Value-Based Management and
Course Summary
Week 15 – December 4, 2002
J. K. Dietrich - FBE 432 – Fall, 2002
FBE 432: Case Course
 Goal:
Understand implications of financial
theory in real situations
 Objectives: Students take a position on a
financial policy or strategy and defend their
decision using financial theory
 By-product: Gain exposure to a wide
variety of financial issues in a broad range
of market contexts (e.g. domestic and
international) and many “war stories”
J. K. Dietrich - FBE 432 – Fall, 2002
Review Cases: Investment Banking
 Eskimo
Pie
 Continental
 Hostile
Carriers
Bid for Red October
J. K. Dietrich - FBE 432 – Fall, 2002
Review Cases: Venture Capital
 The
John Case Co.
 Trendsetters
J. K. Dietrich - FBE 432 – Fall, 2002
Review Cases: Risk Management
 For
risk management, we had more lecture
coverage of technical background:
– Measuring risk exposure
– Techniques for risk management
– Derivative securities: futures and forward
contracts, options, and swaps
 Liabilities
J. K. Dietrich - FBE 432 – Fall, 2002
Management at Union Carbide
Review Cases: Financial Strategy
 PPL
 Clarkson
 Avon
Lumber
Products
J. K. Dietrich - FBE 432 – Fall, 2002
Review Cases:
 International
Capital Markets
– Huaneng Power International
 Corporate
Governance
– Circon (A)
 Value-Based
– Vyaderm
J. K. Dietrich - FBE 432 – Fall, 2002
Management
Summary
 Value
and valuation is the key in finance
 Cash flows, discount rates, and present values are
the critical tools and assumptions for each are the
main points of debate
 Accounting concepts (like income) and numbers
are important inputs but finance is forwardlooking and requires assumptions
 Finance theory is essential in framing a
convincing argument, either as benchmarks for
analysis or in assessing real-world departures from
assumptions underlying finance theories
J. K. Dietrich - FBE 432 – Fall, 2002
Advice from Professor
 Common
sense precedes careful analysis
and analysis must be measured against
plausibility and reasonableness
 It is important to enjoy what you are doing,
more important than anything, do not adopt
other people’s concept of success
 Balance is essential: finance is a partial
view of the world, your job is in many ways
the least important part of your life
J. K. Dietrich - FBE 432 – Fall, 2002
Examination – Dec. 13, 2002
 Format
same as midterm (multiple choice
and longer answer)
 Coverage is 2/3 on material since midterm
and 1/3 before midterm
 Two-hour examination: final counts twice
and midterm once, drop lowest of three
 Review weekly objectives and vocabulary
 Review syllabus to focus attention on
important finance theories used in cases
J. K. Dietrich - FBE 432 – Fall, 2002