Question

Why use case studies to evaluate “Problems in Corporate Finance?” – in your response include one example of a type of “(real world) Problem in Corporate Finance.

Answer 1

A case study in corporate finance is a historical, in-depth analysis of a particular case in the history of a business.

In business research, four common case study approaches are present, namely :

1. No Theory First 2. Gaps and Holes 3. Social Construction of Reality 4. Anomalies

The reasons of doing a case study in corporate finance are :

• case studies mimic real world scenarios and problems that businesses might face.
• show situations that demand speedy decision-making where there is confusion and potential alternative solutions
• accentuate the use of real companies that need to make critical investment or financing decisions
• enhance soft skills including analytical skills, communication and presentation skills, interpersonal and problem-solving skills as well as apply judgement in making decisions
• gain experience from mistakes of others that would have taken a long time in real practice.
• appreciate the multitude of industries and the different value drivers that run them
• promote research , scrutiny and skill of correlation of factors widely unrelated that go on to impact a business
• develops skill of corporate strategy

example of a case study in problem in corporate finance :

Since the last half a century , the world has increasingly depended on China for machinery parts. It has almost gained a monopoly by using economies of scale to create the cheapest, most efficient manufacturing and shipping industries. With the Covid - 19 crisis , these mega industries have practically shut down due to the lockdown. Markets is an excellent barometer of the economy.Global markets fell in just the beginning of March, wiping out $2 trillion in wealth on the American stock market alone.

for example:- international business travel has come to a halt. The airline, a major conduit to ferry passengers into and out of China, would normally operate 368 flights in February and March. But it only operated 39 flights on its schedules, according to the South China Morning Post. The New York Times reported that on January 23, when things were normal in China, 12,814 flights operated within the world’s largest aviation market. Three weeks later, this number had dropped to 1,662.