The Far East Trading Company
Jan Karl Karlsen is the CFO of The Far East Trading Company, a 100-year old Swedish company with operations throughout Asia and Latin America. It is November 1997, and the firm has just issued its second official profit warning to its stockholders in Stockholm, its corporate home. The company is now feeling the effects of the Asian currency crisis which began in July 1997 in Thailand, and then spread to the neighboring countries of Indonesia, Malaysia, the Philippines, Taiwan, Singapore, and Korea. As Jan Karl Karlsen pondered what specific actions were needed to navigate the treacherous waters of the market crisis, he focused on the "three C's of corporate financial management: control, confidence, and cash flow."
This case has been used very effectively to communicate the impact of the Asian currency and economic crisis on the thoughts and actions of corporate management, both strategic and financial in nature. The complexities of the modern multinational firm are in many ways found simpler in the context of a century-old multinational trading company which has evolved into a loosely-knit collection of country-kingdoms which are individually and collectively exposed to the impact of the economic crisis. Students are asked to first list and categorize the many operating and financing problems faced by the firm, explore their interrelationships, and offer pragmatic solutions to the firm and its management in the midst of crisis.