 84-91.
Martha Amram and Nalin Kulatilaka, “Disciplined Decisions:
Aligning Strategy with the Financial Markets,” Harvard Business
Review (January-February 1999) pp. 95-104.
Simon M. Keane, “Can a Successful Company Expect to Increase Its
Share Price? A Clarification of a Common Misconception,” Journal
of Applied Corporate Finance (Fall 1990), pp.82-88.
Michael E. Porter, “The Competitive Advantage of Nations,” Harvard
Business Review (March-April 1990) pp. 73-93.
Jeffrey F. Rayport & John J. Sviokla, “Exploiting the Virtual Value
Chain,” Harvard Business Review (Nov-Dec 1995) pp. 75-85.
Reference: Brealey & Myers: Chapters 10-11.
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Course Syllabus
Sept 14:
Sept 21:
Sept 28:
Oct 5:
Oct 12:
Oct 19:
Oct 26:
Nov 2:
FINA 5300: Case Studies in Finance
Fall 1999
Value-Based Management
1st case: “Lockheed Tri-Star and Capital Budgeting,” Case Problems in
Finance: pp. 435-8.
2nd case: “Duckworth Industries, Inc.” Case Problems in Finance: pp. 76788.
Additional reading: Chew, pp. 140-191
Incremental analysis and project financing
3rd case: “The Super Project,” Case Problems in Finance: pp. 439-54
4th case: “Southport Minerals, Inc.,” handout
Chew: pp. 411-424
Articles (handouts):
Kensinger, “Project Finance: Raising Money the Old-Fashioned
Way”
Making investment decisions when options are involved
5th case: “E.I. DuPont de Nemours & Company: Titanium Dioxide,” handout
6th case: “The Starship Project,” handout
Discussion of capital budgeting in practice.
Chew: pp. 101-139, 720-738
Readings packet on capital budgeting (handout)
MIDTERM EXAMINATION
Lecture: The basics of Option Pricing Theory (OPT), and applications in
financial decision-making
Case Problems in Finance: pp. 529-41
Articles (handouts):
Kensinger: “Adding the Value of Active Management into the Capital
Budgeting Equation”
Trigeorgis & Mason, “Valuing Managerial Flexibility”
Brennan & Schwartz, “A New Approach to Evaluating Natural
Resource Investments”
Siegel, Smith, & Paddock, “Valuing Offshore Oil Properties with
Option Pricing Models”
Brealey & Myers: Chapters 20,21,22, plus section titled “Financial Planning
as Managing a Portfolio of Options” in Chapter 28.
Financial leverage
7th case: “Massey-Ferguson (1980),” Case Problems in Finance: pp. 165-82
8th case: “Congoleum Corporation (Abridged),” Case Problems in Finance:
719-35
Additional reading: Chew, pp. 569-605
Financial leverage as harvest strategy
9th case: “Colt Industries, Inc.” handout
10th case: “Gulf Oil Corporation—Takeover,” Case Problems in Finance: pp.
653-62
Additional reading: Chew, pp. 606-657
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Course Syllabus
Nov 9:
Nov 16:
Nov 23:
Nov 30:
Dec 7:
Dec 14:
FINA 5300: Case Studies in Finance
Fall 1999
Leveraged buyout associations: better than corporations?
11th case: “RJR Nabisco,” Case Problems in Finance: 737-47
12th case: “Philip Morris Companies and Kraft, Inc.,” Case Problems in
Finance: pp. 663-82
Additional reading: Chew, pp. 658-719
Articles (handouts):
Mohan and Chen, “A Review of the RJR-Nabisco Buyout,” Journal
of Applied Corporate Finance (Summer 1990), pp.102-8 (handout).
Michael Jensen, “Eclipse of the Public Corporation,” Harvard
Business Review, September-October 1989 (handout).
Looking for synergy and hidden value
13th case: “Cooper Industries, Inc.,” Case Problems in Finance: pp. 601-9
14th case: “MRC Inc. (A),” handout
Additional reading:
Peter F. Drucker, Chapter 51, “Building Unity Out of Diversity,”
Management: Tasks, Responsibilities, Practices (handout)
Lecture 4: Corporate restructuring, where are we going?
Reference: Brealey & Myers: Chapter 33
15th case: “The Challenge Ahead: Economic Growth, Global Interdependence,
and the New Competition,” Chandler, pp. 805-854 (handout)
Restructuring in response to economic globalization
Readings packet on investor activism and corporate restructuring in the ’80s
and ’90s
Articles (handouts):
Kensinger, “Financing Dynamic Networks”
Financial Execution
16th case: “Intel Corporation (1992),” Case Problems in Finance: pp. 381-401
17th case: “The Learjet Venture,” handout
Additional reading: Chew, pp. 374-392
CUMULATIVE FINAL EXAMINATION
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