Description
This case is a two-part series on Dunia. Case A is set in 2008, where founder CEO Rajeev Kakar has just spent 20 months setting up Dunia, a finance company in the United Arab Emirates (UAE). The enterprise originated from a partnership between his former employer, Fullerton Financial Holdings (FFH) and a couple of key entities in the UAE that were keen on building a financial presence in the region. On September 15, 2008 — as the Dunia team is preparing to announce the opening of its first branch in Abu Dhabi — news breaks on the Lehman Brothers bankruptcy. For Kakar, it means that the product programmes he has lined up, as well as his funding assumptions for Dunia, have crashed.
Dunia A deals with the time frame before the launch of the company and covers factors such as pricing risk and uncertainty, along with a broader view that covers the struggles presented with new ventures and entrepreneurship.
Dunia B is a follow up case to Dunia A, but can also be taught independently. This case discusses the challenges faced by the chief risk officer Raman Krishna after the launch of Dunia, during a time of unprecedented uncertainty in the midst of the 2008 worldwide financial crisis.
During this time it has become difficult to manage the sales force and their motivation on account of ever tightening credit criteria and the inevitable reduction in loan volumes. There is a real need to understand how, and from where, to source a sufficient number of potential borrowers who will satisfy the revised criteria and also enable Dunia to meet their planned growth numbers. Dunia has been cautious with its first couple loans, but as it begins to loan out the remainder of its portfolio, the company needs to make some tough decisions on how to make the lending business work with such widespread uncertainty.
In the Dunia B case, participants experience the challenges of pursuing profit with quality (versus quantity) growth. It provides students an opportunity to discuss the challenges of credit evaluation and approval strategies, as well as credit risk management, faced by a new financial institution. The instructor can also guide a discussion on the reliability of traditional rule-based models as opposed to a judgment-based approach.
Inspection copies and teaching notes are available for university faculty. To receive an inspection copy and teaching note, please email cmpshop@smu.edu.sg with your registered faculty email ID and a link to your contact information on the faculty directory at your university as verification. An inspection copy and teaching note will then be sent to your faculty email account.